Retire on 3k per month thoughts...

[Khan]

As of this morning I have spent $17,000 so far this year (not including buying a car, which I last did in 1989).

 

[Gumby]

My retirement budget assumes that the young wife and I will not want to change our standard of living. Not counting the mortgage P&I (which will stop coincident with our retirement), our actual current cash outlay is about $4.5k per month ($760/mo. for real property tax alone - yikes!). To this, we will add $2k per month for a sinking fund to be used for car purchases, larger home repairs (such as periodic painting, new roof, etc.) and vacations. We figure that the reduction in commuting expenses will be offset by health care costs. Accordingly, my retirement budget is $6.5 k per month (after taxes) for two.

 

[SecondCor521]

I spend right around $6K per month, but about 2/3 of that is direct kid expenses and mortgage interest, so with a paid off house and the kids grown, I think I can live comfortably on $2K per month.

2Cor521

 

[haydee]

Are most people assuming health care is covered. I am not sure how you can plan for health care. Sure, I could do $3k/month NOW paying for private insurance, but dont know what health care is going to be costing. We are in our 30's, and health care for people in their 60's is more expensive, as I can see when plugging numbers in esurance, plus its been going up at a higher rate of inflation. So being able to live on $3k now for me does not mean that I can leave on $3k plus inflation in the future.

 

[JohnP]

The "Fog of Finances while saving for retirement" is slowly clearing... it is showing me that we are more like Gumby than the 3k/mo crowd. We live modestly in a 3 br condo and LBYM. Like Gumby, we planned to retire at the same level of living as we enjoyed while working - it has worked out that we've been able to successfully continue our lifestyle into retirement.

We're 64 and 66. This month is the first where we don't have income from a job and corresponding savings into tax deferred retirement accounts since DW has finished her part-time teaching stint. I've developed what I call my Cashflow Budget which now only has six major topics, Household, Insurance, Auto, Medical Out-of-pocket, Taxes and Personal. Everything is becoming easier since we are retired-retired, the mortage is paid and both cars are paid for.

Household includes all expenses to keep the doors open
Elect 70
Gas 120
Cable 55
Inter 25
Phone 80
HOA 320
Water 60
PropTx 450
Tot 1180/mo

Insurance includes recuring Ins expenses.
HC 300
LTC 200
Life Ins 100
Property 70
Medi Pt B 95
Vision 15
Tot 780/mo

Two Cars '98 and '01
Gas & Maint 400/mo

Out of Pocket Med 150/mo

Personal includes discretionary expenses -
Food, Clothes, Misc, Vacations 1200/mo

Total of 1180+780+400+150+1200= 3710/mo not incl Fed & State Tx

We usually have a 6-10k Vacation that isn't included here also - we went for the open-heart surgery and cardio rehab option instead - $6-10k Vacations to restart in 2008.

JohnP

 

[Corporateburnout]

It would be extremely difficult for us to live on 3k per month especially in the area we live in (the northeast). My ER budget is 5.5K per month including a couple of vacations per year.

 

[OAG]

Our budget for 5 of the past 7 years has averaged less than $24K, last 2 years it has gone up to about $28.5K. Lived in Florida for 17 of the last 19 years and OHIO for the past two years. Increased budget due, primarily, to RE taxes on a fully paid for $350K condo. We travel a bit (last two years to Virginia twice, Chicago twice, Florida 3 times, and NY (Niagara Falls) once). We stay with friends, family or (in the case of NY) Military Lodging facilities, visit things that do not cost much like walking trails, parks, water falls, etc.,. I guess it is what you want to do and how much you want to "spend" doing it. We do this because it is what we want to do and not because we cannot afford to do more as we have budgeted expenses covered at about a 4:1 ratio (Income to Expenses).

We own one car (3 years old that cost $50K when we bought it new), do not carry any type of life insurance (to old and do not need to give anyone a windfall to waste) with the exception of one small paid up policy and have medical insurance covered at no cost.

So to OP yes you should be able to do it fine on $3K per month even considering medical expenses.

 

[Bigritchie]

The "Fog of Finances while saving for retirement" is slowly clearing... it is showing me that we are more like Gumby than the 3k/mo crowd. We live modestly in a 3 br condo and LBYM. Like Gumby, we planned to retire at the same level of living as we enjoyed while working - it has worked out that we've been able to successfully continue our lifestyle into retirement.

We're 64 and 66. This month is the first where we don't have income from a job and corresponding savings into tax deferred retirement accounts since DW has finished her part-time teaching stint. I've developed what I call my Cashflow Budget which now only has six major topics, Household, Insurance, Auto, Medical Out-of-pocket, Taxes and Personal. Everything is becoming easier since we are retired-retired, the mortage is paid and both cars are paid for.

Household includes all expenses to keep the doors open
Elect 70
Gas 120
Cable 55
Inter 25
Phone 80
HOA 320
Water 60
PropTx 450
Tot 1180/mo

Insurance includes recuring Ins expenses.
HC 300
LTC 200
Life Ins 100
Property 70
Medi Pt B 95
Vision 15
Tot 780/mo

Two Cars '98 and '01
Gas & Maint 400/mo

Out of Pocket Med 150/mo

Personal includes discretionary expenses -
Food, Clothes, Misc, Vacations 1200/mo

Total of 1180+780+400+150+1200= 3710/mo not incl Fed & State Tx

We usually have a 6-10k Vacation that isn't included here also - we went for the open-heart surgery and cardio rehab option instead - $6-10k Vacations to restart in 2008.

JohnP

Wow John, I cannot imagine having to pay 450+ a month just for property tax, I just pay 400 per year. That just blows my mind.

 

[haydee]

Where do you live? I pay $4,000+/year and I thought I was doing good. I am in Seattle.

Wow John, I cannot imagine having to pay 450+ a month just for property tax, I just pay 400 per year. That just blows my mind.

 

[Corporateburnout]

Where do you live? I pay $4,000+/year and I thought I was doing good. I am in Seattle.

I wondered about that myself. I pay $4800 in property tax as well.

Living in Boston, Seattle or San Diego is much more expensive that the mid western or southern states. That is why 3k per month does not work for everybody.

 

[JustCurious]

I paid $1,300 in property taxes last year.

 

[JustCurious]

JohnP, why in the world are you paying $1,200 per year for life insurance at the age of 64??

 

[JohnP]

Today 03:54 PMJustCuriousJohnP, why in the world are you paying $1,200 per year for life insurance at the age of 64??

Well... $33/mo is from employer Ins bene and just is deducted from my pension check.... Next year that expense will be zero'ed on my BD and then become a paidup ins policy. The rest is plain life insurance that I've wobbled back and forth on whether to keep or not - this year my heirs came really, really, really close to collecting - I know all the advise of keep-vs-close... Just haven't decided to punch out of the policy - figure that amount hasn't raised to the level where I am concerned about it.

JohnP

 

[A854321]

As appealing as being thrify is, I plan on doing considerable (budget) travel in retirement. I also would want to have some security for unforseeable ( ie- medical) expenses. I just don't think 3K gives enough security and flexibility for what I want to do.

 

[LeatherneckPA]

Cindy and I pay about $800 a year in property tax. Of course, that's only on our 1/4 acre village lot. When we get the 25 acre farmette I expect that to increase. But not to the point that is $400 a month or more. Heck, that's a mortgage payment!!

LOL, I had officers working for me in NJ who paid more per month for taxes than they did for their mortgage. "But I'll make such a killing when I finally retire and sell this house." Sounded like twisted logic to me. Couldn't that $10k or more per year be better invested than that. I believed so. Just couldn't make them see it. Of course, I hadn't discovered these boards yet, and I was an "outsider" and a supervisor. Two strikes right off the bat.

 

[LeatherneckPA]

As for the OP, I have planned all my life to retire on my pension and funnily enough that's going to be right around $40k. What I never had planned for (and I am embarrassed to say it didn't dawn on me until just last summer) was that Cindy would also finish a career with a pension. Eight years after I retire she will retire from the bank. And at the rate her salary is increasing her pension could well be more than mine.

 

[Gumby]

Cindy and I pay about $800 a year in property tax. Of course, that's only on our 1/4 acre village lot. When we get the 25 acre farmette I expect that to increase. But not to the point that is $400 a month or more. Heck, that's a mortgage payment!!

This month's regular mortgage payment to the bank was $841 principal, $543 interest and $759 real property tax. That's right, $9108 per year in real property tax, and we are only in the first year of a 5 year revaluation phase-in. We have a 3 bedroom 2500 sqft house on 1/3 acre.

 

[Bigritchie]

This month's regular mortgage payment to the bank was $841 principal, $543 interest and $759 real property tax. That's right, $9108 per year in real property tax, and we are only in the first year of a 5 year revaluation phase-in. We have a 3 bedroom 2500 sqft house on 1/3 acre.

That is scary to think of property tax like that for me. I have 2 acres in east TN, with a 3 bedroom, 3 bath, 3 car garage all fenced in for just 400 a year hehe. I think the house cost me around 130k or so too.

 

[Hal3]

The plumber said that the problem was probably
caused by nearby lightning striking a utility pole
behind our house and some of the surge was
grounded through our water system. Who knows
if he is right. Anyway, there are no more leaks for
now at least.

Damage from lightning strikes is covered by many homeowners insurance policies.

You might want to check it out.

 

[rjk514]

It lives...as the economy tanks..prices of most stuff coming down...3K per month and some frugal spending and one can live quite well...

 

[Notmuchlonger]

It lives...as the economy tanks..prices of most stuff coming down...3K per month and some frugal spending and one can live quite well...

Guess it depends on what your definition of "quite well" is

 

[rjk514]

Quite well for us is paying all the bills, a steak every now and then, and a few golf trips a year. We don't demand that much out of life to be happy and content..We do all we want and don't exceed the 3k limit..we seem to be able to find most of life's shortcuts
available to us..all you need do is to look for them.

 

[NW-Bound]

My mother did quite well on less than $30K last year (2007). That gross income came from a state pension, SS, and IRA withdrawal, and was before any taxes.

She lives alone in Ahwatukee, a relatively newer area of the Metropolitan Phoenix. She owns a 3-BR house of 1650 sq.ft. The house is probably worth $250K now. The RE tax was $1700 last year.

Though not a big spender, my mother was not all that frugal. Last year she spent some of the above annual income to buy some jewelry to keep up with her friends and my SIL! (we kept telling her that it was OK for her to spend, as she wouldn't be able to "take it with her".) My mother also takes a couple of domestic trips a year.

So, $36K/year is not subsistence living, depending on where you live.

 

[Moemg]

I'm sure a lot of people can live on $36,000 a year but what happens when one of those SS payments disappear ? Can you still live comfortably on $24,000 ?

 

[ziggy29]

Looking at ONLY our expenses now, it looks like we could live reasonably well on $3000 a month. The problem is, we'd have to add the full cost of health insurance back in if this was all coming from "passive" income (i.e. no j*b), which would blow that out of the water.