Hard to live on 100K per year ?

[ShokWaveRider]

Not possible if you pay full prices for medical insurance. There goes the BMW every year.

We do not have children and have always lived within our means. The cars are renewed every 3 years (Lump sum paid Lease). I say BMW and Mercedes as the last 4 have need 2 of each alternated. 3 Series and E Class respectively. Home is paid for.

 

[Danmar]

We drive a new BMW or Mercedes every 3 years, own a ~$900k home in a Country Club community in Florida, travel when we feel like it, have quite a few new Tech toys and do not want for anything. We struggle to spend $50k a year. We could spend up to $120k pa and not even touch our Nest Egg, but choose not to. So in IMHO one has to be pretty extravagant or have VERY high expenses to have trouble living off `$100k.

Sounds a little “judgemental” to me. “ Extravagance” is a subjective term.

 

[ShokWaveRider]

Sounds a little “judgemental” to me. “ Extravagance” is a subjective term.

Perhaps I should have added "in retirement". BTW Extravagance is not a BAD thing, it is up to the individual(s) how they spend their money. One man's extravagance is another man's basics.

 

[LOL!]

I'm late to this thread, but since I read the NPR article today that was broadcast: https://www.npr.org/2017/12/03/567602293/what-living-on-100-000-a-year-looks-like

And as mentioned, there was no way to tell what these people were doing with their $100,000 a year or so. It was just basically, "Oh, we try, but we can't." So the piece is really unhelpful to listeners, readers, and the subjects.

There is vague mention of "student loans, health care, childcare or housing costs." Sure, but what makes them different from the rest of us with the same expenses? Is it "Credit card debt, hospital bills ..." just like some of us have?

A clear listing of income and outgo might have elicited more empathy.

 

[athena53]

I already know that I don't want to try it, living in NYC that is.

Even if I had enough to buy a penthouse apartment looking down on Central Park, I still would not like the crowded condition around me.

BIL and SIL have a floor-through in a prewar building in NYC across from the Plaza Athenee. It helps if you also have a home on a private beach in Mantoloking, NJ!

 

[Sunset]

Perhaps I should have added "in retirement". BTW Extravagance is not a BAD thing, it is up to the individual(s) how they spend their money. One man's extravagance is another man's basics.

Another view is:
One man's extravagance is another man's income.

 

[Danmar]

Perhaps I should have added "in retirement". BTW Extravagance is not a BAD thing, it is up to the individual(s) how they spend their money. One man's extravagance is another man's basics.

Yes, agree,

 

[Danmar]

Another view is:
One man's extravagance is another man's income.

Good point. If one has the income, you can only spend it or give it away, now or later.

 

[RAchip]

"Yes, but are you FI/ER, or are you still slaving away at w**k?"

FI, yes; ER, semi; I am one of the owners of my company and am still involved in a supervisory role but mostly try not to work any more

 

[soupcxan]

We drive a new BMW or Mercedes every 3 years, own a ~$900k home in a Country Club community in Florida, travel when we feel like it, have quite a few new Tech toys and do not want for anything. We struggle to spend $50k a year. We could spend up to $120k pa and not even touch our Nest Egg, but choose not to. So in IMHO one has to be pretty extravagant or have VERY high expenses to have trouble living off `$100k.

$9k property tax @ 1% of $900k
$4k maintenance @ 0.5% of $900k
$2k homeowners insurance
$8.4k car lease @ $350/car/month x2
$1k car insurance
$16k health insurance and out of pocket
= $40k

Leaving you $10k for food, gasoline, power, water, phone, HOA dues, federal income taxes, clothes, haircuts/makeup, travel, dental care, electronic toys, hobbies, entertainment, gifts, donations, etc. I can't imagine that's extremely luxurious.

 

[Scuba]

We do not have children and have always lived within our means. The cars are renewed every 3 years (Lump sum paid Lease). I say BMW and Mercedes as the last 4 have need 2 of each alternated. 3 Series and E Class respectively. Home is paid for.

Well, you don't have state income tax in FL. Not sure what your property tax is. Ours is over $14K this year. That plus state & federal income tax and health insurance/medical costs gets us well on the way. Add in food, transportation, housing, travel, dining out, gifting, etc etc and not hard to see why we're well over $100K. YMMV

 

[Scuba]

Good point. If one has the income, you can only spend it or give it away, now or later.

Well said!

 

[Scuba]

Yes, agree,

+1

 

[marko]

Well, you don't have state income tax in FL. Not sure what your property tax is. Ours is over $14K this year. That plus state & federal income tax and health insurance/medical costs gets us well on the way. Add in food, transportation, housing, travel, dining out, gifting, etc etc and not hard to see why we're well over $100K. YMMV

+1 Several old threads highlight the risks of lumping the entire US into one bucket. $100K in Manhattan vs Iowa (examples) are two very different expense profiles.
I remember going to park my rental car in a New Mexico lot and was told it was a five dollars. "For the whole time or the quarter hour?" I asked. The attendant said "Yes, for the whole time, what are you, from New York or something?"

 

[Helena]

.

I live comfortably on less than $15,000 per year...
but I am totally debt-free [including my house.]

 

[bobandsherry]

$9k property tax @ 1% of $900k
$4k maintenance @ 0.5% of $900k
$2k homeowners insurance
$8.4k car lease @ $350/car/month x2
$1k car insurance
$16k health insurance and out of pocket
= $40k

Leaving you $10k for food, gasoline, power, water, phone, HOA dues, federal income taxes, clothes, haircuts/makeup, travel, dental care, electronic toys, hobbies, entertainment, gifts, donations, etc. I can't imagine that's extremely luxurious.

SWR can be more specific if he chooses, but living in Florida I'd say your estimate for car insurance is way low (Florida is a no fault state and has just driven up the cost of insurance). Can lease at $350 also seems low as SWR said he's driving a new BMW and Mercedes every 3 years. But health insurance is probably heavy - but so think it's a bit of a stretch to understand how someone is living on $50K, especially given the $900K cost of the home. Guess we'll have to see if SWR is willing to share his expense details especially with the level of travel he mentioned he takes.

 

[RetiredAt55.5]

It costs money to have kids? As DINKs, we are paying for your kids' education and your dependent tax deductions. No one ever says thanks, either.

Thanks!

I have 3 kids. I'm paying full college tuition and room and board (state schools, no aid) for all 3. One day, all three will be contributing to SS for the current folks drawing SS. I don't expect anyone will think to thank me for that, either.

 

[explanade]

I've stayed in Silicon Valley after FIRE-ing just over 3 years ago.

My last year of work, I spent less than $50k and that included several overseas trip to maximize the 4 weeks of vacation I accrued.

Now I'm at around $80-85k with a much bigger travel budget, pricey health care premiums ($6200, will go up to 7500 next year). I haven't cut back on cable or cell phone -- my work used to pay for cell phone.

But the annual spending represents less than 2% of my assets. One of the reasons I FIRE'd when I did was that I needed to spend more and couldn't do so working 50-60 hours a week with restrictions on travel schedule.

Spending could be higher but I bought my townhouse 20 years ago in a prime location so mortgage is low as are property taxes -- my assessments are nowhere near the market value, which has quadrupled since purchase.

I could increase spending, like take more trips (already spending 6-8 weeks a year). I had planned to buy or lease a luxury vehicle but that's still pending. It would be an extravagance because I put only about 2k miles a year.

I could eat out more but not a foodie or into expensive meals. I like steaks but not enough to regularly go for steak meals which go for $40 or more. Of course a lot of that is a deliberate choice to limit red meat consumption.

Eating out more may not be the most healthy thing either the way a lot of restaurants go heavy with salt and sugar. There are high end restaurants which tout their own organic garden (but don't necessarily offer organic meats) but they're long drive away and would cost around $100 a head.

Currently have no yearning for more luxurious items, like maybe a bigger home. I have been eyeing an OLED TVs which go for $3k -- and would necessitate upgrading the AV receiver and other components. But there aren't enough 4K HDR content to make me jump in now. If they had live sports in 4K, I'd bite.

This year, got a new iPhone, new iMac and new iPad Pro. Still not going to appreciably raise my spending this year. P

When I retired, I gave some thought to moving to a lower-cost area. Even a place like San Diego seemed to have lower prices per square foot than the Bay Area, when I last checked around 1-2 years ago. But I chose to be near my parents because I knew they didn't have much time and I just haven't gone out of my way to check out potentially lower cost areas.

 

[NW-Bound]

Thanks!

I have 3 kids. I'm paying full college tuition and room and board (state schools, no aid) for all 3. One day, all three will be contributing to SS for the current folks drawing SS. I don't expect anyone will think to thank me for that, either.

I thank you. I have done the same for my 2 children, and now at 31 and 28 they are having good jobs, and paying taxes and SS. Raising them, the tax deduction helped, but was nowhere near what it cost, and I did not have them to get tax breaks anyway.

Is that enough? No. Just to support the 2 of us, we would need 6 kids!

... today there are just 2.9 workers per retiree—and this amount is expected to drop to two workers per retiree by 2030. The program was stable when there were more than 3 workers per beneficiary.​

 

[pb4uski]

We do not have children and have always lived within our means. The cars are renewed every 3 years (Lump sum paid Lease). I say BMW and Mercedes as the last 4 have need 2 of each alternated. 3 Series and E Class respectively. Home is paid for.

Are these lump sum paid leases included in the $50k/year of living costs? I'm skeptical in that we live much more modestly than you describe and I can't imagine doing it on $50k a year.

Also, I've always wondered about those prepaid leases.... what happens if you have an accident and total the car right after you get it? Your insurer just will pay FMV and you need to go and find a replacement acceptable to you and the lessor?

 

[Andre1969]

In my case, I make about $80,000 per year, but my paycheck, after taxes, is about $1500 every two weeks. So my net comes out to about 48 cents on the dollar. I'm single, with no kids. I max out my 401k, which does take a big chunk out of the take-home pay. Now, if I made $100K, I estimate that would give me another $12,000 after taxes, since I already max out my 401k and wouldn't be able to defer any more income.

That would come out to $1000 per month. I don't really live all that extravagantly right now, and am fairly happy, but I don't see $1000 more per month putting me into the "high life" category. So, I can definitely see how it would be possible for a couple, especially with kids, to have difficulty living on a family salary of $100K per year. It all depends on where you live, what your priorities are, etc.

Now, if it was $100K AFTER taxes and everything are taken out, that would seem like a pretty extravagant lifestyle to me. But, again, depending on where you live, family dynamic, etc, even $100K probably wouldn't stretch that far for many people.

 

[Bigdawg]

... today there are just 2.9 workers per retiree—and this amount is expected to drop to two workers per retiree by 2030. The program was stable when there were more than 3 workers per beneficiary.​

Make the robots that are replacing the humans pay social security. Problem solved.

 

[NW-Bound]

... Now, if it was $100K AFTER taxes and everything are taken out, that would seem like a pretty extravagant lifestyle to me. But, again, depending on where you live, family dynamic, etc, even $100K probably wouldn't stretch that far for many people.

I do not live in an expensive area (but not cheap either). And when I started to track expenses using Quicken in 2010, I was astounded to see I spent in the low 6 figures some years. And that was no tax, as I had no earned income and could not draw from roll-over IRA because I was not yet 59-1/2, and was living completely off after-tax savings.

It scared the heck of me, because I did not realize things added up that much. Just $10K here and there, soon you talk $100K.

The expense tracking was good for me, because I was able to sit down and look at the expenses afterwards. We never did do preplanning because we were always LBYM. But looking at the expenses afterwards showed me that many items should be non-recurrent, and so far they have been.

 

[NW-Bound]

Make the robots that are replacing the humans pay social security. Problem solved.

Excellent idea!

Hmmm... Robots have no need for stuff that humans do. A bit for cheap housing and energy. No travel, vacation, medical care, organic and good-tasting food and booze, etc...

I say we confiscate all of their salary. What can they do? They don't even know to complain. If they do, we just pull their plug.

 

[Chuckanut]

Location, location, location.

Several years ago I was in Rome I bought an espresso at a nice bar in a business/tourist area for 2 €. Later that day I bought TWO iced coffees at a small bar about a 20 minute walk from the business area - 2.50 € for both.