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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.
And people wonder why state govt's are running out of money
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.
While it's still amazing, your explanation helps to understand what at first seemed incomprehensible. We have to add the $50 per month food help which you and your wife give. But of course the big piece there is the housing issue: $75 covers all housing expenses including utilities! Most of us have to include property taxes and home repair/maintenance/insurance along with utilities even if we have no mortgage. So subtracting the $75 dollars for all housing related expenses and adding back in the $50 food help from you and your wife, she lives on $425 per month which needs to cover only part of her food, her clothing, her incidentals (tooth paste, soap, etc.), her medical supplement. There is no car ownership involved (sort of obvious at that level of income).
The huge tax payer subsidies skew the whole thread title question, in my opinion. We tend to think in terms of our own situation, and most of the people posting here have to pay for their own housing (however modest), their own transportation (whether that includes car ownership or not), their own utilities, their own food, etc., and on top of that we have to pay for all those items for other people via our taxes.
The implicit meaning of the thread title question, at least as I took it, was how are we doing financially in retirement if we are paying our own expenses. In those terms, living on three times the $450 amount ($1350) would be quite a challenge and quite a struggle.
She was in low income housing she only had to pay $75 per month including utilities....
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.
Oh, c'mon now. Having government pretty much pay all of your housing expenses, leaving you with only a de minimis payment of $75/month, is not in any sense of the word getting it done.
By that rationale, a homeless person with no money living in a sheltor and getting his or her meals there is demonstrating that it, to use your words, "can be done." They just had to make "adjustments."
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.
I figured it had to be something like that. She must have been in excellent health and not have needed much in the way of medication. Glad she was able to make it work for her.
I realize people can live on less than they think they can but I have to wonder how much of the anecdotal evidence will hold true today. It seems to me that with health care costs continuing to rise, employers cutting back on retirement benefits and low interest rates that what worked in the past, may not work today or 10 years in the future.
I find it exceedingly unfortunate that I don't possess a crystal ball. I guess it's plan for the worst, hope for the best.
And people wonder why state govt's are running out of money
There are 50 state governments, not all of which are running out of money. I'm happy to inform you that whatever California's financial troubles are, they are not caused by the teachers' pensions, which are almost entirely funded by salary deductions and the employers' (school districts) contributions. If you're thinking about CalPERS with their lavish medical entitlements, the teachers are part of a different and separate system, and we teachers get no medical insurance with our retirement, unless individual school districts have decided to provide it; in other words, medical is not provided by the State of California to retired teachers.
Oh, c'mon now. Having government pretty much pay all of your housing expenses, leaving you with only a de minimis payment of $75/month, is not in any sense of the word getting it done.
By that rationale, a homeless person with no money living in a sheltor and getting his or her meals there is demonstrating that it, to use your words, "can be done." They just had to make "adjustments."
I wrote essentially the same thing, but you said it better because you used fewer words. Succinct beats wordy almost every time.
And people wonder why state govt's are running out of money
Apparantly you don't realize that that pension was contributory and replaces SS. Its not "free" money the taxpayers are ponying up. Same for most all Federal pensions. The only people that really made out are mostly all dead now, the early SS recipients that got more in a year than they contributed in their whole lifetime. While COLA pensions are rare, the vast bulk of it was employee and employer matching, just like SS. I don't know what the contributions are, but I know by the time I retire, my SS contributions between FICA and Med, myself and my employer will be over $500k, which they had started collecting as much as 40 hears earlier. If I had that same contributions in fixed bonds even, it would be close to a million. So I deserve every cent of that money, just like the state and federal pensioners do. I have neither a state nor federal pension, and used to wonder the same thing..how are they so large? I do have a private pension, non contibutory, that when added to my SS will easily exceed the public pensions, for similar type jobs. All I had to do was make less salary than I could have in other private sector positions that were similar, a decision I made early in life, and to this day, not sure if I regret it or not.
My pension is not COLA, but will be plenty big for the first 10-15 years of my retirement, before inflation starts eating it away. I could easily adjust my living conditions to live comfortable off both, but I save hard to supplement that and live better, not just comfortable, without worry. The worst that could happen is I am forced to live "only" comfortable. The better outcome is added fantastic travel. I dont need or want a monster house with a pool and new cars every few years. But I do want to do international travel in comfort, and that can be spendy, especially for 2.
The point is, the OPs original question depends on what you want to spend in retirement, vs what tou have to spend. Just like the expected expenses poll earlier, where the vast majority were under $60k year, while like 6 people were above that level. Almost representative of income reality.
In the nonprofit world we count "in-kind" (noncash) income on the balance sheet. Also applied to individuals, "in-kind" line items are as real as cash line items. So on the income side, the actual cash value of contributions by way of housing (rent assistance), food (food stamps), health insurance (subsidy) is figured in, to get a fair analysis. These same items are figured on the expense side. So a total budget would actually be much higher than what is disclosed as cash income.
I am from a poor area and from a working to middle class family for the area, lower to working class in most normal areas, so there simply wasn't all that much money to be had.
I know very few millionaires, and I don't think any of those are retired. Of the retirees from back home in Tennessee I know, most are reasonably frugal people. The common threads were that they were debt-free going into retirement and lived in a low cost area. I can't think of any of those retirees who are driving expensive cars or taking jet-setting trips. Most are content to putter around town.
If that's you, a million or even half-million probably won't be needed.
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.
Kill me now. That's not living, that's just existing. I would not want to live like that nor work until I'm 80.
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I would not want to live like that nor work until I'm 80.
