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

[24601NoMore]

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.

Hmmm..our property tax is $12K+. Medical/Dental: nearly $15K. Cars: $10K+ (lease payments for 2 not fancy vehicles, gas, insurance). That's $37K right there. Add in all the other things: roughly $100K/yr, and we live somewhat frugally (ie: no spending on fancy stuff..don't eat out much..clip coupons for groceries).

I'm sure you "could" spend $19K or $36K a year, but can't fathom what kind of sacrifices that would entail, or what kind of area you'd need to move to.

Every time I see one of these spending threads, I have to wonder if people TRULY track every penny they spend in an app like Quicken. We do, and it's amazing how many things most of us spend money on. We're at $60K'ish on "core" expenses (food, cars, groceries, house care, property taxes, etc) and $100K if we add in healthcare, vacation (none this year due to COVID so that drops us to $90K'ish) and taxes..

 

[jim584672]

I track every penny. Live in a nice area. I just think you are all bad at frugal. Average about $160 a month for food.

 

[Music Lover]

Live like a student.

Interesting thought, but I don't want to live in a dorm room and go to the cafeteria to eat, and share the bathroom with 3 other guys.

I get the point, although I doubt anyone over 25 wants to live in a dorm. But a smaller house with a well laid out floor plan isn't a big sacrifice for most people. We get by on just under 1000 sq. ft for us and wife's daughter (21 going to university). A little more space would be nice but we don't care enough to spend the extra money. There are far better things to spend it on.

 

[Music Lover]

Hmmm..our property tax is $12K+. Medical/Dental: nearly $15K. Cars: $10K+ (lease payments for 2 not fancy vehicles, gas, insurance). That's $37K right there. Add in all the other things: roughly $100K/yr, and we live somewhat frugally (ie: no spending on fancy stuff..don't eat out much..clip coupons for groceries).

I'm sure you "could" spend $19K or $36K a year, but can't fathom what kind of sacrifices that would entail, or what kind of area you'd need to move to.

Every time I see one of these spending threads, I have to wonder if people TRULY track every penny they spend in an app like Quicken. We do, and it's amazing how many things most of us spend money on. We're at $60K'ish on "core" expenses (food, cars, groceries, house care, property taxes, etc) and $100K if we add in healthcare, vacation (none this year due to COVID so that drops us to $90K'ish) and taxes..

Property taxes - $3000
2 cars, owned outright - $5000
medical dental (Canada) - $2000

That's $8k vs. $22k for taxes and auto. There are plenty of US citizens on here with similar property tax and auto expenses. Obviously living in different countries we can't compare medical.

Cheap hobbies, prefer to cook at home, do my own reno and repairs...we can live comfortably for under $30k but probably spend $45 or so and don't feel we're sacrificing.

 

[MC Rider]

I get the point, although I doubt anyone over 25 wants to live in a dorm. But a smaller house with a well laid out floor plan isn't a big sacrifice for most people. We get by on just under 1000 sq. ft for us and wife's daughter (21 going to university). A little more space would be nice but we don't care enough to spend the extra money. There are far better things to spend it on.

Guess I was being a little facetious there.


1000 SF is on the "cozy" side but otoh our place is 1400 sf for 2 people and we use 2 bedrooms as offices as we still are w**king. Smaller would be OK for the next place, we don't want bigger due to expense and work to maintain.

 

[FANOFJESUS]

1 br under 900 square feet. Rather not get into exact numbers.

Ok then shot me a ballpark number. I am from MO. so I am in the dark here about prices.

 

[jim584672]

I keep my cars (Japanese econoboxes) for 16-20 years at a time, owned outright. Minimal expenses since I live near tons of stores and can walk, which is good for health anyway. No fancy cable channels, just OTA with a $30 DVR. Library has all the movies and series that come out. Electric with discount is probably $30 a month. No medical costs. Food would be $130 if I cut the sodas. I don't feel like I am "deprived" in any way.

 

[daylatedollarshort]

Live like a student.

Interesting thought, but I don't want to live in a dorm room and go to the cafeteria to eat, and share the bathroom with 3 other guys. Hmm, sounds suspiciously like one of those old folks homes.

In my example there were 2 roommates in a nice apartment and they either ate out or cooked at home. With school full-time, co-op jobs, club activities and social lives, they weren't home together that often anyway. And with a mild climate near the beach, they were outside a lot, too. It may not be your ideal life, but the question posted here was how can a household even survive on $36K a year, let alone have a fun, pleasant life.

 

[MC Rider]

In my example there were 2 roommates in a nice apartment and they either ate out or cooked at home.

Sounds a lot better than 4 guys in 2 rooms with a bath between. And better than the prior dorm with a communal bath down the hall.

 

[jim584672]

My main cost is investment loss on the money tied up in the property. But that is invisible and untaxed, $275k to $300K if I sold it now. I could rent it out for $1,850. If I got a roommate I could live almost for free.

 

[skyking1]

Our average spend is ~3k a month. This includes:
4000 property tax.
3000 auto,RV, and home insurances.
No loans or mortgages.
We both work so insurance is provided.
When we do retire I can get a subsidized COBRA type retirement health coverage for both of us for ~1100, so we should be OK at ~50K per year.

 

[Delawaredave5]

5% withdrawal rate is too high. Reducing retirement spending by 40% from the median is a lot.

Rest of video was too confusing. Shouldn't judge, but inconsistent capitalization and decimal places doesn't add to video's credit.

Use Firecalc.

 

[NoEZmoney]

It's quite doable depending on circumstances

I think the video premise is doable depending on a few things such as your zip code, housing costs (if any) health needs (no severe illness/debilitation), and spending habits. I have dear friends who had higher-than-average income jobs in healthcare and the wife would go and burn through $600 to $1,000 on a weekend shopping spree and she did that every two or three weeks. (buying for herself, splurging on kids and now grandkids). The husband has since weaned himself from high spending habits but he says he just can't seem to get his DW to do the same. She was used to making a ton at work and while they have good savings, it seems unnecessary. But I'm sure there are those on this forum for whom that kind of spending is no big deal. And I get it.

DW and I came from parents whose concept of financial planning was racing to the bank on payday to cover bad checks written a week earlier. So we both are pretty cost-conscious when it comes to spending. About to retire in 9 months and while we've socked a good bit away (started with IRA's in '85 and 401(k) soon after) we have no wish to change habits except for not waking up and slogging into work.

No RV's, or sports car purchases, or boats either. And our travel habits are mid-level, no business class (unless upgradeable with points) and I still used coupons (both paper and digital) when shopping. I've thought about "side-hustles" when I retire but that was before I did the pre-retiree math and we both agree we don't really need to unless something grabs our interests.

Like Mazlo's hierarchy -- it's all about wants & needs. We want for nothing so we won't need a whole lot to keep us happy come retirement.

 

[cbslc]

Isn't this group about early retirement. Full retirement age of 67. Sure if I were 67 today, and I got SS @ my supposed rate of 3900/mo. And I got medicare or medicaid. I could probably live off a small savings. But this is an early retirement forum. And for me 67 is off in the distance. So far off in the distance that SS is in question. So how do I make up that $3900/mo plus healthcare. Savings and hopefully earnings on that savings. So no way is his estimate correct for early retirement.

 

[FANOFJESUS]

5% withdrawal rate is too high. Reducing retirement spending by 40% from the median is a lot.

Rest of video was too confusing. Shouldn't judge, but inconsistent capitalization and decimal places doesn't add to video's credit.

Use Firecalc.

The plan started in a bear and has made it though 3 of them in all if he continued on until the end of 2021. Not that shabby.

 

[gooddog]

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

With inflation, maybe $207k/year....in 10 years?

 

[2HOTinPHX]

Isn't this group about early retirement. Full retirement age of 67. Sure if I were 67 today, and I got SS @ my supposed rate of 3900/mo. And I got medicare or medicaid. I could probably live off a small savings. But this is an early retirement forum. And for me 67 is off in the distance. So far off in the distance that SS is in question. So how do I make up that $3900/mo plus healthcare. Savings and hopefully earnings on that savings. So no way is his estimate correct for early retirement.

Discussions here do not strictly have to be about "early" retirement.We discuss all kinds of subjects that others might find interesting all the time. Have you read thru the living alone thread? It has some really great post lately on marriage that have really hit close to home for me at this time in my life.

Some of us here have discovered the retire early planning concept later in life. So we look for feed back from those here that are much more knowledgeable in the area of retirement planning on interesting items we run across like the one I posted here. I appreciate the feedback and am thankful for this wonderful community.

 

[trumpeting_angel]

I love this thread. I haven't looked at his videos, but I like to read about challenging the status quo in the US - big house, leased cars (or loans), higher spending. I joined this forum many years ago, when the emphasis was on frugality. The general discussion on the forum was about ways to recognize what is unnecessary for a good life, ways to achieve one's goals without high spending, and finding fulfillment in getting off the treadmill and meaningful activities. In recent years, there has been a trend toward very wealthy, high-salary individuals discussing whether to stay on another 6 months for one last huge bonus. Hard for me to relate - I was always in the non-profit world. I got a bonus once (years ago) of $15. There may have been others, but I can't remember any.

So I really enjoyed this thread.

 

[dixonge]

We have lived more in Mexico than in the States since 2011. This is by design. Our current COVID/RV phase is coming to an end, and it's been a rather expensive 20 months. We offset that (to an extent) by boondocking, including four straight months last summer in Colorado where we did not stay in an RV park. Most people do not enjoy this level of nomad-ness, but it has worked well for us.

Fortunately it looks like we will actually get out of our car and RV payments and walk away with a nice little chunk of cash thanks to the crazy market. It should be enough to take care of our apartment deposit and a used car purchase back in Mexico. It will be interesting to finally live there *with* a vehicle!

Mexico has greatly helped us to live well while we were waiting on our various income sources to come online. We've used savings to cover the 'gap' years and I also went back to work for two years. Since 'official' retirement five years ago we've managed to live well *and* still build our nest egg.

The numbers from that video sound plausible for a short-term plan with no surprise expenses, minimal inflation, but $200K and nothing but SS would scare the crap outta me! We're still building our nest egg so we can cover future inflation for our non-COLA pensions.

 

[ElizabethT]

This thread has convinced me to re-read that old classic, Your Money Or Your Life. Due to the 10+ year bull market our portfolio has grown dramatically since we retired in 2012. And we have another $100,000 a year coming online in the next few years with SS and Medicare. (Our self-paid medical expenses this year will be about $20,000, and will be reallocated elsewhere once Medicare arrives.) No clue where we will spend it, which could be a not-so-subtle signal that it's not going to be a significant life enhancer. And lately I've been bothered by a sense of spending just because 'we can,' not so much because it's sincerely enhancing our lives.

So from a different path along the spending spectrum, I am really appreciative of the thoughtful posts detailing a less money-focused approach to life.

Being physically active outdoors, working in my yard, reading, doing needlepoint, are all low cost things I enjoy, but sometimes feel 'aren't enough' due to the wealth we live amongst. I'm going to ponder for a bit how/why that may have occurred. Thanks all.

 

[2HOTinPHX]

I love this thread. I haven't looked at his videos, but I like to read about challenging the status quo in the US - big house, leased cars (or loans), higher spending. I joined this forum many years ago, when the emphasis was on frugality. The general discussion on the forum was about ways to recognize what is unnecessary for a good life, ways to achieve one's goals without high spending, and finding fulfillment in getting off the treadmill and meaningful activities. In recent years, there has been a trend toward very wealthy, high-salary individuals discussing whether to stay on another 6 months for one last huge bonus. Hard for me to relate - I was always in the non-profit world. I got a bonus once (years ago) of $15. There may have been others, but I can't remember any.

So I really enjoyed this thread.

I am glad you are enjoying this thread too. Thanks for your feedback and from all the others who have contributed so far.
The guy in the video post a lot of thought provoking content going against the grain of common things you hear like you need to have at least a million to retire. I like his casual on the fly format but sometimes it's hard for me follow his math. That's why I posted it to get some feedback. He is a little to free on his opinions on some subjects for my liking but hey it's his videos so you gotta take the good with the bad. Watching his videos like this one gets me questioning some of what we are use to hearing out there.
I agree hard for me to relate to all the threads on what wealthy people are doing here but I read them in hopes to gain some inside knowledge....even though reading them make me feel like maybe I am in the wrong forum sometimes. I know that's on me...it's a great forum with tons of caring people.

 

[jkern]

Hello there, do you live in Castro Valley, Ca? We grew up in bay area and wifey and I owned our first 2 bed 1 bath home in Castro Valley from 1994 thru 2004. Still remember when we purchased it for 180,000 and thought WOW that's a lot of money did we just make a huge mistake.... Turned out well for as we sold it for 460,000...way more that we ever expected.
Relocated to Phoenix AZ for the half off home sale pricing ...big mistake so hot here in the summer...wish we could afford to move back but the bay area is crazy expensive now. Our little home in Castro Valley recently sold for 825,000...

https://www.redfin.com/CA/Castro-Valley/21612-Baywood-Ave-94546/home/1783178

So I would guess your property taxes are pretty high being in the bay area. Along with everything else there now be so pricey. But hey its a great place to be...enjoy it for us...LOL

Yes, I do live in Castro Valley CA (in the Columbia neighborhood). I grew up in San Mateo and move to CV in 1988, so I'm kinda stuck here (friends and family). I bought my house for $285K and is currently worth about $1.8M. One thing going for CV is that the weather is fantastic.

 

[jkern]

I have income taxes in there to for 19k. If we were forced to we could go lower. Maybe down to 14k a year. So we still have extras in there for 19k. I am sure I could really help cut your budget if you were willing (most folks are not) Step one move out of CA.

Thanks, not really looking to cut my budget just curious how your's is so low.

 

[2HOTinPHX]

Yes, I do live in Castro Valley CA (in the Columbia neighborhood). I grew up in San Mateo and move to CV in 1988, so I'm kinda stuck here (friends and family). I bought my house for $285K and is currently worth about $1.8M. One thing going for CV is that the weather is fantastic.

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...

 

[FANOFJESUS]

Thanks, not really looking to cut my budget just curious how your's is so low.

Many tricks

eat at home
low income for taxes and health insurance
small home
keep cars forever