Can a single person live off $32K in retirement? (milk, cancer, Florida)
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This is deja vu all over again . We just see this type question often here. There is no way, this far in advance to predict what will happen in your life between now and then. Just meeting someone new and falling in love changes everything and it can't be predicted where you may end up for employment reasons, etc, etc. That is what I mean by choices, actually versatility of situations is a better description . I agree living life is important, but it is a very grey area where the line between sacrificing tomorrow for today and visa versa actually is. In my 30's I never dreamed I would make as much as I am, or have saved what I have. I was broke, shackled in a loveless marriage to a lazy spendthrift woman. After that divorce, based on my then current view of life, I would have already been retired and living well. But today, my definition of "well" vs "getting by" have changed significantly . I chose not to severely restrict my retirement lifestyle choices (no car, have to rent, must live near public transport, live in a fairly low COL location, enjoy only low cost free entertainment , etc, etc) which is what $32k limits you today, much more than $60 or $80K does. Not that there is anything wrong with living simply and frugally, but I prefer not to have my life determined by that, especially since I haven't lived that way for the last 15 years. The vast majority of people that say they would be no happier with double their income, never lived on (actually used, vs saving 50%, so always living on less) double. The freedom to retire "early" was overwhelmingly more important than the level of comfort in retirement was. No one can determine what is right for you. You have to live it and experience it, before making a meaningful decision . Just IMHO, of course, and YMMV.
I am currently 32 years old and am revisiting my retirement savings strategy. I am gay, single and plan to never have a family. I don't ever want children. I may end up getting married to another guy at some point, who knows? But that's it. For now, let's just assume I'm going to remain single forever, and into retirement as well.
With that said, do you think a single person can live comfortably off $32K per year during retirement (that's a gross income of about $2,700 a month)? This is in TODAY'S dollars, for purposes of this discussion.
I do not care about early retirement or traveling or buying a nice house when I'm retired. I just want to live average and I'm happy with that. I would certainly be willing to relocate to a low cost area, if necessary. And there's a strong likelihood that I could have no housing payment by the time I'm retired, which helps.
If it is indeed comfortable to live off $32K during retirement, then I may consider reducing the amount of money I contribute to retirement from my paycheck, because right now I am on track to having $54K a year during retirement, which I'm starting to think is overkill for a single retiree.
Thoughts?
If you can afford to, by a home so when you retire you have one less expense. Also move where you can utlize public transportation so you wont have a car and car insurance bill
If you can afford to, by a home so when you retire you have one less expense. Also move where you can utlize public transportation so you wont have a car and car insurance bill
usually a good public transportation system and expensive places to live go hand in hand .
If I retired today my health insurance premium for the insurance I have now would be in the $500-600/ month range. That was one thing I thought of when I voted "no" on the poll. I think I'm also jaded by the COL where I am now.
At $32K, one of the main considerations will be no mortgage. I own my own home. My cost to run the house (taxes, gas & electric, water, internet, cable TV, homeowners insurance, HOA dues, etc.) is about $600.00 per month. I bought a newly built home so home maintenance is about zero and expected to be so for at least 10 years.
So at $32K, I would have about $25K left for auto, food, entertainment, travel, clothing, etc. The average person could live quite well on this.
Currently, whole families live on $32K a year. Can you do it? Depends. Mortgage paid off? No rent? No car payment? Retiree friendly state? Meaning taxes! Healthcare!!! Who knows what our healthcare system will be like in 5 years let alone 30. Cost of living where you're located at retirement. You won't be able to eat out at 5 star restaurants every day. But you certainly could eat out once in awhile.
If there is anyway to sell the house without making these improvements -- or to finance the improvements another way -- I would recommend that. Taking a lump sum payout from a tax deferred account, with or without early withdrawal penalty, is not advisable because as you noted it is entirely taxable in the year you receive it. Sudden jumps in income can make other income taxable in higher brackets too. Although you are too young for Social Security OASI, I have observed people see their Social Security jump into the taxable bracket when a one-off capital gain is realized, for example.
Your home improvement plan may be one time when HELOC debt is advisable -- it's also deductible if you do itemize.
Yes, i'm working on other options for the fix-ups. Dont need TONS of money for them, but also have the $1K every quarter going to taxes. Just need to get out of here the sooner the better - and the withdrawal would help it so much. I'm an impatient person. But luckily i have someone else saying, "calm down, and wait" lol.
Pretty good but just a couple of things I see on your numbers.
1 is that healthcare above and beyond health insurance?
2 groceries seem just a bit low. Maybe $200 a month?
3 dining out $100? What only two times?
Still Reno sounds great. Weather is good and taxes there are low. COL is low and I think it is a reasonably good walking town. Depending on where you live you might have to walk to bus stop to get to downtown but everything is relatively clean and in good repair last time I checked.
I just based this off how I would do it if it were me personally. The heathcare I did was loosely based off when I had insurance through Obamacare. I want to say it was like $200 a month and the the extra would be for dental and any prescriptions as needed (assuming you are relatively healthy though). My staple groceries are just milk, Cheerio's, tunafish, lettuce, tomatoes, cucumbers, salad dressing, kale, peanut butter, cheese, bread, green apples, bananas, pancake mix, ground up beef, chicken breasts, cold cuts, some frozen entrees, and maybe some cookies or ice cream. When I dine out, it's not at high end places or anything. Maybe what I get comes out to $15 entree (I don't get appetizers,desserts, or drinks) so with tax and a tip under $20. I also don't dine out too often. When I usually order food, I'll be honest, it's usually Subway, Del Taco, or Panda Express lol. Figure that is always under $9. So assuming I eat at a real restaurant once a week at $20 each time=$80.
With entertainment I don't go to the zoo or fairs or anything like that. Not really my idea of fun. I'm more of a homebody so probably just RedBox every now and then and seeing a matinee at the movies (I once in awhile get popcorn and a soda).
I make a decent living right now and honestly my main expense is just my apartment which is super expensive for me. Everything else I do on the cheap.
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