Only need $207,000 to retire at full retirement age?

[ArmchairMillionaire23]

I'm curious how you create a standard of living on $19K/yr or even $36K/yr for that matter.

My property tax, home insurance, food, utilities, medical, dental, and transportation equal about $28K/yr.

While I haven't created a spending budget yet, (I've tried!) I can look back and see that our combined take-home from our paychecks last year (2021) was around $36.650. Out of that, we contributed $13K to our IRAs and an additional $650 to DW's HSA. So, doing the math, we managed to live just fine on the remaining $23K. That covered our car and home insurance, property taxes, groceries, utilities, food, vacations, vehicle maintenance, and whatever else life threw at us.

So it is possible.

 

[Vacation4us]

Well Castro Valley is a nice place to be stuck especially with friends and family around. We foolishly thought everyone would come and visit us a lot more than they have since Phoenix is a short plane trip away. Only a few visits over the years and we missed out on a lot of family get togethers. Big regret on our part.
Thanks to Prop 13 your taxes have remained affordable. I feel bad for those like my nephews who are in the bay area and would be subject to property taxes that would be the same as our house payment including property taxes were. Smart thing to stay put in one home for the long term....say hi to everyone in Castro Valley for us...

I did my last working years in Castro Valley. Couldn’t wait to leave the filth, crime, and homelessness. Definitely a YMMV for me. Home again in Orange County, California. Paid off home and zero plans to ever sell.

One thing I have learned over the decades if you sell and leave California your never going to be able to come back. Bought 20 years ago for $369 worth $1.1 now. I could never afford to buy in my own neighborhood. If we ever move Which we do talk about I will rent out the house to pay for the next place.

I do like Phoenix, going again in June, but it’s overpriced now too. Heck we know multiple friends who moved to Idaho, 1 million in Idaho heck no!

 

[Katsmeow]

SS normally replaces 40% of income, so that would be $24k a year, so you would need $25,563 a year to replicate $49,318 with those numbers your federal tax would be negligible ($245, so you would have $49,318 available for spending).

That 40% is meaningless. For example the amount of SS I receive (taken at almost 63) is about 15% of my pre-semi retirement income. However, our spending now is less than a third of what we spent pre-retirement. Our combined SS received though is about 75% of our budgeted spending for this year.

Between SNAP benefits, Meals on Wheels, food bank help, senior or low income housing, Medicaid, and senior / low income discounts on most utilities, senior clubs with free activities, transportation and lunches, etc. one wouldn't need that much other income to get by..

When my mother died at age 94 her annual income as just under $25k which was mostly a combination of SS and some small pensions. On that income over the 10 years before her death she saved roughly 5k a year. She owned her home (had paid it off in the 1960s), her property taxes were low (most had been capped for years). She was on Medicare. She had a 20 year old car when she died that had less than 30k miles on it. She only drove short distances for years before. She rarely ate out. She could. She just didn't have the desire. She had no expensive hobbies (the internet passed her by). She didn't subscribe to cable TV, just used the free TV. She didn't buy much stuff. Her big expenses were dental (she had a couple of implants that were hugely expensive), prescriptions, and occasional house repairs. And she was in pretty good health right up until shortly before her death. But she didn't go out much and didn't spend much.

 

[Physics Guy]

I'm glad to see someone with some name recognition is pushing the idea of living like a student. We got a great start in the late 80s and through the 90s through consciously living like grad students even though my wife had a solid job (I was a grad student).

The whole discussion of what you need for retirement is so dependent on individual factors. We currently live in a MCOL area with a modest house that will be paid off next year. A conservative (ie rounding up all estimates) look at our spending in retirement says that our lifestyle costs $50k if I calculate everything except federal taxes and health insurance coverage.

Of course taxes depend heavily on how our funds do and therefor ACA healthcare costs aren't predictable. It's not a bad problem but aggressive saving outside of retirement account to allow an early retirement has made some retirement planning more difficult!

 

[pb4uski]

That 40% is meaningless. For example the amount of SS I receive (taken at almost 63) is about 15% of my pre-semi retirement income. However, our spending now is less than a third of what we spent pre-retirement. Our combined SS received though is about 75% of our budgeted spending for this year.
....

I totally disagree... the OP was based on a median income so the 40% is a reasonable approximation and is meaningful.

I realize and agree that the 40% doesn't apply to higher income situations but that isn't the situation that the OP presented.

 

[pb4uski]

That 40% is meaningless. For example the amount of SS I receive (taken at almost 63) is about 15% of my pre-semi retirement income. However, our spending now is less than a third of what we spent pre-retirement. Our combined SS received though is about 75% of our budgeted spending for this year.
....

I totally disagree... the OP was based on a median income so the 40% is a reasonable approximation and is meaningful.

I realize and agree that the 40% doesn't apply to higher income situations but that isn't the situation that the OP presented.

 

[old medic]

There are a lot of people that life very comfortably on $36k a year, some of them are on this site. If you live in a LCOL area with a paid off house, low taxes, and inexpensive health insurance it's fairly easy.

$18000/Yr pays our absolute expenses ... food, gas and beer are extra