How much monthly income to retire?

[Bentley]

Hey everyone; I was wondering what others thought about the cost of living after retirement. I think it would be very difficult for anyone to retire if their home is not paid off. As of this year, my home is paid for on our 4 acres.

I also realize there is a ton of variables to this question as well, such as the cost of living where you are, and what your lifestyle is. But assuming that there was little or no extravagances, two vehicles, nice garden, and health insurance was less than 1000 per month, how much would it take?

I suspect the answers will range from $1200 per month to over $6000.

How about you?

[cc-rider]

Good question. I don't expect my expenses to change too awfully much. I drive only a couple miles to work, so no savings there by being retired. I spend about $100 a month in groceries/toiletries/clothes, and I don't expect that to change much, except I'll eat BETTER when I'm retired because of more time to garden.

By the time I retire (3 more years...woohoo), my house, car, and basement loan will be paid off, leaving me with only taxes, insurances, and normal expenses. No other loans, etc. That's how I hope to be able to survive on less money -- no debts. My only fear is that someday I'll need a different car, and then I'll have that expense.

[Jenn]

I'm a youngster when it comes to retiring so for now I am refusing to retire because I don't trust that however much I budget to retire on/with will be enough for the next 50 years. I know we don't need our monthly income to live on because that has varied all over the place and we stash away a good part of it for retirement most months. But until the kids are out of college and I see how expensive DH is once HE retires, I'm gonna stay in the work force.

[Beeman]

Very hard to calculate. My stuff has been paid off for years but it still keeps wearing out and needing replacement and or repairs. Insurance and taxes have only gone up. If you only knew how long you'd live it would be much easier to figure.

[Patt]

We "retired" at 42 this year on $1,600 a month.

[Pam6]

If my DH retired now we would need more per month than he makes now because he would find all kinds of things to spend money on since he would have so much free time! Since we still have a house payment we would need at least $3k a month to live. Once the house is paid off and all 6 kids move out that amount could probably be cut in half.

[longrider]

Most people in the old days made pretty close to what they spent during the year(including savings plan.)

These days most people spend (borrow) more than they make in a giving year. My brother and parents each do this. As do nearly all of my friends.

For me retirement is easy. I am cutting out what I dont need (and still have a good life) and am substituting what I can in order to not need to go to walmart that much.

My plan is to make the transition to retirement without noticing it.

I read in a CNBC article yesterday that I would need $1 million dollars put away to support a $50k a year habit of spending. No way I could come close to that kind of savings.

[Micheal]

When I retired, 3 years ago next month, between SS, pension(s), and some other investments my retirement income was a tad more than my gross income was while working. The only bills I had were the everyday bills everyone has, but I was debt free as to any type of bank loan.

I found that because of my (our) lifestyle that even after retirement I didn't need to tap a good portion of that available income. So as I've aged into these (tarnished ) "golden years" I've been lucky enough to keep adding bucks to my retirement/emergency/travel/rainy day/wanta buy/etc fund.

I would offer, via my own personal view, that one can not say that a nest egg of x number of bucks is all that will be needed. One's health, outlook, family needs, and some unexpected events can and most likely will occur just as they did while one was/is working.......

[ET1 SS]

I retired in 2001, my pension gives me $1390/month.

No SS yet, when I do qualify for SS it's amount will be subtracted from my pension; so instead of getting one paycheck like now, I will then get two smaller checks which will total the same amount as I get today [$1390].

We have 150 acres and we are developing our homestead to become more self-sufficient.

[Belfrybat]

I receive $1200.00 SS and live quite nicely on that, including paying for a health care policy ($311.00). My savings account is pretty low, so I'm praying I don't have an emergency any time soon. Everything is paid off and I figure my truck should last another 8-10 years (2002 model). I've been putting away $150.00 a month towards truck replacement/ maintenance on the house, etc. I figure if I ever end up with a real emergency I can always get a reverse mortgage on the house to carry me over. Wouldn't want to, but at least I know that's a possibility.

[Tricky Grama]

I'm retired-since 1/06-SS since last yr. DH is not retired but out of work for 1 1/2 yrs. Home is pd for as is our land an hr away. I want to sell this home in the 'burbs & build on our land but that's prolly not gonna happen. If it was not pd for I don't know how we'd make it now. We'd be into the IRAs prematurely, I guess.
Also have a rent house in a little town north of here. Adds some income + helps pay taxes, etc.

[pancho]

A couple of weeks ago I volunteered to retire. The place I work is laying off a few people. Must save $18 million in the next 2 months. Even though there is only 7 in my department the boss thought he might have to lay off 1 person. I knew who he planned to lay off. That person could not afford to be layed off. I volunteered to take the layoff if there was one.
I think my expenses would drop dramatically.

[Lyra]

My generation and those younger than me will never be able to retire. So don't take your retirement for granted.

[ChristyACB]

Pancho - That is extremely kind of you! What a wonderful thing to do for another person.

Bentley - Like you said, it is just so variable. I've been asking myself similar questions and finally I came up with something that has helped me a lot. It's called YNAB - You Need a Budget. It's a software that is meant for budgeting but in a far more intuitive manner and it helps you get ahead and achieve goals. Anyway...

I used it to figure out what I really spent a month (who knew I spent that much on stuff!) and then used it to figure out, quite easily, what was related to my working and what was related to playing. For example, the spending pattern I have changes drastically when I go on leave than when I'm working.

Then I figured how all that related to the new life in a different location by setting up parallel budgets. I really was surprised to find all the things I'd missed in my initial assessments and also surprised that with a decent budget, how much extra I would have a month even with less than half my current pay.

I'd highly suggest it as a tool for today and for getting ready to retire and then maintaining control once you do.

[wwubben]

Originally Posted by Lyra

My generation and those younger than me will never be able to retire. So don't take your retirement for granted.

You spend less than you make and put it in savings or property and you will have no problem retiring.Big spenders will always be behind.

[Beeman]

Originally Posted by ET1 SS

I retired in 2001, my pension gives me $1390/month.

No SS yet, when I do qualify for SS it's amount will be subtracted from my pension; so instead of getting one paycheck like now, I will then get two smaller checks which will total the same amount as I get today [$1390].

We have 150 acres and we are developing our homestead to become more self-sufficient.

I thought you had rental income property?

[salmonslayer]

I retired in 2001, my pension gives me $1390/month.

No SS yet, when I do qualify for SS it's amount will be subtracted from my pension; so instead of getting one paycheck like now, I will then get two smaller checks which will total the same amount as I get today [$1390].

I had always assumed you were retired military which doesnt have an offset of the military pension and Social Security. Thats a tough one and if you dont have a COLA wow. Any hope that will change with all the new regs?

I know I was surprized at how much my miltary pension was when I retired and I get enough even after taxes, SBP, and dental insurance that I dont have to work. I also have a small state pension from a past employment period and federal TSP and the wife has a state pension, a 401K from a 10 year period she worked in private industry, and she used deferred compensation to sock away money the whole time she worked for the state so when we hit our 60s we will be set. Unfortunately, we can only draw on the military pension and my small state pension at this point without a large tax penalty.

What allows us to get by very comfortably is that we have no debt, we built up a considerable savings and our health insurance is paid for so if your looking to retire let me add to those saying dump your debt, build up a sizable nest egg, and adjust your monthly spending habits. We decided we wanted to retire young and live simply but securely on a homestead and we worked towards that goal.

We dont have anything fancy but we dont regret it for a minute..I may get another job and I may not...its just nice to not have to worry about having to have a job to pay the mortgage or put food on the table.

[motdaugrnds]

I can only give our experience. I retired a few years ago due to both the lack of jobs and the health of my Mother. Now have only my SS to live on, which is next to poverty line. My grown son was disabled a few years ago and gets even less than I do in DSS. We do "not" owe anything at all; so our monthly expenses consist of only what "being on the grid" neccessitates, i.e. electricity, phone & oil for the furnace (most costly 2-3 x year). (The auto & farm insurance is difficult sometimes to pay and, since we have not been able to rennovate our pastures, our "baled" hay for winter feed is difficult; yet, we have managed so far.)

We grow our own food (dairy goats, chickens/eggs & vegies). We don't have much; but never did value what most people value anyway; so we get along fine.

All the above keeps us alert to what we spend and how; yet the neccessity to do all maintenance/work coming due ourselves helps keep us physically active. We are not suffering and our spirits are high, mostly due to our "spiritual" awareness.

Hope this helps.

[kmam10]

It depends on health insurance. That is our single largest monthly expense by a factor of 3. It is high deductible, but when you get to a certain age it is expensive no matter what. We do have a very good policy, but health insurance is not an area to go cheap. We are both in great health, but accidents happen and even people in great health start having problems as they age.

Depending on your age, I would be careful depending completely on a pension. Have multiple sources of income. My father had one of his pensions cut during the 2001/2002 recession, and it was a permanent cut. Long term, pensions may or may not be sustainable. Most states have overpromised health care and pension amounts to their retirees, and the rest of us don't have the money for the tax increases that would be needed to support the civil servants, so I don't know what will happen there.

Have the house paid for. That used to be a given for retirees, and I am amazed at the number of people who retire today and still have a mortgage. They are the ones going back to work, or trying, when things get tough.

Retirement will cost more than you think, even without all of the travel and other things you hope to do.

[where I want to]

Well- my experience has not been as rosey as some of the ones above.
When I retired, my house was just paid off, as was my truck and I carried no debt. I calculated what my income would be and what my expenses were, and although tight was doable. My wants were not too large, except for my two retired horses. I don't travel much or have other hobbies that are expensive. I've always been self sufficient.
This went on for about 4 years.
Then I developed an unexpected, rare disease that causes me to have to travel quite a distance for care. And even though I had reasonably good health insurance, although expensive , my medical bills started eating up large amounts of my income. And I had difficulty keeping up my place myself. Well- boo hoo on me- I'm not really whining, just pointing out that things don't always stay the same.
Then my dog got old and is using large amounts for vet bills. I also had other surpising expenses- my brand new house needed repair. All my appliances that I put in the brand new house died within a couple of months of each other. Things like this happen.
The property taxes go up, they keep adding bonds to it. I can't make use many tax deductions as the thing that made it possible was the mortgage deduction that allowed me to deduct State tax (a biggie here), charitable deductions, etc. So taxes are actually more on my income is about half (I hadn't thought about that one.)
Somethings are a lot cheaper - I only use gas to go to town once every week or two rather than 5 days a week. I've hardly had to buy any clothes yet. My truck insurance is cheaper as I don't drive so much. But none of this makes up for the unexpected things. I also have to keep the house warmer than I used to keep it as I'm here all the time.
My advice is to plan on needing more than your direct expenses. If you notice, the people who seem to do the best have multiple sources of income even in retirement.

If you really want to have a good idea of what it's going to be like- try living on your expected retirement income for 6 mos or a year. Put the difference into your retirement savings. And see if you're OK with it.