How low can you go?

[MrBig1]

I want to thank you fine folks for responding to this thread. I somehow assumed that my wife and I were the only couple here living and thriving on 56k. We lack for nothing and save money monthly simply living off Social Security and a small VA disability. We have never in the 4 years after my forced retirement had to dip into our TIRA. We will both be 65 in March. No debt is essential in our lives. Pre Covid we traveled 8 months of the year all around the west chasing cool weather and beautiful scenery.
We live in South Carolina and here we pay no income tax state or federal. Property taxes on home and vehicles runs about 4k a year. We travel to escape the brutal summer heat and humidity. Life is good.

[aleabo]

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Originally Posted by MrBig1 I want to thank you fine folks for responding to this thread. I somehow assumed that my wife and I were the only couple here living and thriving on 56k. We lack for nothing and save money monthly simply living off Social Security and a small VA disability. We have never in the 4 years after my forced retirement had to dip into our TIRA. We will both be 65 in March. No debt is essential in our lives. Pre Covid we traveled 8 months of the year all around the west chasing cool weather and beautiful scenery. We live in South Carolina and here we pay no income tax state or federal. Property taxes on home and vehicles runs about 4k a year. We travel to escape the brutal summer heat and humidity. Life is good.

May I ask how you manage not to pay federal or state taxes? Especially if you younger than 65? Also how to you pay for medical/dental insurance?

[Gumby]

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Originally Posted by aleabo May I ask how you manage not to pay federal or state taxes? Especially if you younger than 65? Also how to you pay for medical/dental insurance?

MrBig1 may come back to answer for himself, but, in the meantime, I note that VA disability payments are not taxable at all - federal or state. Social security is only federally taxable if 1/2 of your social security + your other taxable income exceeds $32k (MFJ) If their only potentially taxable income is $56k in social security, then 1/2 of that ($28k) is below the threshold for federal taxation. And South Carolina does not tax social security at all.

[Surewhitey]

Living in a nice place in Dallas, we live on minimum of $24k annually. Add in all the taxes, insurance and travel, $45k. After FIRE, add in some for health insurance.

Forgot to mention, debt free on cars & home makes a big difference...

[Dtail]

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Originally Posted by aleabo May I ask how you manage not to pay federal or state taxes? Especially if you younger than 65? Also how to you pay for medical/dental insurance?

My question too on the Federal side with having SS payments.

[anothercog]

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Originally Posted by Surewhitey Living in a nice place in Dallas, we live on minimum of $24k annually. Add in all the taxes, insurance and travel, $45k. After FIRE, add in some for health insurance. Forgot to mention, debt free on cars & home makes a big difference...

How is your health insurance/costs so low?

[MatatuPuncher]

Late to this conversation but it does provide for some escapeism to think about it. If I had to I could get my nut down to $1500/month. So that's $18,000/year which makes for about $450,000 total at the 4% rule.

This would be a safe but modest 1br apartment in Tucson and local based activities like cycling, skateboarding, tennis, gaming, minor league and college sports attendance etc... Food would have to be mostly home cooked. Medical could be swung with a bronze plan at about $100/month. Yearly dental work would be an easy bus ride south to one of the Mexican border towns once or twice per year.

An economy car might be doable in that budget but one would have to be able to get by on the local bus system if needed. My biggest issue would be cutting down the carousing budget, lol.

I could do it if I had to and be reasonable happy.

[anothercog]

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Originally Posted by UKadventurer I used to live in the USA (Brit with greencard) but now my Mongolian wife and I live in Nha Trang, Vietnam. We live on about $800-1000 per month, so let’s say $12k per year. We just rent, pay no taxes, hold no debt. I only ride 2 wheelers which were paid for in cash. We don’t have health insurance in Vietnam but are covered in our home countries. Our current rental is a very nice big studio in a beachside hotel but we could cut that down substantially by living in an apartment. However, the hotel is our one extravagance because we like the amenities pool and gym). We mainly cook at home but occasionally eat out but that’s cheap too. There’s no opportunity for international travel at the moment so that’s saving us a lot. We plan to move to Turkey when the pandemic has eased off. We’ll rent for up to a year (about $150 pm) and possibly buy our own place for $50k. Monthly Expenses should be less in Turkey than Vietnam so we can use some discretionary buying for things like more e-bikes and trips. $12k per year is 4% of my cash assets but we do some online work too, mostly she does.

I’m surprised Turkey will be less expensive than Vietnam. Do you have a kitchen in you studio? I heard it us very inexpensive to dine out in Vietnam. I don’t think we would move overseas permanently but wintering in Southeast Asia or Philippines could be a early retirement option for us.

[Surewhitey]

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Originally Posted by anothercog How is your health insurance/costs so low?

DW is with mega-Corp insurance who gives us a nice boost for the HSA choice and subsidies the premiums too. In the end, we pay approx $150 / mo for insurance we don't really use as we're both pretty healthy.

If/when she wants to RE again, we'll likely sign up with the ACA...

[pb4uski]

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Originally Posted by Dtail My question too on the Federal side with having SS payments.

But if you don't have significant income other than SS then SS is not taxable so it sounds very feasible if his VA disability isn't taxable income.... it would be like only having SS.

[Teacher Terry]

The IRS has a withholding calculator on it’s website. When I put in my pension and SS which equals 30k for just me it shows I don’t owe federal taxes. Now if I withdraw from investments that will obviously change.

[Dtail]

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Originally Posted by pb4uski But if you don't have significant income other than SS then SS is not taxable so it sounds very feasible if his VA disability isn't taxable income.... it would be like only having SS.

True, was assuming the VA income was taxable.

[Bullwinkle]

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Originally Posted by Teacher Terry The IRS has a withholding calculator on it’s website. When I put in my pension and SS which equals 30k for just me it shows I don’t owe federal taxes. Now if I withdraw from investments that will obviously change.

I figured even with investments it should be tax free if you can stay below 80k, because long term capital gains are at 0% up to 80k... I'm just asking to make sure because I frequently make mistakes around taxes!

I guess there are other kinds of investments, but for stock index at least it seems to be almost all capital gains, with a trickle of dividends. Come to think of it I'm not even sure how to get Vanguard to show how much in a year was due to dividends, short of add up all the individual "reinvested" messages.

[Mauser]

Wow - I'm new here, and I cannot believe how fast these threads grow! But here's our situation:

We live on 20 acres in the mountains, fairly remote. Mortgage is about $2,000/mo (includes insurance and taxes). Other than that, we have ZERO debt. Healthcare is VA and Medicare.

When we are not traveling, such as all of 2020, our total spend every month is about $1,000, and that includes somewhere around $1,000 on liquor every four months or so when we finally come down off the mountain to get to Sam's. Travel is 100% discretionary, so I consider anything spent on travel is meaningless as long as we can afford it.

I cannot say what our "budget" is - we do not use one. I used to obsessively record every penny in Quicken for 20+ years, but I quit that when they tried to force me to start paying an annual license for their software. The stats and reports I got from Quicken were interesting, but unnecessary. Now I just track what we spend only by how much I have to transfer into our checking account every month to keep the balance steady. I have never made a budget, simply because I find it a waste of time when I already manage money without a problem - I have always spent much less than I made, even way, way back when I was paid minimum wage to build mobile homes. I can pretty much buy whatever I want without worrying about the price, but I DON'T. I compare prices on a box of toothpicks, and I buy anchovies in bulk because the 4oz cans cost too much. etc. It has never seemed difficult to me to live frugally. And I guess that is why we do not have to worry about money now.

I will admit that DW wishes we wasted more money - she would rather spend $12 lb on meat at the store than eat the elk I put in the freezer - the same with vegetables at the store vs what I grow in the garden. But she is one of those who doesn't feel she is rich unless she can spend it and be seen (sigh). She eats out 2-3 times a week with her friends; I almost never do.

I am totally happy with my 28 yr old truck, but we will break down and buy her a new car this year, just so she can feel better spending some money. I guess that will effectively increase our "monthly" spend, even tho we will pay cash for it.

[SecondCor521]

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Originally Posted by Bullwinkle I figured even with investments it should be tax free if you can stay below 80k, because long term capital gains are at 0% up to 80k... I'm just asking to make sure because I frequently make mistakes around taxes! I guess there are other kinds of investments, but for stock index at least it seems to be almost all capital gains, with a trickle of dividends. Come to think of it I'm not even sure how to get Vanguard to show how much in a year was due to dividends, short of add up all the individual "reinvested" messages.

As long as your regular income is less than your standard deduction and your total income is less than the 0% LTCG bracket for your filing status, and you don't have self-employment income, and your provisional income is less than the threshold level and you don't create any taxes or penalties by early or non-qualified withdrawals from IRAs and 529s, then you'll generally have no federal taxes. State taxes may apply.

To see how much you've received in dividends throughout the year at Vanguard, you can log in, then go to "My Accounts", then "Tax Center", then "Quarterly summary" then pick the account you're interested in. At the end of the year (well in January actually), Vanguard should send you a consolidated 1099, and your total dividends will show up there on your 1099-B in boxes 1a and 1b.

[gayl]

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Originally Posted by RunningBum You've been on this board for 16 years, even if you have mostly lurked, and have not seen people who live on a small amount of income? Hint: they don't live in the SF Bay area.

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Originally Posted by Major Tom I live in the SF Bay area, in Oakland, to be precise. Current annual spend is ~$27,600/year....

I live in SF Bay Area (north side of Mt Diablo) and live on 3120 a month. Quite well actually. House paid off, property tax 3k yr, only travel (pre-pandemic) 3× year and always overseas (Europe, South America, Indonesia, and Australia 2019). But then I'm single

[gayl]

Delete

[finnski1]

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Originally Posted by gayl I live in SF Bay Area (north side of Mt Diablo) and live on 3120 a month. Quite well actually. House paid off, property tax 3k yr, only travel (pre-pandemic) 3× year and always overseas (Europe, South America, Indonesia, and Australia 2019). But then I'm single

Sounds perfectly reasonable to me. It seems that the HCOL card is thrown out a lot when people explain why they "can't" live on 40k or 50k or 60k or whatever. To me the only real high cost of these places is RE. I don't think you have to pay $80k for a Toyota highlander, as an example, in Silicon valley that you could by in Fresno for $40k. Same for food etc. but you certainly can pay 2,3,4x or more for a place to live. So if one has inexpensive or paid off housing it can get them way down towards a national average or median. I realize that state and local taxes can be in the same category as the RE but mostly I believe it is still the RE as the main culprit. I have seen several posts of people living in SF that support this.
Obviously this is not some earth shattering observation on my part but felt like stating it anyway.

[Music Lover]

Quote:

Originally Posted by gayl I live in SF Bay Area (north side of Mt Diablo) and live on 3120 a month. Quite well actually. House paid off, property tax 3k yr, only travel (pre-pandemic) 3× year and always overseas (Europe, South America, Indonesia, and Australia 2019). But then I'm single

There are people here paying $12 - $15k a year in property taxes alone...that's perfectly fine as it appears they're happy and don't have to run to the food bank every week.

There are also people here who pay $3k or less per year on property taxes with a paid off house and don't have expensive hobbies. In those cases it's very possible to live quite well on about $3k a month.

[Major Tom]

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Originally Posted by finnski1 Sounds perfectly reasonable to me. It seems that the HCOL card is thrown out a lot when people explain why they "can't" live on 40k or 50k or 60k or whatever. To me the only real high cost of these places is RE.

+1. The cost of housing is the factor that seems to differ the most when comparing the COL in different areas. Many of the other differences can be ascribed to lifestyle choices.

If you're in a HCOL area in California, and purchased your home a long time ago, you are most likely in a good place. Prop 13 is the gift that keeps on giving.