Reducing/Estimating Expenses

[Midpack]

We live on about $70K month (after taxes), but we could and will drop expenses when we retire. Some of your monthly expenses look outrageous to me, but we all have different priorities. And with many of the suggestions you've gotten, you simply defend what you choose to spend. Instead of guessing where you can save, have you Googled household budgets or expenses? You can find all sorts of averages online, which will show you where your spending differs from the mainstream. If I were you, I'd compare to several of them, and then it's for you to reconcile the differences.

 

[Delawaredave5]

Your investments are $400K total ? Old rule-of-thumb I've read is (Age) x (Annual Salary) / 10 ought to be a ballpark net worth. So 50 years x 300k / 10 = $1.5mm.

What kind of house equity do you have total ?

You know this already, but high expense items to me are: house, pets, gifts, and computers.

Given your "historical lifestyle", I wouldn't try to force a budget much less than $80k/year.

I'd consider 62 year old hubby retiring and have younger, higher paid spouse keep working and try to put away $100k / year for next 7 years and downsize house.

That ought to get you to $2mm and $80k annual withdrawl rate.

 

[Midpack]

Your investments are $400K total ? Old rule-of-thumb I've read is (Age) x (Annual Salary) / 10 ought to be a ballpark net worth. So 50 years x 300k / 10 = $1.5mm.

Sorry for the hijack, but thanks for the positive reinforcement, we're way ahead of that rule-of-thumb.

 

[LOL!]

We live on about $70K month (after taxes), but ....

I wouldn't have a problem with spending at that rate.

I'd consider 62 year old hubby retiring and have younger, higher paid spouse keep working and try to put away $100k / year for next 7 years and downsize house.

I like this idea as well. Having two spouses -- an older retired one and a younger, higher paid one -- sounds ideal to me.

 

[Katsmeow]

Some of your monthly expenses look outrageous to me, but we all have different priorities. And with many of the suggestions you've gotten, you simply defend what you choose to spend. Instead of guessing where you can save, have you Googled household budgets or expenses?

It isn't so much that I defend it as answer questions to explain it. Some of it I would love to get rid of. When we bought this house we severely underestimated the cost of maintenance/repair. We had never lived on anything other than a regular lot in a regular subdivision. We moved from that to a house on 2 acres with well and septic and over 100 large trees. So the maintenance and repair costs have been what they have been. But, I don't want them in future, hence, part of the reason we want to move.

As far as researching expenses and getting info...well, that was sort of the point of this whole thread. We have googled it. I spent a great deal of time researching food costs and found out that my budgeted goal was woefully inadequate. Some stuff...well it doesn't help to know what the average electric bill is of, say, a 1500 square foot house when that isn't the house that I have.

 

[FANOFJESUS]

If it were me I would take the size of my house divided by 1500 square feet that would give you a ballpark number for your utilities.

It isn't so much that I defend it as answer questions to explain it. Some of it I would love to get rid of. When we bought this house we severely underestimated the cost of maintenance/repair. We had never lived on anything other than a regular lot in a regular subdivision. We moved from that to a house on 2 acres with well and septic and over 100 large trees. So the maintenance and repair costs have been what they have been. But, I don't want them in future, hence, part of the reason we want to move.

As far as researching expenses and getting info...well, that was sort of the point of this whole thread. We have googled it. I spent a great deal of time researching food costs and found out that my budgeted goal was woefully inadequate. Some stuff...well it doesn't help to know what the average electric bill is of, say, a 1500 square foot house when that isn't the house that I have.

 

[Katsmeow]

Your investments are $400K total ? Old rule-of-thumb I've read is (Age) x (Annual Salary) / 10 ought to be a ballpark net worth. So 50 years x 300k / 10 = $1.5mm.

What kind of house equity do you have total ?

You know this already, but high expense items to me are: house, pets, gifts, and computers.

Given your "historical lifestyle", I wouldn't try to force a budget much less than $80k/year.

I'd consider 62 year old hubby retiring and have younger, higher paid spouse keep working and try to put away $100k / year for next 7 years and downsize house.

That ought to get you to $2mm and $80k annual withdrawl rate.

DH and I didn't always have those salaries. DH raised a family with 3 kids before we married and had a non-working spouse in prior marriage. When we married (I was in my late 30s) he had kids in college and had no non-retirement savings. We married and have 3 children all of which turned out to some needs which resujlted in some not typical expenses that were necessary but extremely expensive. Having said that for several years we did not adjust our lifestyle to those expenses. We should have but we didn't. As a result we were severely in debt. The high child related expenses weren't our fault. The failure to adjust our lifestyle to deal with them was. That was entirely our responsibility and entirely our failure. We have spent the past 4 years getting out from under that and within the next couple of months will have gone from having around $300k in non-mortgage debt to having zero.

DH and I both have always had the mindset that in retirement we would live much more modestly and would not have the kind of house we have now. The pets/computers are important to us and we would give up house, travel, dining out, and many other things to afford them.

I guess I could work for the next 7 years but I have two problems with it. First, I don't see that I need to. We have $350k in 401(k) If, say, I worked 2 more years and we maxed it out and the returns were zero, in 2 years that is about $430k. DH would get about $700k from his lump sum. So that is $1,130,000. Using 4% that is roughly $45k a year. His SS at 66 is estimated at $27576. If I work until 62 and take it, my estimated would be $22,008. If I retired in 2 years (the earliest possiblity that I see) mine would be $20664 at 62.

If DH is retired and I am not yet 62, then income (without increasing withdrawal rate above 4% until I am 62) is $72576. Once I hit 62, then that increases to $93,240.

I don't think I need to work another 7 years to pile up $2 million. I probably will work more than 2 more years although I am seriously considering requesting in a year or so a reduction in work hours for a reduction in salary (probably in the 20% to 30% range).

DH doesn't hate his job. He receives excellent benefits and his work is very low stress. If they offered him a good early retirement package (which has occasionally happened where he works) he would take it but he is OK with working to 65 or 66.

My job is long hours and extremely high stress. If I had to keep up for the next 7 years my current work schedule and stress I would shoot myself. Retiring entirely in 2 years probably is not in the cards, but I could see myself significantly changing my work situation where my income was much less. Ideally the situation would be, however, that we could reduce our expenses enough by selling this house and moving that we could live solely on DH's income so that we would have that option.

I want to be clear that in talking about historical expenses or projected expenses I am not expressing unwillingness to change them to get them lower. The point of this thread is to gather ideas and get a feel for others have done. For example, DH and I talked yesterday about reducing the cable bill and how to do that. We worked out how to reduce it by $100 a month. We can reduce our cell phone bill $20 a month by dropping our plan from 2100 minutes a month (4 people using plan) to 700 minutes.

We can reduce dining out easily but reducing computer/pets would be only if we were in dire straits since that is important to us.

FWIW, doing a projected budget for when kids are out of the house is about $60 to $70k a year depending on some variables.

 

[Katsmeow]

If it were me I would take the size of my house divided by 1500 square feet that would give you a ballpark number for your utilities.

Well we don't come out that badly on that particularly given that our house is all electric with no natural gas.

 

[FANOFJESUS]

The average family in the US makes about 50k a year. It should be easy to be average in Texas for 50k a year. Here are some 2007 numbers for Texas.

http://www.ers.usda.gov/data/unemployment/RDList2.asp?ST=TX

 

[Delawaredave5]

I guess I could work for the next 7 years but I have two problems with it. First, I don't see that I need to. We have $350k in 401(k) If, say, I worked 2 more years and we maxed it out and the returns were zero, in 2 years that is about $430k. DH would get about $700k from his lump sum. So that is $1,130,000. Using 4% that is roughly $45k a year. His SS at 66 is estimated at $27576. If I work until 62 and take it, my estimated would be $22,008. If I retired in 2 years (the earliest possiblity that I see) mine would be $20664 at 62.

BTW, thanks for sharing - hopefully helpful for you, informative for all. I figured one/both of you had "prior families" or other circumstances.

Someone said earlier in thread that demonstrating / confirming one's retirement budget while still working is a good idea.

We're going to be doing that - until you're in those "budget shoes" you don't know how they are going to fit...

 

[Katsmeow]

The average family in the US makes about 50k a year. It should be easy to be average in Texas for 50k a year. Here are some 2007 numbers for Texas.

ERS/USDA Data - TX Unemployment and Median Household Income

That is an interesting question. Yet, I don't think it is that simple. Here is an example.

My younger son attended a therapeutic school for several years. Tuition/fees were roughly $30k a year. School let out at 3:45 and the childrenn had to be picked up then. There was absolutely no after school year. The school was a very unique, nationally known school and there services could not be duplicated in public schools or even other private schools. The majority of the parents had a non-working parent who could pick up the children after school. DH and I both worked and did not have jobs that would accomodate picking up our son. I spent much effort trying to find the cheapest way to get him home from school (I could drive him in the mornings so that was never an issue). I found one private service but it was over a $1000 a week. Well, no. I looked into taxis (we lived a long distance from the school. We thought about moving close to the school but it was in an extremely expensive area to live so was cost prohibitive) and that was also extremely expensive. We emailed every parent to see about whether a parent could pick him up and he could stay at that parent's house or the parent would bring him to ours (we would have compensated the parent for that) but no dice. There were some potentials there but no one would commit to being able to do it all the time. It was catch as catch can.

Ultimately by far the cheapest solution was to use an au pair on a J1 visa. Even so, annual au pair costs were overall about $20k.

So for the 4 1/2 years he was in that school our out of pocket cost was $50k a year.

During that time, by chance I was talking to my daughter's public school teacher (our other two kids were in public school) and found out that her son attended the therapeutic school. She was making a teacher's salary, had applied for and received a complete scholarship from the school. Her school day ended early enough she could pick him up from school.

So she had zero cost for her son to attend the school, but it cost us $50k. I don't begrudge her that. I'm glad the school provided financial aid. But it is an example of how you just can't necessarily compare expenses between the average income and someone else.

 

[Zoocat]

Hi,
If you both retire, will you still be on your husband's health insurance policy? Sorry, I missed that bit in the long thread. If not, you might consult a health insurance agent to get an idea how much your premium will be on the open market. I am 60 with minor exclusions (of about $600 year) and I pay $430 mo with a $2700/yr deductible, no co-pays. This is an important consideration, even though Obamacare might change things. I doubt costs will go down for individual health insurance for early retirees.

Another consideration that I hesitate to bring up, but which might put a real kink in your plans. What if your college grads can't find good jobs? They will need health insurance policies. They might, gulp, have to come home again for a while. You might consider this when you are looking to downsize your home.

Congrats on doing so much research!

 

[Katsmeow]

The health insurance issue is an important one. DH will have retiree coverage, the kids and I will not (well, not past COBRA). Also if I leave my employer neither I nor the kids would have any coverage.

The kids may well have difficulty finding coverage. Two of our children were internationally adopted and have 2 genetic disorders which in some people can be life threatening or disabling. In our kids, they are not and have required no treatment other than being aware of them and not doing things that would worsen them (one is a connective tissue disorder and the other is a blood disorder). For one of the disorders, there is a version of it that is usually fatal before age 40. There is a genetic test for that version which my older son had so I know they don't have it (he doesn't have it, his sister couldn't have it). However, I imagine that most insurers would be spooked by these two disorders and would deny coverage.

I have sort of thought that worst case was the Texas high risk pool. Under that I would pay $590 for a plan with a $5000 deductible or $756 a month for the HSA plan with $3000 deductible.

My children's would cost $221 or $283 a month for the same plans (would go up very slightly from ages 19 to 24).

As far as kids coming home, I have mixed feelings about that. I could see letting kids stay with us for awhile but, on the other hand, I think there is a point where they have to make their way. Having said that, we plan to buy a 4 bedroom house (albeit the 3 bedrooms other than the master will likely be quite small given the size house we want) and so they could stay there for a time. The insurance question is a real one and I've discussed with them keeping coverage and not letting a gap occur. Whether they will listen to me or not is a different issue....

 

[FANOFJESUS]

Well Kats I don't have all the answers, but I know there many people on the board that live on 15k to 25k a year. The Lord has given you a bigger load to carry but he has also given you one heck of a income. I don't know the details but there must be some ways for you to cut your budget.

 

[Maurice]

I guess I could work for the next 7 years but I have two problems with it. First, I don't see that I need to. We have $350k in 401(k) If, say, I worked 2 more years and we maxed it out and the returns were zero, in 2 years that is about $430k. DH would get about $700k from his lump sum. So that is $1,130,000. Using 4% that is roughly $45k a year. His SS at 66 is estimated at $27576. If I work until 62 and take it, my estimated would be $22,008. If I retired in 2 years (the earliest possiblity that I see) mine would be $20664 at 62.

If DH is retired and I am not yet 62, then income (without increasing withdrawal rate above 4% until I am 62) is $72576. Once I hit 62, then that increases to $93,240.

I don't think I need to work another 7 years to pile up $2 million. I probably will work more than 2 more years although I am seriously considering requesting in a year or so a reduction in work hours for a reduction in salary (probably in the 20% to 30% range).

Have you accounted for income taxes? You say you need 98k, but then you show us how you'll get 93k worth of pre-tax income. Thats a big gap.

 

[Katsmeow]

Have you accounted for income taxes? You say you need 98k, but then you show us how you'll get 93k worth of pre-tax income. Thats a big gap.

To be clear that 98k would be if (1) we moved a year from now to a smaller house (2) we had one child living in a dorm and two living at home and (3) we didn't make an effort to reduce the more discretionary expenditures.

When we actually retire we will surely be in the smaller house -- selling this house is a key to reducing our expenses. In the last 12 months we spent roughly $85000 in housing related expenses -- mortgage, taxes, utilities, repairs, maintenance. If we move to a smaller house of the price we are considering, we would reduce that by about $50000 annually!

Now, at actual retirement of both of us -- which is a few years away from now, we will likely only have 1 child at home (she would be a senior in high school) and the other two would be finished or nearly finished with college.

The point being that most of our retirement time will be just the two of us, and re won't have the expenses that are child related.

I also know that some of the expenses that I have in that year from now budget are discretionary and likely could and would be reduced. For example, DH and have already talked about substantially reducing gift expenses immediately, reducing cable TV immediately, reducing phone in various ways, etc.

When I figure expenses (including taxes) for true retirement with just the two of us it comes out from $60,000 (basic with not much discretionary spending) to $90,000 (most everything I really want). The true goal is probably closer to the $75,000 to $80,000.

 

[Lazarus]

You don't have a problem other than not being willing to downsize. the median household income in the us is about 50K.

Median household income - Wikipedia, the free encyclopedia

Your husband is going to retire shortly and you don't want to keep working after he is retired. Your choices are to keep working or downsize. Thats about it.

Your goal seems to be to maintain your high lifestyle rather than to retire early. Sure you are on the right board?

High lifestyle and ER do not usually go together unless you are very well off.

Consider moving to a lower cost of living area. Texas is pretty good but Houston elite subdivisions are not the cheapest. Paying MUD taxes?

 

[Katsmeow]

Your husband is going to retire shortly and you don't want to keep working after he is retired. Your choices are to keep working or downsize. Thats about it.

Your goal seems to be to maintain your high lifestyle rather than to retire early. Sure you are on the right board?

High lifestyle and ER do not usually go together unless you are very well off.

Consider moving to a lower cost of living area. Texas is pretty good but Houston elite subdivisions are not the cheapest. Paying MUD taxes?

I guess I'm not quite sure I understand your post. I not only am willing to downsize, I'm downright desperate to do it. If I could sell this house tomorrow I would. My actual plan is to get the house ready to list in spring hoping we could sell in the summer. The area we live in has very unique houses so houses can stay on the market a long time unless someone happens by who really wants whatever unique features your house has (the house across the street which is a 3 bedroom in a sea of houses with lots of bedrooms has been on the market for a year and a half). But then others sell quickly so who knows.

I want to downsize, intend to downsize as quickly as possible recognizing that we will still have 4 people in the house unless I want to through my DH or teenagers out on the street.

I don't want to maintain a high lifestyle. I want to sell this house and save the $50k a year that I will save by moving somewhere smaller. I agree that other cuts in expenses are good, hence my posting this thread. If I didn't want to get feedback and ideas I wouldn't have posted.....

<i>Texas is pretty good but Houston elite subdivisions are not the cheapest. Paying MUD taxes? </i>

Good heavens, no. When we moved from our last house I said I would never pay MUD taxes again. This house has a lot of expensive maintenance but the one good thing is no MUD taxes. On the other hand, when the well went out a few months ago we had to pay the $3000 for the resulting repairs.

I wouldn't call this an elite subdivision either. The houses are all different from one another, there are very loose restrictions, most are on 2 acres or more with a lot of people having a couple of horses. We are all on well and septic and really things aren't very fancy. It is just this house was built about 15 years ago, is quite large and not energy efficient and the extensive trees (although beautiful) are difficult to maintain and to clean up after storms.

 

[hguyw]

I want to downsize, intend to downsize as quickly as possible recognizing that we will still have 4 people in the house unless I want to through my DH or teenagers out on the street.

I've been trying to follow this thread - IIRC, you're living in a 4000+ SF house and feel you can't downsize until the kids are out? Honestly, I don't understand that...why can't four people live just fine in a 2500 SF house? I consider 2500 SF to be HUGE. When I was growing up, it was three of us in 864 SF of living area plus a full basement.

And that $6000 electric bill...yowza. I can't imagine how many lights, gadgets and toys must be running 24/7 to run up a bill like that. I live in upstate NY, so I have cold weather to contend with and all my utilities combined (cable TV, cell, landline, gas & electric and trash pickup) only totaled $3218 in the last 12 months. I live on 1.8 acres with a well and septic and lots of trees (woods) as well. My house only has '80s era insulation with 6 1950's single pane windows still to be replaced.

My sense is that you want to live a smaller life, but you're hung up on a bunch of erroneous assumptions, like "it's impossible for 4 people to live in less than 4000 SF". I suggest the first thing to do is pick up a copy of Your Money or Your Life and read it cover to cover. A basic premise of the book is the "fulfillment curve" and understanding what's "enough".

I make $64,700 per year and I'm currently putting $18K into my 403b and trying to figure out how to up that to the max of $22K. If I had anything like your income, I'd be figuring out a way to retire a week from Tuesday!

 

[FANOFJESUS]

So true hguyw, we spent about $3000 last year on phone, lights, gas, water, trash for the entire year.

Here is a sample of our budget last year. It covers a 1500 square foot home in Missouri.

Auto repair and maintenance $400
Home Repairs and Maintenance $300
Insurance (Home 475)
Electricity $840

Total for the year $2015

If I had anything like your income, I would need to work about 4 years (of my entire life) then I could retire.

Kats your total for these same four items came to $17,868 I know you have a larger home but there must be some way to cut these costs. On the bright side you are saving about $18,000 a year in Missouri state income taxes by living in Texas.

 

[W2R]

Right now we have a large house (over 4000 square feet), 2 garages, and a guest house.

I want to downsize, intend to downsize as quickly as possible recognizing that we will still have 4 people in the house unless I want to through my DH or teenagers out on the street.

(bolding emphasis mine)

This is as puzzling to me as it is to those posting previously. I wonder if you are being completely honest with yourself. Who knows what the real reasons are that you are clinging to this huge home and doubtlessly ostentatious lifestyle - - maybe you grew up poor and are worried that downsizing would be a step backwards? Or maybe some other reason. I don't know you, but I can tell that this situation has been distressing for you and I am sorry that it is.

I hope you find happiness in your life, and that you can somehow figure out how to save enough to retire in the lifestyle that you prefer, while spending at the rate you now prefer to spend, on your present income. Right now, I don't see a way for that to happen. I fear that you may end up feeling miserable, resentful, and bitter in your later years due to insufficient financial preparation, leading to less money when you are older than you could otherwise have.

 

[Amethyst]

Hey Kats,

Can you do all your own meal preparation, and bank the eating-out money? I imagine your lovely big house comes equipped with as much kitchen as a cook could ask for.

We may not be 5-star chefs, but we've gotten good enough at meal preparation that we don't really enjoy restaurant food any more. At least, not the kind we could afford on $200.00 per month, assuming that includes tax and tip.

We don't skimp on groceries--we buy top-quality food and spices, and taught ourselves to make a couple of dozen favorite dishes and desserts, plus wine selected from the "under $10.00 and preferably under $8.00 a bottle" shelves. Also, for $100 or so, we picked up some professional chef's knives that make the chopping, slicing, etc. much easier.

Not everyone's cup of tea, I know, but it's a thought.

Amethyst.

 

[Katsmeow]

I've been trying to follow this thread - IIRC, you're living in a 4000+ SF house and feel you can't downsize until the kids are out? Honestly, I don't understand that...why can't four people live just fine in a 2500 SF house?

I entirely agree. That is why we are going to put our house on the market in the spring! Until 4 months ago, we had 6 people living in our house. Right now, we have 5. By next fall it will be 4. Thinking it will take awhile to sell the house we are putting it on the market in the spring. We plan to buy a house between 2000 and 2500 square feet and will have 4 people living there.

Truthfully sort of baffled that anyone thinks that I have ever said I can't downside until all the kids are out. I thought the thread was clear that we want to downsize now and don't want to wait until the kids are all out (which won't be for least 5 years).

And that $6000 electric bill...yowza. I can't imagine how many lights, gadgets and toys must be running 24/7 to run up a bill like that.

Not really. I walk around turning off lights all the time. We do have computers that are usually plugged in. They are set to go to sleep and turn off the monitor after a period of inactivity. We have TVs (I personally haven't turned on a TV in months). But they aren't run all that much.

The house is not very energy efficient and it is all electric with no gas. We have programmable thermostats which are programmed to reduce costs as well. The house does have lots and lots of windows including a sunroom that is entirely large windows.

My sense is that you want to live a smaller life, but you're hung up on a bunch of erroneous assumptions, like "it's impossible for 4 people to live in less than 4000 SF".

No, I think we could live fine in 2000 to 2500 SF; hence my desire to sell this house come spring.

I make $64,700 per year and I'm currently putting $18K into my 403b and trying to figure out how to up that to the max of $22K. If I had anything like your income, I'd be figuring out a way to retire a week from Tuesday!

When people say that kind of thing to me I tell them I will trade my income but they have to have my family and my expenses. You get my children and their special needs. You get the two rare genetic disorders that two of my children have (these are not life threatening but took time and money to find and diagnose). You get my son who attended a therapeutic school and you have to be located where I am with the transportation options that I had. In addition, you have to be married to my husband who when we married had just finished supporting 3 children and was still putting a child through college.

Look, yes, I've not always made the best decisions in my life. Hindsight is 20-20. Right now, though, I'm planning to sell this house at the earliest opportunity that I have (around here far better to list in spring than this time of year) and personally I'm happy that I've paid off the six figure debt that I had just a few years ago and now have less than $5k in non-mortgage debt.

 

[Katsmeow]

(bolding emphasis mine)

Who knows what the real reasons are that you are clinging to this huge home and doubtlessly ostentatious lifestyle - - maybe you grew up poor and are worried that downsizing would be a step backwards? Or maybe some other reason. I don't know you, but I can tell that this situation has been distressing for you and I am sorry that it is.

I guess I just don't get it. It is November, which is a poor time to put the house on the market. We also need to have some minor work done to put it on the market so even if I started tomorrow would put it on the market in mid-December -- terrible time to do so.

We plan to put it on the market in the Spring, hopefully March. I just don't see why waiting until March -- a good time to put it on the market -- means I am clinging to this house?

I can't wait to downsize. My oldest son will go away to college next fall and there will be 4 in the house once he goes.

You quote me saying "I want to downsize, intend to downsize as quickly as possible recognizing that we will still have 4 people in the house unless I want to through my DH or teenagers out on the street." I guess I don't see why you think that means we aren't going to sell this house.

The only point I am making with that is that we will have to downsize to a house that will hold the 4 of us. Given that we will have a son and a daughter still at home, we could not for example downsize to a house with 2 bedrooms.

That is only downsizing dilemma that we have had. DH and I have discussed when to downsize. If we waited until all the kids were gone (at least 5 years from now) then we could downsize to a smaller home with fewer bedroom that we can downsize to when there are 4 people in the house. We have decided we want to downsize now.

Oh, and I'm not sure what an ostentatious lifestyle is but I know I don't have one. I have to go to a social event next weekend and I have a dilemma as my clothes are of two types: Clothes for work and jeans and T-shirts. I do not have anything else and jeans are inappropriate for the event. The dining out budget is mostly lunch out at work once a week, Subway, one or two dinners a month with DH usually at the neighborhood Chinese or Mexican food place with the occasional family outing to Chili's.

you can somehow figure out how to save enough to retire in the lifestyle that you prefer, while spending at the rate you now prefer to spend, on your present income. Right now, I don't see a way for that to happen. I fear that you may end up feeling miserable, resentful, and bitter in your later years due to insufficient financial preparation, leading to less money when you are older than you could otherwise have.

I guess I don't see it that grimly. If DH retired and took his lump sum and we never put another penny in retirement savings, I think we would be OK if we sell this house. Right now that total of lump sum + 401k would be about $1.05 million.

In reality, DH doesn't plan to retire for 4 more years, we will be putting money into our 401ks. If DH takes SS at 66 and I take it at 62, combine SS is almost $50k.

So I don't really see that big a problem. Remember the budget I posted in my first post was not a retirement budget. It was a budget based upon moving to a smaller house, but while 2 kids are still at home.

Ideally I would, however, like to retire before 62 and that will require more adjusting to the budget but I think it is entirely possible. Just this week I've adjusted several things so that I've cut expenses by $265 a month. Now that isn't a huge amount of cutting compared to selling this house but I was still pleased with it.

 

[Katsmeow]

Auto repair and maintenance $400
Home Repairs and Maintenance $300
Insurance (Home 475)
Electricity $840

Total for the year $2015
....
Kats your total for these same four items came to $17,868 I know you have a larger home but there must be some way to cut these costs.

Auto repair and maintenance - we gave the high maintenance older car to our son. That cost is now his problem (and one he is glad to have).

Home repairs and maintenance - The primary way we plan to cut these costs is by selling the house.

Insurance - The house insurance will go down some when we sell the house. The auto insurance we can't do much about unless our son is no longer a resident in our house and is not our dependent. Since he is a senior in high school neither of those is happening. On the bright side, he does pay for his share of the auto insurance so that is really a pass through cost for us.

Electricity -- We have actually reduced this one somewhat by using the programmable thermostats and turning off lights, etc. However, the real solution is selling this house which we hope we will be next summer (plan to put on market in spring).