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Annual living expenses range
04-19-2020, 08:20 AM
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#1
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Recycles dryer sheets
Join Date: Jun 2015
Posts: 338
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Annual living expenses range
I’m trying to get an idea as to general annual living expenses. I know it varies a lot based on individual circumstances.
Assumptions:
2 person household
No mortgage
(Property taxes $1500 annually)
No debt
Health insurance currently free with minimal out of pocket costs/eventually need to include Medicare premiums)
What amount is needed monthly to have a trouble free retirement? Just looking for a general range.
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04-19-2020, 08:25 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Aug 2010
Location: Back woods of Fennario
Posts: 1,170
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$4-6K/month.
__________________
"Time wounds all heels...." - Groucho Marx
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04-19-2020, 08:26 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
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Quote:
Originally Posted by Joylush
I’m trying to get an idea as to general annual living expenses. I know it varies a lot based on individual circumstances.
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Yes, that's why a "general range" isn't meaningful.
The most accurate way to do this is to take your current general annual living expenses (you do track those, don't you ) and go through each category to estimate how it will change once you are retired. That should get you a number that is definitely within the ball park.
__________________
Numbers is hard
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04-19-2020, 08:41 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Posts: 5,342
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$1K-15K/mo. Is that general enough? If I didn't have a mortgage $1K/mo would be plenty for me. There are others on this forum that would say it's "impossible" to live on less than $5K/mo and others who would rather keep working than live on less than $10K/mo. There is no "general" amount that is enough. It varies greatly from person to person.
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04-19-2020, 08:46 AM
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#5
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Thinks s/he gets paid by the post
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 4,354
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Depends on your budget. As all previous posts to mine stated.
__________________
The problem isn't artificial intelligence, it's natural stupidity.
You can't spend yourself to prosperity.
Semi-Retired 7/1/16: working part-time (60%) for now [4/24/17 changed to 80%]
Retired Aug 2, 2017; age 53
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04-19-2020, 08:49 AM
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#6
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,474
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This is one of our favorite topics. Here's a thread where we shared our spending for 2019:
https://www.early-retirement.org/for...ml#post2346811
Hope that helps.
As for YOUR spending, I'd first record every cent you spend right now, and use that as a starting point. Subtract expenses you will no longer have in retirement (work clothes? More gasoline for a long commute? etc), and add new expenses that you might have like travel, entertainment and so on. Then you may have more of an idea of what you will need in retirement for the lifestyle you envision.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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04-19-2020, 08:50 AM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2003
Location: Florida's First Coast
Posts: 7,666
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The Property Taxes are a little unrealistic, we are in NEFLA and our Taxes are >$6k a year. There is $500 pm right away.
I would say ours are about $5k pm on average for any give year including home maintenance etc.
__________________
"Never Argue With a Fool, Onlookers May Not Be Able To Tell the Difference." - Mark Twain
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04-19-2020, 08:55 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,232
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IIRC, there was a past poll which indicated ~20% of folks spend more than 120k yearly.
So the range is quite wide.
__________________
TGIM
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04-19-2020, 09:11 AM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 17,012
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OP - How much do you spend now ?
Best thing I have done to ease my mind on spending is track my expenses everytime I spend a penny.
I use an phone app: Spending Tracker (free) so it's easy and quick, I use about 30 categories (ex groceries, takeout, in restaurant, travel, booze, etc)
Each month I transfer it to a spreadsheet so I have records going back few years and can see changes or graph it, etc.
__________________
Fortune favors the prepared mind. ... Louis Pasteur
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04-19-2020, 09:12 AM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
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This poll is about retirement income, not expenses, but assuming the two are closely related it does illustrate there is a wide range: 80% fall between $36,000 and $120,000 (after taxes). And as was mentioned previously, that leaves 20% with an annual number of more than $120K.
https://www.early-retirement.org/for...ome-89328.html
__________________
Numbers is hard
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04-19-2020, 09:31 AM
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#11
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Recycles dryer sheets
Join Date: Jun 2015
Posts: 338
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Quote:
Originally Posted by Sunset
OP - How much do you spend now ?
Best thing I have done to ease my mind on spending is track my expenses everytime I spend a penny.
I use an phone app: Spending Tracker (free) so it's easy and quick, I use about 30 categories (ex groceries, takeout, in restaurant, travel, booze, etc)
Each month I transfer it to a spreadsheet so I have records going back few years and can see changes or graph it, etc.
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That’s a good idea. I just listed out all the expenses I could think of and then just doubled it to be safe. It didn’t include travel/entertainment before I doubled it. That came to around $6000.
I have been retired for several years. My income is rental property income, so my job, is landlord. I’m growing tired of it and have started selling as folks move.
Haven’t had to track anything in detail because I spend far less than I make. Eventually the monthly income will decline as I sell but then again I will also be able to access the proceeds. Half my net worth is in real estate. One quarter is in cash, the other investments 75/25. I believe the cash savings will be enough to live off of forever so the rest is just a bonus but I don’t want to be overly confident- then again I keep hearing once you have enough why risk it. It is just hard to stop being an investor when you’ve been one your entire adult life.
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04-19-2020, 09:51 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Nov 2016
Location: Washington State
Posts: 2,350
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Quote:
Originally Posted by Joylush
I’m trying to get an idea as to general annual living expenses. I know it varies a lot based on individual circumstances.
Assumptions:
2 person household
No mortgage
(Property taxes $1500 annually)
No debt
Health insurance currently free with minimal out of pocket costs/eventually need to include Medicare premiums)
What amount is needed monthly to have a trouble free retirement? Just looking for a general range.
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A quick answer someone else told me on this forum a while back is to take your current take home pay, subtract the amount you save, the rest is your living expenses. It's crude, but it's a decent approximation.
Personally, I download my checking and credit card transactions from my banks web sites each year and categorize where we spend money each year. I use a program called Alzex Finance ( https://www.alzex.com/) to make this easier, but have done it manually too before that.
For what it's worth, our spending over the last six years has varied from 38K to 55K per year, with the average being right around 44K annually. We're both still working so some costs will likely go down after retiring (gas, clothing, work expenses), while others will likely go up (health insurance, travel, etc.).
Oh, and $1500 property taxes are great if true. Ours are $5000 per year here in Washington state, for a small 1456 sq/ft house.
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04-19-2020, 10:05 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Oct 2017
Posts: 1,137
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After health insurance and income tax we live comfortably on $4k per month, including a couple nice trips. 2 people, no mortgage or car payment. Similar property taxes.
Add in health insurance $1,300 per month and income tax $500 month we do fine on under $6k per month. Income is about $9k per month, not counting investment gains. Doin just fine.
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04-19-2020, 10:24 AM
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#14
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Thinks s/he gets paid by the post
Join Date: May 2016
Location: Mid-Atlantic
Posts: 2,654
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I used the Fidelity retirement planner to plan out a detailed retirement budget based on our current spending. When I found that our necessary expenses would easily be covered, I started adding things that would make us comfortable based on what our projections predicted we could successfully spend. When the bull market was running up, I upped our travel and dining expenses a few times and still had a comfortable margin at $10K/month total budget. Now that our score is down to 102 (from 111) I could reduce or remove some of those optional expenses, but I'd like to aim for frequent 3-4 star travel, or maybe 5-star travel once every year or two, so I'll keep the budget as-is for now and see if we can improve our score.
tl;dr version: working out a detailed budget is a good starting point, it can help you set a retirement target range.
__________________
-Looking to FIRE in the mid-2020s, which would be our mid-50s.
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04-19-2020, 07:27 PM
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#15
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Full time employment: Posting here.
Join Date: Feb 2018
Location: An Un-Organized Township of Maine
Posts: 801
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My Navy pension gives us around $1580/month.
After 19 years of being retired, we find living expenses run about 2/3s of my pension income.
Family of 2, we own our house and land with no mortgage.
We live in a 2400 sq ft house, on 150-acres of land. Our property taxes run $850/year.
I do not pay into income taxation, I have not paid into that since 1984.
__________________
Retired at 42 and I have been enjoying retirement for 18 years [so far].
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04-19-2020, 07:59 PM
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#16
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Recycles dryer sheets
Join Date: Jun 2015
Posts: 338
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Quote:
Originally Posted by Offgrid Organic Farmer
My Navy pension gives us around $1580/month.
After 19 years of being retired, we find this is about 2/3 of our living expenses.
Family of 2, we own our house and land with no mortgage.
We live in a 2400 sq ft house, on 150-acres of land. Our property taxes run $850/year.
I do not pay into income taxation, I have not paid into that since 1984.
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I admire that! Sounds like great peace of mind!
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04-19-2020, 08:04 PM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Posts: 5,342
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Quote:
Originally Posted by Offgrid Organic Farmer
My Navy pension gives us around $1580/month.
After 19 years of being retired, we find this is about 2/3 of our living expenses.
Family of 2, we own our house and land with no mortgage.
We live in a 2400 sq ft house, on 150-acres of land. Our property taxes run $850/year.
I do not pay into income taxation, I have not paid into that since 1984.
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How do you not pay income tax on a Federal Pension or on the savings that you use to fund the other 1/3 of your living costs?
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04-19-2020, 08:12 PM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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For reference, you can check out: https://www.bls.gov/cex/
The Consumer Expenditure Surveys (CE) program provides data on expenditures, income, and demographic characteristics of consumers in the United States. The CE program provides these data in tables, LABSTAT database, news releases, reports, and public use microdata files.
Many here advocate tracking every penny before retirement. We actually didn't do that. We just decided we were tired of working and had enough income compared to most households in the CES. We took a close look at the CES tables and decided we'd be fine.
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Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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04-19-2020, 08:33 PM
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#19
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Full time employment: Posting here.
Join Date: Feb 2018
Location: An Un-Organized Township of Maine
Posts: 801
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Quote:
Originally Posted by aaronc879
How do you not pay income tax on a Federal Pension or on the savings that you use to fund the other 1/3 of your living costs?
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Most years of my career, my pay was tax-exempt because I was in combat. At each duty station where I was located, we bought an additional apartment complex. My wife is an accountant, she was able to show that our rental real estate properties were write-offs that provided sheltering over my salary income.
Now as a military retiree, my pension is not large enough to require paying income taxes.
I support us on 2/3 of my pension, and the other third we spend on improvements here on our farm. Or for the last few years, we have been remodeling a commercial rental real estate.
I just got our Certificate-of-occupancy a week ago, I am rather excited about filling this new property with tenants.
__________________
Retired at 42 and I have been enjoying retirement for 18 years [so far].
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04-19-2020, 08:44 PM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2016
Posts: 8,968
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Fifteen thousand a month.
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