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In retirement, a lot of costs may go down. For example, you likely won't commute to a job. Too many variables to consider to answer this with yes or no.
In retirement, a lot of costs may go down. For example, you likely won't commute to a job. Too many variables to consider to answer this with yes or no.
we do way more driving now being home and free to do whatever we want every day .
To contrast, my 80-something mother lives in a low COL town in rural Washington -- no state income tax there either. But her monthly spend definitely exceeds 2700:
HOA 950 (this includes all utilities)
Prop Tax 200
Car 400
IRS 300
Insurance (house, car, umbrella) 200
Medicare Part B 250
Medigap 200
Private Doctor "concierge" fee 100
Other Health 100 (drugs, copays)
Food & Entertainment 500
Miscellaneous (arts & crafts, cell phone, travel, gifts for grandchildren) 500
That's $3700/ month. Her investments and social security bring in about $4000 month so she's cash positive. But she is not a spendthrift -- her budget revolves around pretty basic costs. When you start to look at retirees with club memberships or who travel, the 5000/ month outlay becomes the norm.
People underestimate their health care spend in retirement -- my mother does have a concierge service so that she can see "her" doctor at any time -- but the big costs are the never-ending Medicare insurance premiums (450, including her Medigap coverage) plus prescription medicines at 100/ month. I think it's wise to plan 1000/ month for health care costs in retirement.
And utilities (which are more than half of her homeowner association fee) plus taxes continue to be significant line items. Another 1000/ month minimum for those expenses.
IF you own a home and reliable car, you can probably make do at 3000/ month. But that would require careful frugality.
That's crazy HIGH. NOT "BASIC COSTS" LOL.
Are you SURE about that?
What kind of "HOA" is this? Mine is 55+ HOA $350, inclusive of all but Elec ($60.00 avg - running AC in FL) Includes cable TV and we have internet in the clubhouses. With a ton of amenities. Is it a Continuing Care Community that includes MUCH MORE than just basics of daily living? Did she have to make an equity payment to buy into the community? I"m guessing no, since she wouldn't have a prop tax fee for that.
Is it a large single detached house or luxury condo?
WHY is she spending $400 per month on "car"? LOL She has a car loan? LOL again.
$2400 property tax in "rural Washington"? Mine is $495 in FL. Some people in my HOA are paying the same amount since 20 years ago.
Her "misc" also funny. NONE of that is a "basic cost" or relevant to the OP question.
A hint is - she has the lately worthless concierge doctor and an umbrella. I guess because she still drives?
I'd guess your mother is very well off and had no interest in downsizing like most people her age. I'm all for it. But it's kind of a big exaggeration here, IMO. Maybe it all works out in the end, though. With missing items like home maintenance, and spending like hairdresser, manicures etc.
Last edited by runswithscissors; 08-26-2016 at 09:08 AM..
I just did the retirement quiz/calculator thing on my 401k provider's website. The results said I'm on track to live the retirement lifestyle that I want. It said that I will need to have $90K a a year (in future dollars....the year 2051), but I will actually end up having $120K a year. Does that mean I'm oversaving?!
I just did the retirement quiz/calculator thing on my 401k provider's website. The results said I'm on track to live the retirement lifestyle that I want. It said that I will need to have $90K a a year (in future dollars....the year 2051), but I will actually end up having $120K a year. Does that mean I'm oversaving?!
The retirement calculator is likely assuming inflation-adjusted market returns on your retirement portfolio that might or might not happen. 3% average annual return on investment gives you a totally different outcome from 8% average annual return on investment. Lots of people have portfolios that haven't tracked the inflation rate since the bond market is so lousy.
To answer the OP's question in the title of the thread, I could live a modest but comfortable retirement on $32K after-tax cash flow. My house is paid for. Health care would be by far my biggest expense. I don't aspire to live on $32K and, at age 58, my worst case if I never work again is a big higher than that but I'd have a roof over my head, food on the table, and a bit of low cost social activities. The ski condo goes. The boat goes. I wouldn't be doing any travel. I'd have to be really careful with bar/restaurant.
I just did the retirement quiz/calculator thing on my 401k provider's website. The results said I'm on track to live the retirement lifestyle that I want. It said that I will need to have $90K a a year (in future dollars....the year 2051), but I will actually end up having $120K a year. Does that mean I'm oversaving?!
You are only over saving if you are living eating Kraft Mac and Cheese every meal while doing it. The point here is live today as well as save for tomorrow. Tomorrow is very important, but so isn't today.
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NONE of that is a "basic cost" or relevant to the OP question. 
