Monthly Budget 4,000??

KingsX said:
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mathjak107's talent is how to invest to get an income to live like a king.

But being a king [or a queen as the case might be] was never my style or my desire.

Besides, kings worry about revolutions that affect the source of their incomes.

Like Pete, I'm the kind who prefers to live free and independently in a cozy little cottage as far away from royalty as possible.
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no , my investing is nothing more than utilizing the typical allocation to equities of 40-60% that has been used by many retirees to provide their income flow on all levels . in fact vanguard wellesley income with it's 40/60 allocation is one of the most popular one stop shoipping that retirees use .

so you are pretty off base with the living like a king analogy . there is nothing special going on other then to generate a safe withdrawal rate . identical investing allocations are used by millions of retirees with all sorts of asset bases and income levels . an allocation that allows a 4% safe withdrawal rate is nothing special except to those who have little knowledge of what is involved in planning a retirement income that is efficiant for the asset pile , safe , secure and consistent
 

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The op posted


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"important step in final retirement is to create a retirement monthly budget"


That seems to me to be late in the overall planning for retirement. Planning should include knowing what your what your expenses are before retiring, and what you have ready to meet the expenses you expect to have in retirement. Will what you have grow without a paycheck or will depletion take it's toll?


Expectations change as we age, what lifestyle we choose to live is unique to us all. If we plan well we can meet the cost of needs and unexpected events that can take a big bite out of our finances. Peace of mind is the real target in retirement, not how much we have to spend on wants.
 
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I don't keep a monthly budget that I adhere to... but I do keep a record of all my spending.

I also keep a monthly tally of how much of my nest egg money is where. This info is kept and updated also for the benefit of my heirs. As long as my nest egg keeps increasing month over month, I'm happy :)
 

KingsX said:
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I don't keep a monthly budget that I adhere to... but I do keep a record of all my spending.

I also keep a monthly tally of how much of my nest egg money is where. This info is kept and updated also for the benefit of my heirs. As long as my nest egg keeps increasing month over month, I'm happy :)
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Same here. We have the same bills every month and they are set up to be paid automatically when due. The only exception is the cashback CC. I keep track of that and pay it off a couple times a month (that's what we get paid is twice a month). I also keep a notebook with everything written in it for future reference by step-kids so they know what needs to be done if I would pass on before hubby. Whatever is left over with each pay goes into a savings. Easy peasy :)
 
Another notebook keeper!

I write down what I spend each day.

I make a loose annual budget and a loose monthly budget on New Year's Day based on what I've spent in the past and any known changes in spending for the coming year.

As each month goes by if my spending is a little high I try to tap the brakes a little and bring things back into line.

If something comes up that is important to me I take money from my stash and use it to fund the item or cut back in other areas, YOLO!!!



 
i love fidelity full view . because every dollar we spend is automatically tracked there is nothing to write down . we can click on any date range and bingo we get a total to date . easy peasy . fraud in decades has never been a problem because of linkage
 
Pete said:
Your a man after my own heart Gary O'!

Guess if I never found my wilderness home I would need a lot more $ to retire on, but God had other plans and led me to my Northern Alaska cabin where after 14 years in the woods I found one does not need a lot to keep one happy. I actually find it quite amusing when I do turn on my local TV and watch some of the commercials which make you feel bad if you do not have the latest of whatever they are selling.

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...and God willing I will return next spring
to drift down these waters
and live out whatever time he has given me.
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Man!!!! You got this, my Brother!!!
 
mathjak107 said:
i love fidelity full view . because every dollar we spend is automatically tracked there is nothing to write down . we can click on any date range and bingo we get a total to date . easy peasy . fraud in decades has never been a problem because of linkage
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Yeah we get it... you are in love with your computer and the stock market.

Personally I prefer writing things down the old-fashioned way. Doing so serves to reinforce one's resolve.
 
Though my home and cars (a sedan and a truck) were paid for I immediately downsized upon retirement, a plan that was set two years prior, and I was very excited about it. I may buy another home, but am enjoying easy living in my small apartment for now. I wonder if people generally confuse the term "downsizing" with "living below your means"? I agree the term living below your means is an odd one. Living smaller, or more simply, is what I chose and I love it.
 
i am not in love with either . but i am smart enough to make efficient use of my assets so my money now works for me while i spent a lifetime working for my money and i use technology to make life easier and smarter .

yeah we get you too . you live the way you do , but anyone who wants to safely draw a 4% income from their assets and invests the way it is recommended to invest to have a high rate of success , lives like a king or queen . what financially ignorant nonsense .
 
C_Sally said:
I agree the term living below your means is an odd one.
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I've head the term "live below your means" all my life.

On one level it means spending less money than you take in.

On another level it means your lifestyle should be below your ability to pay for it.

At first glance, those two definitions might seem to say the same thing, but they don't.

There is a difference between "spending money" and "lifestyle." Like a friend of mine, some people who have "champagne taste on a beer budget"... live the champagne lifestyle when they get paid... then are forced to live without either champagne or beer once that money runs out... until they get paid again... then the vicious cycle repeats. Needless to say, they are not savers. They try to continue their champagne lifestyle as long as possible by getting into more and more debt until they become bankrupt.
 
in my opinion it is really about the ratio of discretionary to non discretionary spending . means is changing all the time . you can't cut back as means changes as markets , health , rates , emergency spending , etc all change , when your budget is all needs and little wants so to speak .
 
mathjak107 said:
Once of course you identify what your means is at any given moment of course .

the problem really is there is very little out there about how to spend . we have all sorts of investing information , rules for retirement draws , etc but very little on how to spend .

how much should be ear marked for the short term ? how much should be discretionary vs non discretionary , how much should a car budget be ? , a housing budget ? etc ec . all you ever see is live below your means , whatever that is supposed to mean .

fidelity has started to work in that direction and for a non retiree came up with about a 30% discretionary spending formula . DO YOU SEE HOW THAT BELOW IS VERY DIFFERENT THAN JUST SAYING LIVE BELOW YOUR MEANS WHICH IS NOT A PLAN AT ALL . there is nothing actually actionable in those words

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Semantics. I'm quite sure that everyone who says LBYM has a plan that goes with that, including a percentage for retirement savings, etc. That's the whole point of LBYM, you don't spend every penny you could and you save the rest.
 
We wish that was true but data and studies show other wise. Most budgets are mostly non discretionary with little savings and to much spent in other areas. Many people are living within budget but the budget construction is not so good . Little is really out there about how to spend
 
When I realized I was going to retire earlier than I had originally planned, I bumped up my Deferred Compensation plan contributions to the max (20%). I was also saving/investing $1,100 a month privately. That means I had to learn to live on less money. There are all kinds of "rules of thumb" but it boils down to each person's particular set of circumstances. My colleagues, all of whom had more time in with the state than I did, said I couldn't make it retiring at 50. I was paid as if I was 51 but took a 12% cut in my pension for leaving 4 years early. Still I've had a very comfortable retirement. Learning to live on less while I was working certainly helped make the financial adjustment in retirement; I retired debt free and I have an excellent health benefits package. I've read about people who retired on 50% (and even less) of what their salaries were. Yet the "experts" say you'll need 80% at least.

What you'll need depends on what your basic living expenses are, what kind of retiree health benefits you'll have, what your retirement income will be from a pension or 401K, social security and your private portfolio. Will your lifestyle be more extravagant than is pratical? How frugal you can be and whether or not you're still in debt and how much debt will also be factors. BTW frugal does not mean you forgo enjoying what life has to offer.
 
My fixed expenses are about $40K a year but we can reduce that. So we need $3333 a month to pay all of our fixed costs. Our Social Security is $4333 a month so that gives us a $1000 a month cushion. My mandatory 401K withdrawals are about $12,000 a year so that is our fun money. Plus I have another $340,000 in 3% 5 year CD's and high yield savings account. Since we had no kids we do not need to save for any heirs. I do want to keep a few hundred thousand for assisted living. We did everything we ever wanted to do in our younger years while most here were busy raising kids and paying for their schooling. So while they are spending on cruises and other things they put off, we have been there and done that. After being in 21 countries I have no more desire to travel. Just am enjoying my hobbies and socializing with friends so we should be OK money wise. We did relocate 8 years ago into a small house and a State with no City or State taxes. My property taxes in NJ was $14K a year. Here it iw $1,300 a year. I could not afford to live up north in my retirement.

As long as I can get 3% a year to keep up with COLA I do not need to invest in the stock market. My risk tolerance is very low after the last two recessions. I have no mortgage so no matter what I will always be able to live here just on SS money. I can do without the expensive car and premium cable TV. I can get a reverse mortgage as a last resort or simply sell my house which has appreciated $90K already and move into a smaller house or apartment. For me not to lose sleep I need to make sure I have an emergency fund an no risky investments having been burned twice.
 
Vinny said:
My fixed expenses are about $40K a year but we can reduce that. So we need $3333 a month to pay all of our fixed costs. Our Social Security is $4333 a month so that gives us a $1000 a month cushion. My mandatory 401K withdrawals are about $12,000 a year so that is our fun money. Plus I have another $340,000 in 3% 5 year CD's and high yield savings account. Since we had no kids we do not need to save for any heirs. I do want to keep a few hundred thousand for assisted living. We did everything we ever wanted to do in our younger years while most here were busy raising kids and paying for their schooling. So while they are spending on cruises and other things they put off, we have been there and done that. After being in 21 countries I have no more desire to travel. Just am enjoying my hobbies and socializing with friends so we should be OK money wise. We did relocate 8 years ago into a small house and a State with no City or State taxes. My property taxes in NJ was $14K a year. Here it iw $1,300 a year. I could not afford to live up north in my retirement.

As long as I can get 3% a year to keep up with COLA I do not need to invest in the stock market. My risk tolerance is very low after the last two recessions. I have no mortgage so no matter what I will always be able to live here just on SS money. I can do without the expensive car and premium cable TV. I can get a reverse mortgage as a last resort or simply sell my house which has appreciated $90K already and move into a smaller house or apartment. For me not to lose sleep I need to make sure I have an emergency fund an no risky investments having been burned twice.
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Vinny everyone must do what's comfortable for them (as long as they don't wind up digging their financial graves). No one should lose sleep because of their investment allocations. Seems like you planned wisely and have a very good handle on your financial situation. I have a surprisingly aggressive style of investing for my age, though not as risky as speculative investing. Like you, I have more than enough to cover my personal monthly expenses with about $1,100 left over, which I save/invest. I get a pension as well as SS. When Christie was in office, he stopped our COLAs but I understand it was necessary because our pension fund is billions underfunded. We (Muslims) are not supposed to invest in interest bearing products so I focus on dividend & capital gain paying investments. "Cash" makes up about 25% of my portfolio. Due to our timeshare and it's exchange club affiliation, we can vacation very inexpensively. I'm debt free, except what I charge (and pay in full) on a monthly basis. No longer have a car, reduced fare public transportation and Uber/Lyft are readily available for when my husband can't take me where I need to go. I'm hoping that I won't have to spend my portfolio on nursing home care or a catastrophic illness so that I can leave most of it for my heirs.
 
a dividend is a return of your own principal which is subtracted off your share price . interest comes from someone paying you for the use of your money .



the money paid out comes from the operation of a business and unless you are invested in a bank not the loaning of money.

i guess they consider the loaning of a money a good deed , but it is okay to make money off others running a business
 
KingsX said:
Some banks/credit unions call their percentage CD distributions "dividends" [instead of "interest."]
What's the difference ?

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IMO some financial institutions use the term dividend because a dividend is paid out of profits, if the business does not make a profit no dividend.

Interest, on the other hand, is a contractual obligation that must be met even if the business is not profitable.
 
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As I said... I have had regular CDs at banks and my credit union pay the regular interest percentage...
but instead of the word, "interest", they use the word, "dividend"... but how, when and how much
is paid is the very same as if it were interest.
 
You can always live frugal, but learning the basics to investing is also never wrong. When the markets currently are delivering above 6% in index funds, it would pay to think long and hard on not investing. CD's and bank accounts are delivering less than inflation, you are losing money every year. The value of today's money in the mattress will buy far less next year. Fruit going bad on the vine. But to each his / her own. Why not learn both investing and frugal living?
 
CDs ,banks and money markets should be either money waiting to be spent , or money waiting to be invested elsewhere ...it rarely pays to sit in cash as your investment ....cash can also be used to temper high equity positions instead of bonds . But the point is cash is a poor proxy for an investment
 
A year old thread brought back from the dead and the OP never returned. I wonder if I know him from another financial forum.

Anyway, before a person makes the leap into retirement I agree with the OP. It’s really just math. You need to know what your expenses are and what your income will be. That’s where you need to start. Then you can go from there.

Fidelity has a great retirement tool that you can use on their website. It’s free for anyone. When I sat down with a Fidelity team 5 years ago, the first thing they asked me was what I thought my annual expenses were. They smiled when I told them what I thought it was. We started the expense tracker. Hours later I couldn’t believe it. My expenses were actually 2 and a half times higher than my educated guess. I thought, this can’t be correct. But it was and is. I suggest everyone check it out.
 


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