What's the smallest amount you can retire on?

[nun]

I'm interested to know the smallest annual income folks have retired on. I'm assuming that the big ticket items are paid for, ie. you've paid off the mortgage so that the only housing expense is taxes and repairs and you have no car payments. I'm single, 46, and excluding my mortgage, my annual expenses are
$24k so I calculate that I can think about retiring once I have $750k saved and the mortgage paid off. What do you think?

 

[loosechickens]

Well, many on this board will tell you that is not enough, but we know innumerable people enjoying happy retirements on much less.

Recognizing that freedom is priceless and trumps pretty much any shiny thing you can buy is important. If you are a person who enjoys not having to go to work more than you enjoy buying stuff, you'll be fine.

LooseChickens

 

[ziggy29]

If you are benefitting from employer-provided health insurance, your expenses will be a LOT more than $24,000 a year if you retire. And rising faster than inflation, in all likelihood.

 

[nun]

If you are benefitting from employer-provided health insurance, your expenses will be a LOT more than $24,000 a year if you retire. And rising faster than inflation, in all likelihood.

Health insurance isn't an issue right now as I work for State Government and also have the option of retiring to the UK

 

[SecondCor521]

I've posted here before about how my "non big ticket" budget is about $10k per year. I'm 38 and single, and my big ticket items include my three kids, my mortgage interest, and income taxes. So I could retire on $250K in 2007 dollars.

There are expenses that I expect to go up in retirement and expenses I expect to go down, but I am currently assuming those will be a wash and I can retire on a budget of 100% of my expenses. I think I will try to find some way, even if it means being uncovered (gasp!), to avoid paying the ridiculously large sums of money for health care I have seen. But I will leave the US health care debate to other posters and other threads.

2Cor521

 

[MasterBlaster]

Based on paid healthcare,expenses of $24k and a nest-egg of $750k you could think about retiring.

However there probably isn't much room in your budget for some unknown expense should it occur. For me I would want a bit more of a cushion.

Also have you factored in housing and transporation costs including periodic maintenance and replacements ?

 

[brewer12345]

If you are single and can relocate to wherever necessary, I think it is possible to retire on relatively little money. Inside the US, healthcare is a major barrier to ER. Elsewhere, not so much.

I also look at people like Dream Catcher - Welcome! and figure that they probably live on a pretty small amount of money. Tioga George also obviously lives on a very small budget.

 

[LOL!]

My wife's grandmother retired with $0 saved up. She lived off her social security benefits.

 

[Bikerdude]

Does 24K include a new roof, new heat/air conditioning unit for your house? Does it include replacing your car? Does it include vacations you may want to take? If not I would put some of these things in my budget.

 

[Zathras]

There are many variables to that question, more information would be needed to give you a decent answer.
To start, where do you WANT to live? Many people retire to Mexico as the cost of living is so low. Do you get health care for life after you stop working for the state?
What type of 'big ticket' items will you want to replace or maintain in retirement. Do you like to travel? How do you like camping (enough to do it permanently??), as that can lower your expenses quite a bit

 

[Sam]

The smallest amount is the one that can support your expense indefinitely. Since you already know your expense, just take that number and multiply by the inverse of your SWR. And you have already done that too. Congratulations, 3.2% is as safe as it can be.

 

[maddythebeagle]

My wife's grandmother retired with $0 saved up. She lived off her social security benefits.

N/K...a lot of people do this and I bet are happy enough.

 

[mikex]

I've been working on a detailed spreadsheet, and since I am single, no kids, no payments, it all added up to $18k/year BARE minimum, which ain't a lot (that even budgeted in $250/month for health care). Now, granted I don't want to live like that of course, but It's nice to know what the amount is. I will have more than that of course.

 

[chinaco]

With health insurance and being healthy to boot. Plus no mortgage and if we downsized our house. Drop certain unnecessary expenses. Did not purchase any new cars (older used vehicles). I think we could get by on $30k/yr. But I have not confirmed the numbers, it is a gut opinion.

 

[cute fuzzy bunny]

The cost of a one way ticket to Switzerland and a baguette.

 

[kramer]

barebones livable budget

Here is a subsistence budget that I put together before semi-retiring -- one that I could actually live on for a long time, not a real subsistence budget which would be much lower. This assumes a single person with no house. I was inspired by Cut-Throat's suggestion to come up with a bare bones budget and make sure that it represents a very low SWR.

Kramer


275 EatOut/Groceries/Entertainment
040 Gas/transit
000 Auto principal (public transport if car dies)
075 Auto maintenance/insurance (I am driving less, too)
040 CellPhone (and only cell phone)
075 Internet/CableTV
080 Utilities [electric/laundry] (water/garbage included in rent)
080 Travel
400 Health (wildcard)
650 Housing/Rent 1 br apartment
200 Misc/Cash/Gifts
===============

$1915/month = $22980/year

projected taxes (for me, it's divvies/cap-gains) = $1200/year

Total = $24180/year

So let's say $25K to add a little fudge factor (extra $75 month)

$25K at 2% SWR = 1.25M
$25K at 2.25%SWR = 1.11M
$25K at 2.5% SWR = 1.0M

 

[lazygood4nothinbum]

i could next to bare bone it for $30k/yr while living in this relatively expensive area. but as brewer mentioned, being single, i could always just take off to where even that $30k will buy me a pretty comfy lifestyle and if i could move there then, well, i probably wouldn't even need that much money.

my friend who goes out every night and probably spends $500 or more each week just on booze, he needs more than $30k/year. but fortunately, he wouldn't need it for long. see how it all works out in the wash?

 

[Rustic23]

It would seem to matter how little or how much I need to retire. I could have retired on about a third of what we spend, however, I would have to live in a one room apt., use public transportation or walk everywhere, never travel, never eat out, and pray we never get sick. As is we spend about $50,000 a year, live on a lake, and drive a new car. Travel when we want, and eat out when ever we want. Which may be more or less than others on this board.

The answer is not what others could retire on, but what will you be willing to settle for. I believe worse case would be to retire, have a medical problem, not be able to go back to work, and not have enough money to live the life style you desire. Only you will know how much that is.

I subscribe to the theory that your current life style is most likely close to what you will want in retirement. So what does it cost you to live?

 

[Khan]

I'm spending less than $25,000 a year. However I have a little under $400,000 in untouched IRA/TSP/CDs (for whatever pops up).

 

[nun]

Does 24K include a new roof, new heat/air conditioning unit for your house? Does it include replacing your car? Does it include vacations you may want to take? If not I would put some of these things in my budget.

The $24k/year is what I spend right now, excluding the mortgage, so that's what I'm basing my requirements on. If I was retired I'd probably spend less as
I'd save on gas and car costs as I wouldn't be commuting. Also I use my bike
for short trips. I don't think I live a particularly frugal life, I go out most weekends with friends and blow a fair amount of cash and go to the theatre and cinema regularly. But I don't spend much on consumer goods or clothes eg I just replaced my 16 year old car because it died after $220k miles of happy motoring. I'm just interested to see what other folks think they need to live well.

 

[wildcat]

I think you could do it Nun. People who clock out real early - say mid 40s or younger IMHO - seem to have either:

1) large portfolios where they only have to draw a SWR of less than 4%, have a couple years of cash to sit out bear markets
2) smaller portfolios but they have a pension and/or low cost healthcare
3) medium portfolios or "tweeners" who supplement their income through p-t work and have access to low cost healthcare.

Just about all scenarions, the younger ERs tend to continue LBYM. If you are flexible, you have a lot of options -- as UM2 says "mobile, agile, hostile"

 

[BUM]

Hmmm good question. I think the smallest amount I could retire on is whatever my working spouse brings home!

 

[jay-pee]

There is no doubt that you can do it. I have a brother who left work 5 years ago at age 49 with $65,000 in the bank. He is single, lives in a "paid for" house, drives a 15 year old vehicle, and pays his own health insurance . I asked him, just last week, if he was going to have to go back to work and he said "no way". I don't know if I could live his lifestyle, but I would guess that he is "at least" as happy as I am, if not happier. (I just retired at age 61, with considerably more money, pension, health insurance and SS in a few months). The difference between my brother and myself is that he is single and I am married with an adult dependant(child). I worry about what the stock market is doing, if my (ex)company will keep paying my pension and health ins., if mine or my familys health will fail. He doesn't worry about any of these things. He can live as "he" chooses, I have others to consider. My point is if you don't have anyone else dependent on you and "if you want it , you can do it".

 

[haha]

There is no doubt that you can do it. I have a brother who left work 5 years ago at age 49 with $65,000 in the bank. He is single, lives in a "paid for" house, drives a 15 year old vehicle, and pays his own health insurance . I asked him, just last week, if he was going to have to go back to work and he said "no way". .

See if he will give you an interview which you can share with us. To me this feat sounds about as likely as me running 100m in sub 10 seconds.

Ha

 

[FIREd]

Hi nun,

Our retirement budget looks like that (I assume the mortgage would be paid off prior to retirement): we need 25K for bills (utilitites, food, car/home insurance, RE taxes, car/home repairs and maintenance, health insurance). That's the bare minimum (living a monk's life in other words). We would like another 20-25K for discretionary (mostly travel). Plus of course taxes and funds expenses. So we are probably looking at a 50K to 60K annual budget.

But like you I have the option to retire in Europe where I would enjoy cheap healthcare. Also my parents have talked about giving me a condo there (as part of their effort to reduce their taxable estate). I love the idea of retiring in a condo because it is so much much cheaper to maintain than a house. Finally Europe has great public transportation and one car would be enough for us to get around. Therefore I believe that a move to Europe could seriously reduce our fixed expenses. But moving to Europe would not be easy on the wife. She says she would do it, but I have my doubts. So right now the option is off the table. But if healthcare expenses continue to rise like they have in the US, then it might be our only option to retire early.