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My Mother-in-Law lived off of $450 SS per month just fine because she had no payments and minimal bills.
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Originally Posted by rdflk
Wow...I think THAT is a little low! But good for her for being able to do it. Goes to show it's all relative, I guess.
I just think people too often stress out and accept comments that you need 1, 2 Mil or morel to retire.
They don't even question it. They just repeat it and buy into it like it's gospel.
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Originally Posted by Rowan123
How did she manage to pay for housing, utilities, health care, food and the other basic necessities of life on $450 a month?
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Originally Posted by MadManofBethesda
I'd be curious to see a response to this question as well. I just don't see how its possible. I just wrote out all of my parents' bills so they could see what they're spending. Since some of their bills are paid quarterly, semiannually, and/or annually, they had no idea what their monthly nut was. Their Medicare supplement and prescription drug premiums alone came tozee $686/month ($343/pp).
I just don't see how one could live on anything close to $450/month when you add in food; other household necessities; Rx copayments; utilities such as electric, gas, water, and phone; rent or other housing costs such as taxes & homeowners insurance; transportation; etc.
I'll get in line to be colored skeptical about living on $450 per month. It seems to me living on twice that amount would be quite an accomplishment. There may be some unknown back-story in that particular case, such as an adult child kicking in a few hundred a month, or the person sharing a small house with someone else, or the mother-in-law saying she lived on $450 a month but actually having a bit more.
These are always interesting discussions, because I think we like to compare how much we spend in retirement with how much others spend, or compare our income stream to the income stream of others.
But one thing that complicates the discussions is tossing around vague terms that are hard to interpret, such as, "My aunt had a pension". Even if the statement is "a small pension", we are left to wonder how small is "small". Pensions vary so widely, depending on the following factors, and perhaps other factors I failed to think of:
1. How generous was the particular pension system?
2. How many years did the retiree work under that particular system?
3. How high was the retiree's salary on which the pension is based?
4. Are there any medical benefits which go along with the pension?
5. Is the pension inflation-protected, and if so to what degree?
6. How "secure" is the pension, i.e., what is the level of confidence that pension will be there 20 or 30 years down the road?
I am going to try to be specific about my own situation. (Maybe I shouldn't be answering here because I do not consider myself to be living on "little", but here goes anyway). I have a secure (Calif. State Teachers' Retirement System), inflation-protected (against moderate inflation), no-medical-care pension. Upon my retirement ten years ago at age 61.5 after 34 years of service, my pension was paying me $53,340 per year gross, and the amount was/is taxable by both the feds and the state. The cost of living adjustments in ten years have brought that annual gross amount up to $63,940 at the present time.
Bottom line: With a paid-off town house (paid off at about the time of retirement) my total expenditures have been considerably less than the net pension income. (Not every single month, but over time. For example, one month eight years ago I paid $27,000 cash for a brand new car. Still, that and an $8,000 interior remodeling job left me with an over-all surplus after ten years.) Remember that I live in a high cost of living, high tax area. I live with reasonable frugality but I do allow a few luxuries, such as prime seats at classical music concerts. I have done some travelling within the U.S. and Canada, but no other foreign travel.
I believe I would be fine even if I didn't have one cent in savings, although I wouldn't feel comfortable with that personally and in fact I do have some savings, the total amount of which has grown somewhat (but not substantially) larger since I retired ten years ago.
I'll get in line to be colored skeptical about living on $450 per month. It seems to me living on twice that amount would be quite an accomplishment. There may be some unknown back-story in that particular case, such as an adult child kicking in a few hundred a month, or the person sharing a small house with someone else, or the mother-in-law saying she lived on $450 a month but actually having a bit more.
I suspect SSI would kick in to bring it up to the poverty level. I think SSI tops you up to $721/month. Some states also kick in some money. Layer on food stamps. Hope for elderly housing.
I am going to try to be specific about my own situation. (Maybe I shouldn't be answering here because I do not consider myself to be living on "little", but here goes anyway). I have a secure (Calif. State Teachers' Retirement System), inflation-protected (against moderate inflation), no-medical-care pension. Upon my retirement ten years ago at age 61.5 after 34 years of service, my pension was paying me $53,340 per year gross, and the amount was/is taxable by both the feds and the state. The cost of living adjustments in ten years have brought that annual gross amount up to $63,940 at the present time.
Bottom line: With a paid-off town house (paid off at about the time of retirement) my total expenditures have been considerably less than the net pension income. (Not every single month, but over time. For example, one month eight years ago I paid $27,000 cash for a brand new car. Still, that and an $8,000 interior remodeling job left me with an over-all surplus after ten years.) Remember that I live in a high cost of living, high tax area. I live with reasonable frugality but I do allow a few luxuries, such as prime seats at classical music concerts. I have done some travelling within the U.S. and Canada, but no other foreign travel.
I believe I would be fine even if I didn't have one cent in savings, although I wouldn't feel comfortable with that personally and in fact I do have some savings, the total amount of which has grown somewhat (but not substantially) larger since I retired ten years ago.
Most late boomers and anyone younger than that is looking at a far more bleak outlook. Unless you are a federal/state/local worker, there is no such thing as a pension these days. You get your Social Security check and live off what you have managed to save in your lifetime. If I defer my Social Security check until age 70, it's an inflation-protected $41,664. I then top it up with distributions out of my 401-K/IRA accounts. If I've managed to build up my 401-K/IRA accounts to $1,000,000, I'm looking at about $40K/year in distributions. Most late-boomers don't have $1,000,000 in retirement savings, most late-boomers don't have 35 years of high income to get the maximum pension, and most late-boomers will opt to start collecting earlier than age 70 because they have to. The Census Bureau says that for the 50 to 64 age bracket, the 70th percentile for net worth is $333K. You own your house but probably have a mortgage on it. You have a bit of retirement savings but not enough to make much of a difference. You probably have something happen where you can't work until you hit your full retirement age. Layoffs. Downsizing. The oldest workers who make the most get caught up in carefully masked age discrimination. ...and that's the 70th percentile where you might get a $20K to $25K Social Security check, your house is paid for, and you have a bit of savings for emergencies. It's quite grim for the bottom half.
I don't have a pension. I did the math. I'm not collecting Social Security until age 70 to get the maximum benefit. I fortunately have the means to fund myself between age 65 when I'm planning to retire and age 70 when I'm going to start collecting Social Security and taking IRA/401-K distributions. My numbers won't be too far off from yours if I stay on-plan for the next 8 years. If I have a glitch in employment, the whole thing unravels.
You can kind of expect the voters to stop looking very kindly on the generous pensions teachers and federal/state/local workers receive when they do this math. It's pretty easy to predict that everyone will be shifted to more of a 401-K with employer matching model. Unfunded pension liabilities are lined up to crush many states, cities, and towns. Enjoy your $64K pension. A 25-year-old teacher won't see anything like that when they retire.
^^^^^^^^^ To GeoffD: I am aware of everything you wrote about. The OP had asked for people's stories, so I shared mine. Your response is a good counterpoint to my individual story, of course, as public pensions will be less generous going forward, in the aggregate, as you point out, and, as you also point out, public pensions are increasingly the only pensions left. There are some exceptions in union pensions, utility company pensions, and a few others.
What I didn't think to include in my post I will add now, namely that I feel fortunate to have what I have, and that having that is partly a result of chance - the year of my birth (1944).
Can some one who doesn't have a million dollars, and is living well in retirement tell use their story?
So many people talk about how MUCH they'll have, and how MUCH you need to live on on retirement.
A co-worker and I were talking and we just don't think you need "the average" person needs millions.
Do you think a lot of people stress out too much about needing MILLIONS in order to retire?
Everyone is different in where we live and what amounts we expect in terms of income.
Assuming the home is paid for and absence of debt a retired couple can live reasonably well on $2,500/mo and very well on $3,500 while $2,500 in New York or San Francisco would be death by poverty.
We don't have millions, we barely have a tenth of that in cash, but my wife hasn't worked in years and I will be able to work another 240 more days (I am not counting down or anything) which will bring me close to 2 years beyond my FRA at which time both of us will begin to collect our FRA ss.
I mention my wife hasn't worked in years so when she does begin to draw her FRA ss it won't be as if we lost income by her not working but will enjoy an increase. I am looking forward to the extra free money in a few short months. It's all getting real close.
With the tax advantages, all our income will be federal and state tax exempt, and pensions (some of which do suffer the pension offset penalty) when I pencil everything out our actual equivalent take home pay will go up by a couple hundred a month after I retire. Looking at our budget we can live comfortably in retirement and bank $2,000/month if we watch our spending just a little bit.
What on earth do we need $1.4 million for or when you get right down to it any savings at all? I laugh at the people who tell me I need $1.4 million because the whole concept is ridiculous given our retirement income and where we live.
I keep adding up the numbers to see when we care exit the working world.
I always come up w/different figures but they are always good.
I have work 24/7 with a few vacations for the past 25 yrs. I think Im more afraid of not working
than I am afraid of $ running out. We have invested almost every extra $, some have turned out good and some not so good, we currently have 0 house payment and could stop working today. Right now my business is better than it's ever been but at the same time I could quit tomorrow because my business has also gotten much more difficult since the last housing crash.
Here is a retirement calculator I found and once you get the hang of it its fun to try different scenarios and see what the out come is.
Depending on what happens in the next few years, I will likely be retiring as part of a couple with maybe 700k (but mostly pretax) or solo with 300k (figuring I would end up with the small "half"). SS will be at or very near max payout as I have hit cap for about the last 20 years and likely will the next 6-8 (the amount of time before I retire). As others have said, it is all about what expenses will look like. My plan is to buy in a reasonably priced restricted community so I will have a pool and clubhouse I can walk to that has some activities. Looking at a few places where I could buy for ~100k and keep taxes+fees+utilities in the $500/month range. Probably will get a new car that is something like a Fit - good mileage, likely to last a long time, good warranty - at or near retirement. I am hopeful that the home and car can be bought from equity from current home so there is no tax penalty. Until the car or home needs something major done, I could likely live well on SS in the 2500 - 3000 range (depending on my timing). A lot hinges on staying in reasonably good health of course.
My parents and their brothers and sisters were all depression era products.
I can't really attest to what my aunts and uncles saved or had in their bank accounts, but none of them were ever destitute nor living on the edge.
They always had a roof over their heads, clothes on the kids backs and food on the table.
A lot of them were in the diner/restaurant business and while they did great, they were not millionaires.
I don't recall them taking lavish trips to Europe or anything like that.
Big treat was getting all the sisters together for a week in Wildwood, NJ.
I think that story behind them was that they were always saving for their children's futures and not thinking so much about themselves.
How did she manage to pay for housing, utilities, health care, food and the other basic necessities of life on $450 a month?
She was in low income housing she only had to pay $75 per month including utilities. She did have a supplement insurance plan she paid $80 plus Medicare. Spent very little on food and other basics.
She perfectly content to stay home and put puzzles together. She never bought anything extra for herself unless we did for her Birthday and Christmas. She was a very proud woman. For full disclosure, we probably helped her out with about $600 worth of food for the year. As my wife would go buy groceries when she go visit her. She got a ride to where ever she needed to go by the Senior Transportation system for no charge. Of course, she had no cable, or internet. She did have basic telephone for $20 per month. I think that was reduced to that amount because of income.
Anyway, I understand that is on the extreme side of income to live on but can be done. Most of us on CD are hopefully much better shape financially but makes the point of the OP people can live with much less then you think you can. You would just have to make adjustments.
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