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Old 02-22-2015, 05:21 AM
 
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you can't consider any median or average incomes as a budget for yourself. location and expectations from retirement are the biggest factors.

folks make do on whatever they have whether ss alone or 6 figures plus. median incomes and averages only mean this is what they have, they have little choice it has to work but they may hate that life style or location they are in.

if all i had was 55k here in new york i would not retire on it at 62 , i would work longer as that would be a struggle when rent and healthcare are 40k plus. .

owning a home in long island can carry 18k a year in real estate taxes ,even more in westchester.

no one should ever say what someone elses budget would be fine at. each one of us has goals ,wants and dreams to live in retirement. paying bills is only a piece of what it should be all about.

does anyone tell anyone else what is enough income for them while they are working? of course not ,we all vary regardless of what median numbers are. we each have our own unique expenses and lifestyles.

even the same lifestyles can cost more than 2-1/2 x as much going from area to area. look at houston vs queens where we live , in fact we live in a upscale area of queens which runs even higher.

we are here because our kids and grandkids are here as well as a great public transpotation system if we can't drive , the best in medical facilities and specialists in the world and endless things to do for the rest of our lives.

all priceless now that we are in the last down of life. i can tell you our budget is 6 figures and that is a budget that will require belt tightening and leaving alot of wants and dreams unfullfilled. .

40 years of saving , doing without and investing has our goal to live better in retirement than we did when our money was consumed raising a family and watching every dollar.


Last edited by mathjak107; 02-22-2015 at 05:43 AM..
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Old 02-22-2015, 11:21 AM
 
Location: Los Angeles area
14,018 posts, read 17,729,443 times
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Quote:
Originally Posted by Vision67 View Post
If you have been taxed at the maximum Social Security "contribution" for 35 years of employment you ought to consider Social Security as your base retirement income. The current maximum SS payout at a full retirement age of 66 is $2663 per month. The spousal benefit is one half that amount.

However, if you initiate and then suspend SS at 66, your spouse can collect her monthly benefit of $1332 [this does not grow by further waiting] even though you are delaying yours. At 70, your benefit grows to $3515 so your combined income from just SS is $4847 or $58,164 per year.

Now, if you consider that the average family income in the USA is about $55K, living on $58K should be doable, especially if you have a paid off house and no debt.

You can then use your retirement savings for travel.
The above is a very rational analysis, but there are a couple of reasons why it may apply only to a limited number of people:

1. Statistically, most people do not earn enough to be taxed "at the maximum Social Security 'contribution' for 35 years". The people who do are the fat cats.

2. For a variety of reasons including but not limited to health, not everyone will be able to keep working until age 70 in order to collect that greatly enhanced SS benefit. Or alternatively, not everyone will have the reserves to live comfortably from age 66 to age 70 while waiting to collect SS.

I do agree that "living on $58K should be doable" but with the proviso that it depends on the area where one has chosen to live in retirement (see the bar graph that Mathjak posted).
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Old 02-22-2015, 12:34 PM
 
Location: Dover, DE
1,801 posts, read 3,833,293 times
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We are pretty much like Escort Rider. We don't really have a budget, but do know approximately how much our bills are each month. Then we see what is left over. If we have to cut back somewhere due to an unexpected expenditure then we do that. And we always, always find any discounts that we can use along the way. We have never been ones to buy things "just because" nor because it's the latest and greatest, but when we do decide to buy something we make sure to get the best value we can for our use. We haven't started taking anything from retirement accounts yet, but that is soon coming as DH hasn't worked much this year due to my surgery complications. But we do know what we are going to have to withdraw when it comes down to it.

The biggest thing you will have to worry about if you retire early is health care. You need to make sure to put away as much as possible. I have read many places that your retirement takes priority over everything else, even a kid's college funding. Pay yourself first, put the rest of the important things in order, and then worry about everything else.
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Old 02-22-2015, 12:55 PM
 
4,572 posts, read 7,055,913 times
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I do still maintain a budget, but I'm pretty much a numbers person...I like to see it in front of me. I kept a spreadsheet of expenditures for about 4 years before I retired so I knew what I was spending and on what. That way I knew what I would need to bring in to live the same (more or less). You could start by maxing out your 401k or as much as you can. Buy a home if you haven't already.

Looking 20 years out, hard to tell how much you will need because of inflation, economic ups and downs (you'll experience several "crashes" in 20 years time), health issues, marriages, divorces, family issues, etc. Life happens and no one can really predict the future.

The only budget surprise I've had so far is the cost of food/household supplies has gone up quite a lot. I live a pretty basic lifestyle, and live in a high COL area.
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Old 02-22-2015, 03:35 PM
 
Location: Wisconsin
21,535 posts, read 43,982,964 times
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Quote:
Originally Posted by loveautumn View Post
The only budget surprise I've had so far is the cost of food/household supplies has gone up quite a lot. I live a pretty basic lifestyle, and live in a high COL area.
This is the one I'm noticing the most. I, too, live a pretty basic lifestyle and live in an average COL area. Do buy organic food, however, and the price of some of those items - especially dairy - is easily twice that of nonorganic. Milk $7 gal. v. $3; eggs $4/doz. v. $2, etc. Big difference in taste. I won't eat nonorganic - until organic becomes really unaffordable.

Back to the original question......

Unless you are very highly paid today and/or a dual-income household with no children, 55 is a bit ambitious, imo. Not a fan of retiring at age 55 unless you've got a very good sized retirement account - at the very least in 20 years several million dollars and, possibly, you will be receiving a lifetime pension of some sort at that early retirement age. Otherwise, your investments need to generate all your income until you are of SS age. Those drawdowns will have a significant negative impact on that nestegg. The idea of huge drawdowns at age 55 - without the expectation of a decent pension and/or SS in the future - would make me VERY nervous.

Further, know that early retirement with no further contributions to SS, seriously impacts the amount of the SS benefit. Beginning SS earlier than FRA further reduces that already reduced benefit another 32%. So, think very carefully about that.

I worked until age 67-1/2, am now 73. Prior to the age of 42, I worked full-time some years, part-time others, which is one of the reasons I was able to work as long as I did - not nearly as exhausted as those putting in the daily grind year-in and year-out for 40 years. Although my work history spans over 50 years, many of those years were part-time. That said, my SS benefit today is very high, fortunately.

Financially I am far less stressed today than when I worked and do have more discretionary income, by far. I've been retired about 5.5 years. As it happens, my SS benefit is almost the equivalent of my take-home pay the last few years I worked - because I was saving half of what I earned. So, lifestyle in retirement hasn't changed an iota. I'd been living that lifestyle while working.

Yes, I have a 'budget' to the extent I know where my money is going and what my discretionary income is. Portfolio withdrawals remain in the area of 4%. Barring disasters, I should make it to the end solvent. But, as others upthread have said, life happens.

Nonetheless, do not jump the gun on retirement. The longer you can work and the more of an annuitized income you can secure, the better off you will be. Otherwise, you will need a VERY LARGE nestegg and the know-how to manage it.
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Old 02-22-2015, 03:36 PM
 
Location: Rotonda Florida
1,393 posts, read 1,137,511 times
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Probably the biggest question we all face is: "how much is enough?". Many things factor into that.

You can reasonably figure out what it will cost you to life how you would like under current conditions. The biggest issue in our minds are; medical costs and how much higher can these idiots raise taxes on us.

Is a paid off house with a mil in 401k's along with a 30K pension and SS at 62 enough? Who knows the way the country is headed. It's a crap shoot unless you're Donald Trump or a politician.
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Old 02-23-2015, 10:30 AM
 
Location: SW Florida
9,744 posts, read 7,027,781 times
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Quote:
Originally Posted by Escort Rider View Post
I often take the road less travelled, so this may not be very helpful to the original poster, but he asked and here is my answer:

I am 70 and I have NEVER in my life "budgeted" in the sense of having a list of categories of monthly expenditures. However, I am aware of my monthly TOTAL expenditures (discretionary and non-discretionary together) over time and also of my average monthly income. Since the former has always been less than the latter, I have never found it necessary to get into greater detail.

Now that probably makes it sound like I've been used to having a rather high monthly income. But the strange part is that no, I have had a lifetime very modest income as a high school teacher who sometimes worked moonlighting jobs. It also probably makes it sound like I've never done much in the way of hobbies, travel, etc. Also not true.

The seeming contradiction is resolved by the fact that I have always kept my spending on basics to a minimum. That is, my housing, clothing, food, and car expenses were (and are) marked by frugality - not through discipline (although I guess one could call it that) but through natural inclination. I have no interest in designer clothes, wine costing more than $10 a bottle, or cars at the level or BMW or Mercedes or similar.

The same pattern continued after I retired from full-time work almost ten years ago. My pension plus part-time work (the latter just screwing around at stuff I enjoy, not any serious attempt to earn money) totaled the same or a little better than the (small) amount I made before retiring. My expenses continued also at more or less the same level - I still travelled some, but in a more or less frugal manner as always. I started splurging a bit on the best available seats for live classical music concerts, but I only go once or twice a month, so the total over a year's time is not at all outrageous.

Still no "budgeting", and still income exceeds expenditures - not every single month, but on the average.

I wouldn't be surprised if most people think I'm crazy. But my method has worked for me, and has given me a lifetime of total financial security and comfort, with no stress or agonizing about money.
You're hardly crazy! Perhaps a lifetime of "budgeting" ( although this may be more like instinctively living within your means) makes it second nature to you in your retirement. If you didn't have the desires for the latest and greatest gadget, designer items, expensive cars, expensive travel- or the emotional needs to acquire those items to keep up with your neighbors, you probably won't start doing it in your retirement. I can identify with what you've said, because that's pretty much what we did too. We didn't make a lot of money although we both worked, but our needs and wants were pretty simple as those things go, we always "paid ourselves first"(saving) and considered what we had to spend before we did it. I've thought of this as sort of a tongue-in-cheek argument, perhaps, but there really is something to having to live within "not so generous" means that makes it second nature to you when you stop working.

I do believe though, that being able to live well in one's retirement years comes a lot easier when one's debt is at a minimum. Not having a mortgage, car payments, or large credit card debt makes that money available for those other things you might want, like those travel or classical music concert tickets. Your method has worked for us, too!
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Old 02-23-2015, 01:39 PM
 
48,516 posts, read 83,901,398 times
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Having retired at 52 and wife at 52 ;I can say if you can do it; its well worth doing. The difference in physical ability even if healthy between 55 and 65 is more like between 30 and 50:IMO.this isn't just us but what friends have all learned.
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Old 02-24-2015, 08:07 AM
 
Location: Somewhere in USA
581 posts, read 495,588 times
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Quote:
Originally Posted by texdav View Post
Having retired at 52 and wife at 52 ;I can say if you can do it; its well worth doing. The difference in physical ability even if healthy between 55 and 65 is more like between 30 and 50:IMO.this isn't just us but what friends have all learned.
wow that's pretty early retirement ages...the age gaps between 50 & 66+ is huge. Congrats! You both probably are in a business or paid off professionals .
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Old 02-24-2015, 11:41 AM
 
Location: SW MO
23,605 posts, read 31,471,910 times
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My wife and I spent our working lives getting paid once a month at the end of the month. It made life simple. Pay all the bills on the 1st of the month and then we'd know how broke we'd be for the rest of the month.

My wife retired before I did but her pension check arrived the same time as my paycheck (direct deposit for both) so nothing changed.

Then I retired. Still no change as the pension check hit at the end of the month like my wife's but then I started receiving Social Security, also by direct deposit. It comes on the 3rd Wednesday (credited by my bank on the 3rd Tuesday) so now we had two "paydays."

A couple of years later my wife began drawing Social Security and her direct deposit hits on the 4th Tuesday so we now have three "paydays."

Not being too bright and a bit OCD, this was beginning to get a little confusing after 45 years of once-a-month paydays. My solution was to run an excel spreadsheet which lists all obligations and their due dates; to include regular deposits into savings and other accounts twice a month. It makes sure nothing is ever late, our accounts grow, I'm not confused nor does anything get forgotten or paid late.

Works for me and keeps my wife informed (that's the best part - harmony).
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