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Biggest key to retirement is having no debt. If you have everything paid for (hopefully including your house) then what you need to live is much more controllable. You are going to have fix expenses like taxes, real estate taxes, insurance, utilities, gas etc so you need to add those all up. Then figure your variable expenses like what how expensive groceries you buy, clothes, travel, activities you enjoy, house repairs, medical costs. Once you do your financial worksheet that will give you a very good idea what you need to live off each month. If you are in the negative you need figure what to cut. It is just like a business income vs. expenses. Hopefully, you have money set aside so you don't have to worry about the month to month stress of bills.
Our retirement situation is as follows. We pay property tax, auto and home insurance annually. So one month per year our expenses run around $12K. The remaining 11 months our expenses usually don't exceed $3K. We have zero dept and only standard deduction. My insurance is paid for life by the company, and my wife pays only $165 per month. Our monthly retirement income is five figures. Our SS is taxed at 85% and we are in the 25% tax bracket, our effective adjusted tax rate is 12%.
So in retirement we actually save more than we did working.
I wish you would give some details explaining how you are able to live on so little. As a homeowner, do you put aside an amount each month to build up a reserve for big-ticket items that can hit you, such as roof repairs, replacing the heating/air-conditioning system, major plumbing repairs, and the like? Those things do not necessarily reccur on a predictable schedule.
Anyway, it sounds like you are very disciplined with your spending.
Yes, we do have a cash reserve for big ticket items. Otherwise, we live solely on our social security which is $2,414 per month. From that deduct the $908 for health insurance each month and we have $1,506 to live on. We do also have an IRA, but so far we don't need to use it.
We put $100 away each month for truck maintenance and repairs, which haven't amounted to much. It's a 1997 Toyota that was made in Japan and has been a great truck. It will most likely outlive us.
We also put away $276 per month for the bills that are not monthly such as auto insurance, house insurance, property taxes, auto club, and auto registration.
Our food budget is $400 per month and $25 for non-food grocery items such as laundry detergent, paper towels, TP, etc.
Utilities: Electricity is on average $125/mo. water is just under $15/mo, phone and internet $72, trash is just under $20/mo. We have a pre-paid cell phone for emergencies that is $11 every 90 days.
Gasoline varies and we have grocery rewards that reduce the amount per gallon. Lately, it has been as little as $15/mo., but more often it's around $30/mo. We don't drive a lot, so just fill up once per month, or so.
Haircuts: $12.00/mo.
Prescriptions: $115
Gardener: $65
I'm doing this by memory, but I think that's everything. Leaving us between $300 and $400 for hobbies and what not.
Our retirement situation is as follows. We pay property tax, auto and home insurance annually. So one month per year our expenses run around $12K. The remaining 11 months our expenses usually don't exceed $3K. We have zero dept and only standard deduction. My insurance is paid for life by the company, and my wife pays only $165 per month. Our monthly retirement income is five figures. Our SS is taxed at 85% and we are in the 25% tax bracket, our effective adjusted tax rate is 12%.
So in retirement we actually save more than we did working.
Your annual payments for property tax, auto and home insurance come to $12k ? Isn't that extremely high?
Your annual payments for property tax, auto and home insurance come to $12k ? Isn't that extremely high?
Submariner, Texas has very high property taxes. For instance, a friend who purchased her 4,062 sq ft home in 2009 for $550K was billed $15,000 for her 2015 property tax.
My home is 1,600 sq ft and I pay $6,000 annually for property tax.... and the property tax keeps rising annually.
Submariner, Texas has very high property taxes. For instance, a friend who purchased her 4,062 sq ft home in 2009 for $550K was billed $15,000 for her 2015 property tax.
My home is 1,600 sq ft and I pay $6,000 annually for property tax.... and the property tax keeps rising annually.
Yes, we live in a very small town in Texas and property taxes are very high for what we have. But we are 100% exempt, so that helps. Disabled veteran - 100%.
I know people that live in what some would consider shacks that have to set up monthly payment plans because they can't afford it otherwise.
Your annual payments for property tax, auto and home insurance come to $12k ? Isn't that extremely high?
It is $276 per month, which is $3,312 per year. That is to cover property taxes, house insurance, auto insurance, auto club and auto registration. I think that's very reasonable for all of those expenses.
Submariner, Texas has very high property taxes. For instance, a friend who purchased her 4,062 sq ft home in 2009 for $550K was billed $15,000 for her 2015 property tax.
My home is 1,600 sq ft and I pay $6,000 annually for property tax.... and the property tax keeps rising annually.
Wow that is very high as you have same size house as I do and I pay $2000 but then again
Texas has no income tax as the saying goes they need to get their money somewhere
Submariner, Texas has very high property taxes. For instance, a friend who purchased her 4,062 sq ft home in 2009 for $550K was billed $15,000 for her 2015 property tax.
My home is 1,600 sq ft and I pay $6,000 annually for property tax.... and the property tax keeps rising annually.
I see.
Our home is 2400 sq ft, with wrap-around covered porch and carport the total foot-print is 4800 sq ft. Built in 2005 it is assessed at $60k. Along with 150 acres of river frontage land our property taxes are around $800/year.
Our auto and home insurance add another $1500/year [Prius, Honda minivan and a commercial dump truck].
I pay no Income Taxes. [They just made military pensions tax-free in this state starting this year, but it was a political move to favor votes. The tax brackets are set high enough that military pensions fall well below them, I have never paid Income Taxes in this state.]
I see now why some people 'need' so much in retirement. I was wondering why the numbers that posters have been claiming were running so high. Now it makes more sense.
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