Poll: What is your basic income need (floor) in retirement?

[aaronc879]

Come to Wisconsin, we are trying to corner the market on high taxes.........

Yes Wisconsin taxes are quite high. That's why you need to make a conscious decision to limit your personal taxes. I bought a condo that is only 800/yr in property taxes and I drive as little as possible(<7000 miles/yr) to keep my gasoline tax to a minimum.

 

[haha]

Converting to a $10k or $20k or even $30k lifestyle is not something that can be done free or instantaneously...

I doubt that it is even possible, let alone instantaneous. This thread I believe contains wildly optimistic guesses. Let's remember that UncleMick, who is a self described "Cheap Bastard" found a $12,000 floor under which he perhaps might have been able to go, but couldn't get important people to follow him. He had a cheap paid off house, no medical insurance, and no insurance on his house.

And I believe that was 10 years or so ago, so prices have increased dramatically since then, especially for things the government pays no heed to, but people actually need. Like food, medical and dental care, gasoline, heating oil or natural gas, etc.

What people actually spend tells the tale, averaged with inflation adjustments, over 10 years or so, allowing you to capture at least some of the "stuff replacement cycle”. When the question has been framed, “What do you spend, we find some budgets over $100,000.

I do very little traveling, live in a modest apartment, have Medicare, and spend $2850/month plus income tax. And this is with little driving, a new paid off car, and no expensive hobbies. No accruals included in this total which is from the last 12 months running. It does include a TV, for which I spent less than $1000.

My last 12 months have been cheaper than any 12 months in the prior 6 years, and I don’t have readily available data going back further.

All of this goes to essentials except $325 which I classify as leisure, and in fact includes everything that is not medical care, housing, utilities, auto, food, insurance, personal care, electronics or utilitarian clothes. My friends, retired or working, mostly spend way more- on classes, meals out, drinks, trips. My categories are all functional, in that housing includes heat, a lamp I might buy, or whatever that I need to have a reasonably comfortable place to live.

I have cut back hard over the last few years, partly trying to emulate some of the low spenders here. But I spent more on "leisure" in 1970 than I do now, with no adjustments for inflation.

Further cuts I would consider poverty.

Ha

 

[MissParker]

$40,000 (no mortgage as I will buy house outright when I move)
1 person (me)
Ohio (after retirement)
Still working.

I will retire with about a $50,000 annual pension in a few years. Moving away from California will save me a load of money.

 

[Bikerdude]

My house is appraised for $150,000.
Property taxes are $3800.

My house in CT is assessed at $220,000. Taxes on house $5,550. 6% sales tax. 5% income tax. They tax pensions. They tax SS over 50K income.

Middle class is moving out. Low income/skill emigrants are moving in due to generous aid packages most notably aid to unmarried mothers with children.

Democrats control everything except the Governor and have for over 40 years. With the change in demographics their jobs are safe .

 

[Retire Soon]

1. $35,000
2. 2 people
3. West Coast
4. retired

 

[SecondCor521]

I doubt that it is even possible, let alone instantaneous. This thread I believe contains wildly optimistic guesses.

I think it is possible with the caveats:

1. It depends on how you count.
2. It depends on where you live.
3. It depends on what you define as "needs".

Per #1, if I exclude my kids (I plan to have enough for them and their college set aside before I retire), include a paid off house (I plan to pay off the mortgage before I retire), and subtract off work related taxes, I am fairly certain that what's left is only about $15K annually, if that.

Per #2, I live in Idaho. I would doubt anyone could sustain my (admittedly boring) lifestyle in NYC, San Fran, Seattle, etc. There appear to be other cheap parts of the country, though, including the South and South central US. My property taxes are roughly $1K annually, for example.

Per #3, the $15K of my budget alluded to above is almost entirely the basics: food, clothing, utilities, auto, insurance, etc. It does not include replacement costs / sinking funds, does not include any significant travel, and has a modest recreation budget. But neither does it include bartering for things or shooting and eating squirrels.

When I get home in a little bit maybe I'll post my actual Quicken #'s for the last six months.

2Cor521

 

[RockOn]

$150k
2 people plus dog,
2 kids in college but that is paid for,
$500k still on the mortgage, $6500 prop tax,
2 cars, still owe on both
Colorado,
I work part of the year

 

[playaman]

Not retiring until August 1, but projections show we will need about $90k per year in Texas (constant values).

Cars paid off but $2300 monthly house note for 15 years (principal, insurance, taxes).

Will have some consulting work, so should be able to handle it comfortably.

 

[dex]

This thread might have been better off as a poll.
I'm just saying.

 

[BanDit1]

1. $37000 -- No mortgage, no car pmt., no cc debt. All forms of taxes and insurances included. Currently "splurge" on cable TV, high speed internet, land and cell phones. Could cut back on those if times get tough.
2. 2 +1 dog and 1 cat (Pet food and Vet bills included in above)
3. Suburban Chicago
4. ER'd 12/23/05 -- Not working and don't plan to.

 

[SecondCor521]

OK, excluding kids, interest expense, and taxes, here are my expenses for the last six months ending today:

Food 1,512.96
Utilities 957.38
Medical 948.17
Insurance 739.42
Auto 619.67
Recreation 595.07
Divorce 378
Christmas 367.1
House 272.61
Charity 70
MBA 61.47
Pets 59.03
Bank Charge 49.03
Clothing 46.5
Cash 18.48

which totals just under $6700, for an annual run rate of $13400. Add property taxes of $1100 back in, and you get to $14500.

Of the above categories, Recreation, Divorce, MBA, and Pets are either discretionary or NRE's. Those are at a run rate of $2200 per year, so that brings the total back to $12300 for my "floor".

2Cor521

 

[LRS]

We can make it on $40,000 but I hope to have an income $44,000 in 3.5 years when my husband turns 55. His pension plus 457k plan plus investment income will sustain us for two years, when my pension (substantial) kicks in.

Two adults, one kid still in high school, the other kid out of college.
Fully paid medical in retirement, thank god
Fully paid off house, small home equity loan, no other debt.

We are frugal, we can and have lived on much, much less. But I worked hard in order to be comfortable. I don't think $44,000 is luxurious by any means.

 

[zoey]

We live very comfortably in a high expense area on...

1) $24,000 (no mortgage, or rent)
2) 2 people
3) Hawaii
4) Retired

We live simply, which isn't a sacrifice for us. We have everything we need and since our wants are simple, we have everything we want, as well.

 

[ERD50]

I
This thread I believe contains wildly optimistic guesses.

Ha

I think it is possible with the caveats:

1. It depends on how you count.

It does not include replacement costs

2Cor521

I agree HaHa. A good example above. 2Cor521 relies on a paid for house and a paid for car (I assume $1200/year covers gas/maint - not payments) to hit that $14,500 number. But he will need a new water heater, a new car, a new roof, etc. Amortize those costs over time and it will add up.

I also suspect that a budget focused on the items that he lists may see much more inflation than a more diversified budget. Medical, food, property taxes? Just a guess.

Even a $20,000 car every 12 years is $1666/year - that adds over 10% to his 'budget'. Just one item.

IMO, if you don't account for replacement costs, you don't really have a 'budget', you have a fantasy.

-ERD50

 

[myself]

What is the tax appraisal of your house ?

My house is appraised for $150,000.
Property taxes are $3800.

Tax appraisal value is $178,000.

So that kinda trumps TX. After all, I believe 2.5% is lower than 4% (or 3.1% if you use the lower amount of $5,600 ... but that rebate isn't guaranteed every year).
And I live in a "cheap" tax area of NJ. Folks up near where I work, are tax appraised at $220k, but their taxes are $11k. (5%)

And we now have 7% sales tax (just went up last year), and 6% income tax.

 

[dm]

I keep revising my numbers, but here are the latest.

Bare bones and staying where I am with a paid off house and no other debt.

$31,000 would be tight and no fun. $12,000 of this is health insurance and dental.

Cutting back budget, but still having some fun, playing public golf, cheap vacations, ect.

$45,000

Current budget is $65,000. And we still have to watch our money. This is for two of us and we have no debts.

The above are all after tax.

I'm sure if I had to we would find a way to get buy on less, but I don't feel comfortable without health insurance, home insurance, and some money for repair and replacement. Thankfully, unless there is an economic collapse or other catasrophy, I won't have to worry about it.

 

[HFWR]

I think Scott Burn's considers the cost of living in a home at 1% of its' value per year.

So, for my house, I should budget $1430 annually for the eventual replacement of the roof, water heater, etc.

Not sure where he came upon this number, however...

 

[SecondCor521]

I agree HaHa. A good example above. 2Cor521 relies on a paid for house and a paid for car (I assume $1200/year covers gas/maint - not payments) to hit that $14,500 number. But he will need a new water heater, a new car, a new roof, etc. Amortize those costs over time and it will add up.

...

IMO, if you don't account for replacement costs, you don't really have a 'budget', you have a fantasy.

-ERD50

You're correct. I have a 1995 Toyota Corolla that was paid off a long time ago. It's so old that it has stopped depreciating; in fact it appreciated by $80 last year. The $1200 covers gas/ maintenance/ repairs/ licensing/ emissions test, etc.

I understand the mechanics of accounting for replacement costs. To be blunt, I think I stick my head in the sand on this issue as doing the accounting would push out my ostensible FIRE date. I'm too eager and impatient to get there.

2Cor521

 

[W2R]

I think Scott Burn's considers the cost of living in a home at 1% of its' value per year.

So, for my house, I should budget $1430 annually for the eventual replacement of the roof, water heater, etc.

Not sure where he came upon this number, however...

Out of the air, if he meant to include taxes and insurance!

Surely he didn't.

 

[militaryman]

1. 28,400 Base line needed (no mortgage -- no debt -- Federal retiree health insurance premiums included --- amount is before taxes)

2. 2 people

3. Midwest

4. Working (22years in Fed) 16 to go


$28,400 above is Min NEEDED but will have closer to 70k/year at current savings rate.

 

[TickTock]

Out of the air, if he meant to include taxes and insurance!

Surely he didn't.

I've also heard the 1% per year rule of thumb, for maintenance/replacement costs only, as a long-term average.

 

[HFWR]

Out of the air, if he meant to include taxes and insurance!

Surely he didn't.

I've also heard the 1% per year rule of thumb, for maintenance/replacement costs only, as a long-term average.

What he said...

 

[Ronstar]

1) $75,000 - no mortgage, no debts.
2) 2
3) Chicago suburbs
4) still working 4 days a week - full FIRE by July 2011 at 56

 

[piano88]

Our expenses plus taxes and health in retirement: $78,000. No mortgage. Current ages 52 and 51. One working FT, the other PT. Two college aged children, one graduates in 2009, the other in 2011. Upstate NY, 3 hrs. N of NYC.

 

[mb]

Given that, the bare bones budget I posted earlier isn't even bare bones: It includes my car expenses, eating out, air conditioning, and some other things that I don't consider needs. I could probably cut it back to $8K or less pretty easily.

2Cor521

(1) Ignoring the fact that I still have a mortgage, which is not immaterial.

Me too but DW would have to be one of those non-essential needs that I would have to get rid of