Can a single person live off $32K in retirement? (adult, family, travelling)
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some areas. here in nyc half the housing stock has not been raised in two years for millions . there was a poll here on city data about rent increases . i was quite surprised at how many in all parts of the country said they got no rent increases or very small ones
PhureeKeeper, most people do not go into an Assisted Living facility - it just is not affordable and only a small percentage of the elderly go into one.
And few go into Long Term Care - a small percentage.
Neither type of facility is affordable for many people. Some will get rid of financial assets and enter a facility of which care is paid by the government.
more important is having some extra money to be able to modify and stay in your own home with help if needed .
that is something most of us will need . with the statistics on this stuff being a generation old , and us adding 1 more year of life every 4 years since 2000 this is a big concern .
the up coming generation has 2x the people vs the older statistics based on a generation ago . in fact when medicaid cut the budget for skilled nursing facility's by half in the 1990's they shipped folks off to kind of half way houses and they were no longer counted as being in a snf so the statistics looked very small .
don't forget boomers are not really old enough yet to have long term care issues .
the idea now is to not get shipped off 100 miles away to some dirty medicaid home and TO HAVE CHOICES . choices cost money .
My rent in Indianapolis went up roughly 7% each year for the past two years, and this was in a wealthy suburban area that is mostly homeowners. Newer apartment complexes or those in more hip parts of the core city have gone up more. Several of my friends in Nashville have seen rent go up by 50% or more since 2010/2011.
The average retiree cannot keep up with the cash burn that is consistent rent increase year over year in this landlord's market.
My rent in Indianapolis went up roughly 7% each year for the past two years, and this was in a wealthy suburban area that is mostly homeowners. Newer apartment complexes or those in more hip parts of the core city have gone up more. Several of my friends in Nashville have seen rent go up by 50% or more since 2010/2011.
The average retiree cannot keep up with the cash burn that is consistent rent increase year over year in this landlord's market.
Rent here has gone up 60 or 70% in the last 20 years that I've lived here. The OP isn't retiring for 30 years. So I think he would have to factor that into his plans. Plus everything else has gone up too, from food to internet costs to gasoline.
$32K might be comfortable now, but in 30 years when OP retires, it might be barely above poverty level.
Rent here has gone up 60 or 70% in the last 20 years that I've lived here. The OP isn't retiring for 30 years. So I think he would have to factor that into his plans. Plus everything else has gone up too, from food to internet costs to gasoline.
$32K might be comfortable now, but in 30 years when OP retires, it might be barely above poverty level.
I'm a few years younger than OP and think $32k is OK now, maybe...with little debt, healthy emergency fund, and a cheap area...maybe.
No idea where you are, but 3%-4% annual rent increases are extremely modest. I'm betting you're in a low COL area, likely a small town or rural area in a rural/small state that doesn't have a great job market.
I got my rental in an affluent suburb of Indianapolis in 2014, paying (I think) $700/month. It was up to $820 this year, and each year it is increasing by $60-$70/month. Even with three large complexes coming up in the last year within a couple of miles of my building, rent keeps increasing as construction/vacancy is not keeping pace with rental demand.
Other than health care and a college education (which shouldn't matter to a retiree), I can't think of any general item increasing at a higher rate than rent in growing cities with healthy job markets. It's also important to note than jobs are increasingly consolidating in ever fewer urban areas, leaving many small towns and rural areas basically out in the cold on professional level jobs. Many of these same areas also have restrictive zoning or building codes, retarding new rental construction, and leading ever more people chasing the same amount or even fewer rentals, causing prices to, in Obama's words, necessarily skyrocket.
The rentals (and much of the new home construction as well) which are coming online are often high end and at the top of the market, leading to a shortage of affordable rentals and starter homes. For a retiree on a budget, all the top end construction with the acute shortage at the lower and middle rungs of the rental market are especially punitive.
There are some areas, cases, and situations where renting makes sense. As I age and gain experience, I increasingly see renting as a huge, huge money sink in more and more cases.
My rent in Indianapolis went up roughly 7% each year for the past two years, and this was in a wealthy suburban area that is mostly homeowners. Newer apartment complexes or those in more hip parts of the core city have gone up more. Several of my friends in Nashville have seen rent go up by 50% or more since 2010/2011.
The average retiree cannot keep up with the cash burn that is consistent rent increase year over year in this landlord's market.
I have spent many years as a landlord. It is very common along landlord to bump rent year-to-year so long as a tenant stays in the same apartment. But when they leave the rent goes back down.
Rents go down to lure new tenants in. Rents creep up slowly to increase profits.
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?
Depends on where you live.
San Francisco no. Not even close but in say Mesa, AZ you'd be fine.
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