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Old 09-08-2014, 05:25 PM
 
Location: Southern New Hampshire
7,220 posts, read 12,658,664 times
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Quote:
Originally Posted by Submariner View Post
OMG, that is high.

What you pay in one month for taxes, covers me for a year and includes house, many acres of land, motorcycle, truck, car, etc.
Yep. As a working person I don't feel it as much, since I'm not paying income tax on a relatively high salary, nor sales tax on anything. In retirement, the lack of income and sales tax won't nearly make up for the insane property taxes. Retirement is about 15-20 years away, but I may be joining you in Maine!
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Old 09-08-2014, 09:54 PM
 
2,421 posts, read 3,722,541 times
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Everyone is assuming that the OP is expecting to live in same manner as he/she has become accustomed while still working after retirement. This is not always the case, and there would be a lot of people who could never retire if that were the case. Retirement for many can mean adjusting your spending to meet your new income. So there is an option for retirement spending in so far as it can stay the same, go up, or go down (by making it go down by the choices you make)

I think there is a minimum we all need to cover the basics (non-discretionary) but these can be cut substantially according to where you decide to live. If your staying put, then yes, you will have the same fixed expenses, and they will continue to rise year after year, after year. So I do agree it is far better to plan cautiously and do what you can to control your fixed expenses to leave room for that inflation that we all know is coming sooner or later, and all those other non fixed expenses which usually cost more than your fixed expenses.

Personally, I would not feel comfortable living in a house with yearly real estate costs in excess of $3,000 or living in a large house with high maintenance costs and utility costs. These expenses only become non-discretionary after you have chosen where you are going to settle. Before that you do have a choice what they will be. I can say this, as what the OP stated as her retirement income is about what I try and live on in retirement, so I speak from experience.

The OP is fortunate in that she/he states they have medical provided. This is a big plus, because medical can still be costly even after medicare. I pay a total of $420 for medical even with medicare between Part B, My supplement F Plan, and drug plan. And that doesn't include my medications which is another $30 a month.

It also depends on whether the person was a frugal person up to this point or not. If frugality was always a part of their life, then any adjustments necessary might not be so hard. If they weren't, and their income was much greater, they will find it much harder probably. (but can still be very happy )
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Old 09-09-2014, 02:30 AM
 
71,511 posts, read 71,674,131 times
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one should always work off expenses not off what your income was. heck i work part time in my final year ,what income should i base it on?

Last edited by mathjak107; 09-09-2014 at 03:02 AM..
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Old 09-09-2014, 05:49 AM
 
Location: The Triad (NC)
28,490 posts, read 62,120,010 times
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Quote:
Originally Posted by mathjak107 View Post
one should always work off expenses not off what your income was.
If their expenses will make objective sense on their own... sure.

But just because someone has structured their life to include comforts and high expense
(I'm sure we all know someone like this)... an expectation of being able to maintain
that standard of living absent their prior earned income is simply not reasonable.

Reconciling themselves to this new reality is often difficult for the indulged.
Their ego will be bruised for a bit but they'll get over it. They'll have to.
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Old 09-09-2014, 07:10 AM
 
Location: Los Angeles area
14,018 posts, read 17,729,443 times
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Quote:
Originally Posted by MrRational View Post

Reconciling themselves to this new reality is often difficult for the indulged.
Their ego will be bruised for a bit but they'll get over it. They'll have to.
Well, maybe they won't really "have to". They can rack up huge amounts of credit card debt and re-mortgage the house to finance their indulgences. Of course sooner or later even that money will run out, and they will run crying to their adult children to bail them out. So I propose adding one word to your final sentence: "They'll eventually have to." (Provided they live long enough, of course).
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Old 09-09-2014, 07:37 AM
 
Location: The Triad (NC)
28,490 posts, read 62,120,010 times
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Quote:
Originally Posted by Escort Rider View Post
Well, maybe they won't really "have to".
Fair point.
Re read my post with the term "responsible" sprinkled in as needed.
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Old 09-09-2014, 08:22 AM
 
Location: Central Massachusetts
4,800 posts, read 4,844,519 times
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Quote:
Originally Posted by Escort Rider View Post
Well, maybe they won't really "have to". They can rack up huge amounts of credit card debt and re-mortgage the house to finance their indulgences. Of course sooner or later even that money will run out, and they will run crying to their adult children to bail them out. So I propose adding one word to your final sentence: "They'll eventually have to." (Provided they live long enough, of course).
Yeah aint that the truth. I for one am the adult child whose parent racked up 50k in credit card debt. They first called one of those credit helping companies who helped themselves to a bit of their money. When I found out a year into the credit helping parent and spouse (not parent since mine were divorced) were in debt to eyeballs. Good golly miss molly I near hit the roof. My wife threw a fit but in the end we bailed them out not by paying off debt but by bankruptcy. You cant get blood from a stone and they are only living off SS income and not much of it at that.

Quote:
Originally Posted by MrRational View Post
Fair point.
Re read my post with the term "responsible" sprinkled in as needed.
You just have to live within your means. If you cannot afford lobster dinners then settle for chicken right?
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Old 09-09-2014, 08:28 AM
 
Location: Prosper
6,268 posts, read 12,903,757 times
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I didn't read all the responses, but one thing I didn't see mentioned was inflation. If your monthly income will be $3500, that's a good figure to have NOW. But after 20 years of retirement?

A quick calculation shows that $3500 for retirement in 1990 would need to increase to $5763 in 2010 to maintain the same standard of living.

Depending on how inflation goes over the next 20 years, you may want to calculate your total years of retirement based on spending a higher figure than the $3500 you have planned. Obviously, the costs of inflation have even more of an impact if you live for 30 or even 40 years past retirement age.
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Old 09-09-2014, 08:58 AM
 
Location: The Triad (NC)
28,490 posts, read 62,120,010 times
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Quote:
Originally Posted by golfingduo View Post
You just have to live within your means.
If you cannot afford lobster dinners then settle for chicken right?
That's the first half of it.

The other half is when you DO have lobster (or some other special thing)...
whether you count that as part of your day to day grocery budget or as something else.
And more pointedly.. whether you accept that the distinction SHOULD be made.

I'm cheap and will admit to it. I see the cost differential between owning a Chevy vs a BMW
and object when the higher costs are not accounted for in terms other than meeting transportation need.
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Old 09-09-2014, 09:13 AM
 
Location: Florida -
8,763 posts, read 10,834,959 times
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Everyone's lifestyle, expenses and location COL are different. Many would easily say, "Yes, I could live quite comfortably on $3500 before taxes ...particularly with no mortgage or vehicle expenses." (not sure how this works without maintenance, repair, replacement, taxes, fees and insurance costs?). Others with a greater income, would likely say, "No, I can't see cutting our living expenses by that much, without a serious lifestyle change" .... "and what about inflation and increased health/RX costs?"

Without further lifestyle details, trying to 'back into a $3500 number,' based on the retirement costs of other folks, makes little sense. It seems more reasonable to carefully examine one's pre-retirement expenses (including savings) and clearly determine what expenses one is honestly going to permanently eliminate upon retirement. Then, one should test out that assumption by actually living on $3500 pre-tax, while still working.

While everyone can and should 'live within their means', the reality is that many people lack the financial discipline to do that. It's a lot like dieting and exercise! -- Many people know they would be healthier and better off to lose weight, BUT, how many 'exercise' the discipline to actually do that on a continuing basis?
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