30K a year

[kjpliny]

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Originally Posted by Allegany Well I thought I could easily retire on 36K for me and the wife. Then reality set in. 2008 Health Insurance 1642.10 /month. Mortgage 700/ month brings the total to around 28K. Taxes around 4400. Electric and phone around 200/month. This bring the total to around 35k fixed costs. 1000 for everything else just dosen't make it. Our budget for next year is around 69k. Oh well, as they say in the commercial, life comes at you fast.

Dang...that's like $20k/year. Probably better off saving it and having none...in 5 years you could pay a $100k medical bill.

[Meadbh]

I'm single and live in a relatively low cost area but honestly don't think I could live on $30K without feeling seriously deprived. I'm currently spending ~$45K after income taxes and wouldn't want to reduce further. I need wiggle room.

[FIREd]

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Originally Posted by youbet Your story exacerbates the inconsistency...... If, as you say, the cost of a supporting infrastructure is very low and easy to have and it requires only $30K or less to live nicely in retirement, why the concern about folks being able to retire? SS alone for a couple is typically in the $30K range. What's up with that?

There are plenty of people who have never earned more than 30K per year (for a couple) and will retire without experiencing a major downshift in lifestyle thanks to SS and perhaps a small pension or a small nest egg. They are however unlikely to consider early retirement (because SS is so crucial for them to retire, they have to wait until they are old enough to start receiving benefits) and therefore they are unlikely to post here. I am not worried about these people because they know how to be thrifty.

The people who are freaking out are those who are accustomed to a 60-100K lifestyle and realize that they may only count on a 30K income (SS) in retirement. They can't imagine living on such a small amount of money. They have grown accustomed to luxuries they can't imagine living without, like 400 TV channels and dining out a few times a week. They can't bring themselves to sell the 5000 sqft house and move out of their exclusive neighborhood. Those are the "unprepared and scared boomers" featured in the media.

My MIL is such a boomer. She lived high on the hog for years ($20K per MONTH!). Got divorced late in the game. At 65 she is now receiving 6K per month in alimony. By herself she spends more money than the two of us with half the income (we live in the same city), yet she keeps complaining how money is tight (never mind she is making almost twice the median income for our state). She is worried and angry about her future. But the other day she was talking to her other divorced girlfriends and felt silly when she realized that most of them lived on less than $2500 a month and never complained.

Living on less and enjoying what you have is a state of mind.

[eridanus]

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Originally Posted by restonham I don't have a clue how anyone could live on $30K a year unless they are in an extremely low tax area, have virtually no insurance of any type and absolutely no debt - to include house payments. And them I still can't figure it out. Here's our position - no kids at home, no cc debt, no car debt. Main Mortgage - $15K Property Tax - $5K Homeowners Ins/Homeowners Assoc - $1K Vacation Home - $5K (incl taxes, ins) Groceries - $4K Dining Out - $3K Auto Repair - $3K Insurance (Car/life/health/LTC) - $9K Gasoline -$1K Clothes - $3K Heating Oil - $2K Electricity - $2K Medical/Dental - $3K Household - $3K Cable - 1K Gifts - $4K Home Maint - $3K Misc - $10K Entertainment - $2K Travel - $5K Phone - $1K Other Utilities - $1K Total Expenses- $88K

Except for lower expenses with my mortgage, property taxes, HOA dues, vacation home (none), auto repair, insurance, gas, clothes, heating oil, electricity, medical/dental, household?, cable (none), gifts, miscellaneous?, entertainment, and phone, I spend exactly the same amount.

[accountingsucks]

Yikes...some of the high numbers on here are nuts. I agree living on 30K a year is more than feasible. I am single and 32, with home and car paid for. I live in Canada so no health insurance concerns....anyways I get by on about $1300 average a month in expenses. I could live on around 22K pre tax I think if I absolutely had to. That would be very tight though and probably would mean no vacation in a given year. 30K would be an absolute piece of cake though. I can't believe some of you are spending 80K+ a year...do you really need that 5 bedroom house??

[AltaRed]

Quote:

Originally Posted by Meadbh I'm single and live in a relatively low cost area but honestly don't think I could live on $30K without feeling seriously deprived. I'm currently spending ~$45K after income taxes and wouldn't want to reduce further. I need wiggle room.

I feel the same way and I live below my means. I don't deprive myself, but I take advantage of sales, buy mid-scale stuff when I need new stuff, and do not buy much in the form of extras. Annual expenses still run in the order of $45k net of income taxes.

What I don't see in most (if any) of the expenditures is the accrual for durable goods that need replacement on a certain cycle (vehicles, major appliances, major household repairs such as furnance, roof, A/C). That could easily run $5k per year for middle-line stuff.

[Rambler]

Quote:

Originally Posted by accountingsucks I could live on around 22K pre tax I think if I absolutely had to. That would be very tight though and probably would mean no vacation in a given year. 30K would be an absolute piece of cake though. ??

My folks do 22k or less, vacation and all. But, they have no mortgage, no CC debt, low prop tax, and low desire to be consumptive.

Quote:

Originally Posted by accountingsucks I can't believe some of you are spending 80K+ a year...do you really need that 5 bedroom house??

I don't, but DW wants it for the grandkids (not yet...please! Hope it is 5-8 years down the road.).

R

[maddythebeagle]

Quote:

Originally Posted by FIREdreamer There are plenty of people who have never earned more than 30K per year (for a couple) and will retire without experiencing a major downshift in lifestyle thanks to SS and perhaps a small pension or a small nest egg. They are however unlikely to consider early retirement (because SS is so crucial for them to retire, they have to wait until they are old enough to start receiving benefits) and therefore they are unlikely to post here. I am not worried about these people because they know how to be thrifty. The people who are freaking out are those who are accustomed to a 60-100K lifestyle and realize that they may only count on a 30K income (SS) in retirement. They can't imagine living on such a small amount of money. They have grown accustomed to luxuries they can't imagine living without, like 400 TV channels and dining out a few times a week. They can't bring themselves to sell the 5000 sqft house and move out of their exclusive neighborhood. Those are the "unprepared and scared boomers" featured in the media.

That is what this recurring thread is about I think....people that are obviously spending more than 30k/yr while working and want to FIRE and wonder if they can on 30k....It certainly has been pointed several times in threads that people probably wont be happy if they downshift....

[Rambler]

Oh, my folks do buy a new car every 10 years or so...last one was a new Toyota Corolla which they well equipped for a nicely discounted price...around 15k.

[Khan]

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Originally Posted by AltaRed I feel the same way and I live below my means. I don't deprive myself, but I take advantage of sales, buy mid-scale stuff when I need new stuff, and do not buy much in the form of extras. Annual expenses still run in the order of $45k net of income taxes. What I don't see in most (if any) of the expenditures is the accrual for durable goods that need replacement on a certain cycle (vehicles, major appliances, major household repairs such as furnance, roof, A/C). That could easily run $5k per year for middle-line stuff.

The ~$5K difference between income and outgo goes into MMA.

Replaced 1989 vehicle this year
Washing machine ('92) starting to leak
Furnace (boiler) from '79 still going strong
Roof 10 years in on a '30 year' roof
Bought a new window A/C this year
Fridge, stove and dishwasher installed in 2000

[W2R]

I really think that to downsize one's budget and work on minimizing expenses takes a lot of motivation.

If someone doesn't have sufficient motivation to figure out how to downsize a budget any further than to "x dollars/year", then they have learned something about themselves. Don't judge yourself or self-justify - - just realize you have learned something about your priorities! There's nothing at all that is inherently wrong with wanting to live a certain lifestyle that may mean working a few years longer.

Introspection and learning about oneself can be very valuable. For one thing, when you know your actions are consistent with your priorities, it lowers inner conflict and leads towards inner peace. Heaven knows we can all use that.

I think we (myself included) may have got a little carried away with the "LBYM more than thou" attitude in this thread. My apologies. It's just that I am so glad that I CAN retire, so late in the game (and for me, that is a higher priority than spending $20K/year).

[W2R]

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Originally Posted by Khan The ~$5K difference between income and outgo goes into MMA.

Right, same for me. It's part of my budget. If it isn't spent, it stays unspent because the following year I may need it for these replacement expenses.

[ERD50]

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Originally Posted by Martha Those of us who have to pay $1049 a month for health insurance (my family COBRA payment) plus another $100 a month in copays would have a hard time living on $30,000 a year, even with no mortgage.

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Originally Posted by Dawg52 Good lord have mercy!

Dawg52, why the shock? Those numbers are a reality for many people. I pay over $700/month and it goes up next year. 20% copays for many things.

-ERD50

[youbet]

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Originally Posted by Want2retire I really think that to downsize one's budget and work on minimizing expenses takes a lot of motivation.

It also takes a reason. Once you're retired, you may not be as anxious to do without everything you can possibly do without. LBYM as an end in itself starts to lose its appeal!

Make no mistake, I'm very interested in doing the best job with my investments that I can, getting good value for the money I spend and assuring it is unlikely I'll ever run out of money. But, 18 months into RE, I am starting to find it's nice to obcess less about every penny spent and go do the things I retired to have time to do.

Your milage may vary.

[youbet]

Quote:

Originally Posted by AltaRed I feel the same way and I live below my means. I don't deprive myself, but I take advantage of sales, buy mid-scale stuff when I need new stuff, and do not buy much in the form of extras. Annual expenses still run in the order of $45k net of income taxes. What I don't see in most (if any) of the expenditures is the accrual for durable goods that need replacement on a certain cycle (vehicles, major appliances, major household repairs such as furnance, roof, A/C). That could easily run $5k per year for middle-line stuff.

My observation of people I know (obviously anecdotal) is that it's those with some money/good incomes who are the smart shoppers, getting good value, watching for sales, etc.

Agreed on the accrual for durable goods.

[Rambler]

All of my personal projections show two key totals: total expense including accruals for cars incl maintenance as well as a generous home maintenance fund incl accrual for durables. The other total is for cash flows without these durables, I always assume the accrual for the durables goes in a separate, special kitty set aside for them. Cash flow is for day to day expenses, and the accrual should cover the depreciation. New purchases of durables will come from the accrual account. If there isn't enough, the purchase won't be made until there is enough (unless dire emergency).

R

[youbet]

Quote:

Originally Posted by accountingsucks Yikes...some of the high numbers on here are nuts. I agree living on 30K a year is more than feasible. I am single and 32, with home and car paid for. I live in Canada so no health insurance concerns....anyways I get by on about $1300 average a month in expenses. I could live on around 22K pre tax I think if I absolutely had to. That would be very tight though and probably would mean no vacation in a given year. 30K would be an absolute piece of cake though. I can't believe some of you are spending 80K+ a year...do you really need that 5 bedroom house??

Well.......think about it. You say you could make it on $22K, but it would be tough, maybe no vacations, and you have a paid-for house and no one to worry about other than yourself. So add in $18K for a second person, $12K mortgage, $10K health insurance. That's $62K and we haven't even added in anything like vacations, entertainment or kids. $80K down here, for a couple, in an urban area, certainly is a comfortable lifestyle, but hardly extravagent.

[Dawg52]

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Originally Posted by ERD50 Dawg52, why the shock? Those numbers are a reality for many people. I pay over $700/month and it goes up next year. 20% copays for many things. -ERD50

I pay $170/mo and copays too if I have problems. Fortunately, the only prescriptions meds I take cost $4/mo from Walmart. My bcbs premium goes up to $180 next month.

Guess I have been lucky so far.

[ERD50]

Yes, many people forget those 'accruals'. Just because your car is paid for does not mean that you don't need to budget money each month for it's replacement (assuming you are paying cash for that). It does not show up as an 'expense' today, but it is a very real drain on your budget.

I have hesitated to chime in on these 'living on $XX,XXX' threads, because I have not done a detailed budget. But I *do* know how much total I spend - just two accounts with outflows, so just add up the debits and subtract any reimbursed money.

My friends consider me a cheapskate. I have the cheap pre-paid cell phones, no cable (I may need to crumble on that), just got hi-speed internet a few years ago ($29/month is not much more than a second line and $10 ISP), dining out is normally no more than once a week (if even), usually a cheap mexican place that we like. Vacation $ are almost nil (I hate driving, wife hates flying), CDs mostly from the library or listen on-line, no cleaning people, I do most repairs myself, lawn care (including weed/fertilize), research every purchase I can, etc, etc ,etc. *

And with that, we spend WAY more than $30K a year. Way more.

OK, so I've got a large house with high property taxes. Take away the mortgage, take away (not just adjust) the prop tax, the insurance, the utilities, and we still spend WAY more than $30K.

I find it tough to do a meaningful budget, other than the big stuff, so I don't. I can't learn much from 'costco - $500' - I would need to look at each receipt in detail and how much is food, clothes, gifts, etc. But I know we are careful with our money. So if you people really make it on $30K, great. But I'm having trouble seeing how this is done in most parts of the country, w/o hitting the z-tails of deprivation, or w/o neglecting a few details, like that roof on your paid-for house will need to be replaced in 10 years, and dozens of other little 'inconvenient expenses'.

-ERD50

* OK, just so no one feels sorry for us, we did 'splurge' today. I do take advantage of and enjoy a number of free/cheap entertainment opportunities, but today we were attended the Chicago Symphony and got Box Seats - first time for that. OK, it was the (famous) Brass Orchestra from the Symphony, not the full symphony orchestra, so box seats went for about half normal prices, so we treated ourselves. Worth all 22000 pennies. Another 1000 pennies for the train (holiday fares), a few more for a reasonable dinner and beer downtown, and one short cheap taxi ride back so we made the train on time. The Chicago Brass Orchestra and Mussorgsky's 'Pictures at an Exhibition' - PRICELESS!

But this may have back-fired, the wife was really impressed with the box seats (she was originally against spending the extra bux) - let's do THAT again!

[Goonie]

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Originally Posted by ERD50 * OK, just so no one feels sorry for us, we did 'splurge' today. I do take advantage of and enjoy a number of free/cheap entertainment opportunities, but today we were attended the Chicago Symphony and got Box Seats - first time for that. OK, it was the (famous) Brass Orchestra from the Symphony, not the full symphony orchestra, so box seats went for about half normal prices, so we treated ourselves. Worth all 22000 pennies. Another 1000 pennies for the train (holiday fares), a few more for a reasonable dinner and beer downtown, and one short cheap taxi ride back so we made the train on time. The Chicago Brass Orchestra and Mussorgsky's 'Pictures at an Exhibition' - PRICELESS!

Cool! We're going next Sunday for the CSO Christmas concert! We don't have box seat though.....we're about half way back in the middle section on the main floor. We're going to Lawry's for a nice prime rib dinner before the Symphony....YUM! IIRC, transportation, dinner, and concert is 19000 pennies for the 2 of us. Money well spent!!!