What is the real cost of living in retirement?

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Desertdawg

New Member
What does it really cost to live in retirement? Reason i am asking is that number affects when I can retire from a job I don't like but it pays well enough to fund my 401k and pension pretty good. I am 55 and my wife is a few years younger. We are living fairly comfortable on about 37k/year now not counting house payment and charitable contributions. i am wondering what people are spending and I plan to have a paid off house and live in a low cost-of-living part of the country when I retire. Like to work just hate my job. We are basically pretty frugal.
 

My living expenses stayed about the same when I stopped working. The biggest savings were in payroll taxes, 401K contributions and work related expenses for clothing, transportation, etc...

The biggest new expense for me was health insurance premiums.

I would suggest that you and your wife begin tracking your expenses, try living on a retirement budget while you are still working and have time to adjust your plan. Be honest with yourselves about the need to continue saving in retirement for things like travel, charitable contributions, new vehicles, home repairs, final expenses, etc...

Good luck!
 
Way to many unknows to put a best guess for you to use as a guideline for your hoped for early retirement.

As was suggested live on what you would expect to have as an income. Consider the impact on your 401k if there was a drop in value as happened in 2009. A year test of your ability to live well in retirement might mean every few months drop your retirement income by 3% to simulate a cost of living increase. The health of both you and your wife is a major consideration. Only you know what to set aside as enough to cover that as an expense long term.

Walking away from a job early is doable if you have planned well.

You mentioned a 401k. Both my wife and I had 401k's. We could begin drawing on those at 59 1/2. Much to our surprise those would have been depleted in 15 years because they were set up that way. So rather than lose that as an income source we converted to self directed IRA's. As a planning tool you may want to check into what your 401k plan administrator can tell you about the draw down.
 
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Aunt Bea said:
My living expenses stayed about the same when I stopped working. The biggest savings were in payroll taxes, 401K contributions and work related expenses for clothing, transportation, etc...

The biggest new expense for me was health insurance premiums.

I would suggest that you and your wife begin tracking your expenses, try living on a retirement budget while you are still working and have time to adjust your plan. Be honest with yourselves about the need to continue saving in retirement for things like travel, charitable contributions, new vehicles, home repairs, final expenses, etc...

Good luck!
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I agree. My expenses stayed about the same as well, except for the things you noted -- transportation, etc. Of course, the cost of utilities has gone up, because the rates have been raised, and food prices have gone up as well.

Since you are both under 65, you will have to consider the cost of health insurance and deductibles, co-pays, etc., for some ten years. At the present time, the whole insurance situation is in flux, and who knows what premiums will be a couple of years from now.

My house is paid off, but I still have homeowners' insurance and taxes (which continue to rise), and of course unforeseen home repairs can be expensive.

With the economy and the healthcare system looking as it does now, I would be very hesitant to retire at 55. And, if it doesn't work out, it might be very difficult to find another job that would pay what you need. The days of "I can always find another job" are long gone, especially as we get older.

I agree with Aunt Bea about keeping realistic track of your expenses for a while, and trying to live on what you would have in retirement, to get an idea of what that might look like.
 
I can't give you direct comparisons because we have different set-ups in the UK. For example we stop paying National insurance (which covers medical care, pensions etc..) when we stop working. If we have made enough contributions, we will get a state pension anyway at 65-66 and Medical cover is free at point of delivery, so no costs there. The catch is that the state pension is totally inadequate on it's own, so you need additional income from works pension or investments to provide a decent living standard.

However, as others point out, costs are broadly similar for day-to-day items. The difference is that you will possibly have paid off your mortgage and the kids will have grown and flown, so outgoings will be less. I always say, retire as soon as you can afford to. If your income will cover your outgoings and you have adequate savings, then go for it.
 
Desertdawg said:
What does it really cost to live in retirement? Reason i am asking is that number affects when I can retire from a job I don't like but it pays well enough to fund my 401k and pension pretty good. I am 55 and my wife is a few years younger. We are living fairly comfortable on about 37k/year now not counting house payment and charitable contributions. i am wondering what people are spending and I plan to have a paid off house and live in a low cost-of-living part of the country when I retire. Like to work just hate my job. We are basically pretty frugal.
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how long is a rope ?

it is no different than saying how much do i need to earn while working ?

there is no answer . we all have different wants and needs , different area's . for many life is not just about paying bills . we can easily spend 2x our budget just traveling . my answer would be " as much money as you can get "

we have exceeded in retirement the last 2 years what we spent while working . we have time , and time can cost money ,

we live in queens in nyc . just rent , healthcare costs and our long term care premiums clock in at 40k a year . that is with nothing else and before taxes so comparing to others is silly .
 
I've been retired 10 years and my expenses are certainly more than when I worked. Not unexpected as I planned for it. Health ins premiums more than expected but we all know about that. Will be 65 in 2.5 years so should get a reduction then.

All I can say is track your expenses and add a healthy pad for the unknowns. Lot a good retirement calculators out there like http://firecalc.com/. If your numbers work...go for it. Retirement is great.
 
be careful with firecalc because by default firecalc does not figure healthcare and long term care costs at greater than the general rate of inflation . fidelity's planner allows 5.50% for healthcare inflation , now down from the 7% it was allowing as costs have stopped escalating that fast . but they are still going up faster than general inflation .
 
If I were in your situation, I would call a health insurance broker and ask for quotes on a policy. You'll want to have your current healthcare policy - not just the summary, but the actual plan papers - and ask for a comparison of what such a policy would cost you as an individual.

You'll probably faint at the cost, so have some smelling salts handy, lol. You'll also want to ask him/her what kind of options are available to reduce costs.

You should NOT LIE about any prescriptive medications or pre-existing conditions - ever. You want a straightforward reliable quote, something realistic to work from.

Never try to guess what insurance will cost you. Nobody is going to charge you for calculating a premium quote.

After that, find out what skilled nursing facilities charge in your area per day. As you age it's more likely that you'll go in and out of such convalescent facilities, on a short-term basis. If you know what they cost now, you can easily calculate rates going forward. Assume a 4% annual increase; or at least the facilities we've talked to here, without exception, raise their prices 2-4% every year without fail. It didn't matter if it was a for-profit or non-profit facility, that price increase at nine different facilities in our city (which we personally visited) was regular as clockwork, every July 1st.
 
Lon said:
there are so many variables this question is impossible to answer.
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That's true but the original post laid out some of those variables. I think his cost of living in retirement will be about the same as before. The foreseeable changes will likely be in taxes and medical insurance. On a low income, SS income isn't taxed and medicare is often less than private insurance or company paid insurance.
 
When I first joined this forum, I had hoped to find more information regarding retirement than I have seen here. However as someone mentioned in this thread, there are such variables, it's hard since everyone's income and expenses will be different.

There was once a thread about living on social security only. People didn't seem interested in talking about their experiences for whatever reason. Money is a personal subject. I had owned a house for 7 years but any thought of paying it off and staying there some day was not to be as I had bad neighbors and a horrible experience living there. I'm in an apartment and unable to find a mobile yet in an adult park I want to live in. It seems my best alternative giving the fear I had living in that house. The park should provide some security.

I look forward to having an extra room for sewing. Hanging my laundry out (don't tell me I can't in a park, I do it on my apartment patio. Where there is a will there is a way) I hope I can find a place and will be able to afford upkeep and expenses.

I sometimes feel I'm going to die soon literally and figuratively if I stay at my full time job. I know I won't have money for travels and much. If I can just live, feed myself, take care of the cats and have a little thrift shop, craft and book money, I'm hoping I'll be OK.
 
kind of my feeling too. i love the financial end of retirement but that is not something that really is discussed in this forum . i don't really have any interest in what someone ate for lunch , or their cat , etc so i don't contribute much here . just not my cup of tea . for financial discussions pertaining to retirement the early retirement and financial independence forum is excellent . it is tied in to the creator of firecalc .
 
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Note to OP - it really isn't that difficult to calculate: take your retirement income and add 10%. Easy peasy, and as accurate as any other method...

Hoot N Annie, MBA,CPA*

* inactive
 
mathjak107 said:
kind of my feeling too. i love the financial end of retirement but that is not something that really is discussed in this forum . i don't really have any interest in what someone ate for lunch , or their cat , etc so i don't contribute much here . just not my cup of tea . for financial discussions pertaining to retirement the early retirement and financial independence forum is excellent . it is tied in to the creator of firecalc .
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Your not interested in hearing about my cats!? :)

Seriously though, thank you for mentioning that forum. I just found it and will look into it further.
 
I imagine there are as many answers as there is retired people. Some people like myself can live comfortably off half what they earned before they retired. Money magazine did an article about people like that years ago. More recently, I've read about some online. Others need 100% of what they made before retirement because of the lifestyle they've chosen in order to live their dreams after retirement.
 
OneEyedDiva said:
I imagine there are as many answers as there is retired people. Some people like myself can live comfortably off half what they earned before they retired. Money magazine did an article about people like that years ago. More recently, I've read about some online. Others need 100% of what they made before retirement because of the lifestyle they've chosen in order to live their dreams after retirement.
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I have no dreams of retirement. I just want to get there. I have no delusions of travel etc. If I can find a nice mobile in an adult park, the swimming pool will be my resort.
 
We don't need much more than an rv in a trailer park to live in retirement so any amount of money will make do.

You may hate the life style it gives you but even ss alone will work.


In fact many lower income folks are actually living on subsidy's which can make their income appear bigger than someone else retiring on 15-20k more a year.

Lower income seniors here in ny can be exempt from all future rent increases if they live in a rent stabilized building ,which half of all housing in nyc is. They get subsidized or free healthcare, subsidized utilty bills , food stamps , etc .

Very few here actually are making due with a lowly ss check alone. They are seeing the equal of likely 50-100% more in assistance programs for seniors
 
Could there be special laws for retirees that have extra bedrooms available in their homes? The laws today make it close to impossible to screen potential roommates legally and truly impossible to remove undesirable roommates. I have a nice 3 bedroom place that could help me financially, but have the existing tenant laws reduced potential living spaces? From the intense paperwork regs to tax laws to the precise living condition rules make feeling guilty about having unused space less important. Not having to file annual taxes is much preferred to what would have to happen if I bring additional income in. Be great to have some cash flow though...
 
Kitties said:
I have no dreams of retirement. I just want to get there. I have no delusions of travel etc. If I can find a nice mobile in an adult park, the swimming pool will be my resort.
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Having the degree of "non-expectations" you have Kitties will most likely make for a very happy retirement! You'll probably be living well within your means and that's a good thing. How long before you'll be able to retire?
 
My plan is to find a manufactured home in a park. Not an RV. I'll then have to cover the space rent and I do think they charge too much but I think it's my only alternative. A condo in this area has gone out of my price range (without having to work longer and longer) and honestly I want the security of the park. Nosy neighbors and all.

I do hope my low expectations will work out in the end. I'll be 57 soon. I'm working full time as a floor nurse and it's not so easy being on my feet anymore. I'm looking into part time work now but worried about healthcare. I'd actually prefer to buy a place and then go part time.

Subsidized senior apartments I think are a great answer for many. With my cats though I want my own place and a place where someone else doesn't have the key. Even with having to be responsible for repairs myself. I'm scared of my current manager and maintenance at my apartment and won't even ask for repair needs anymore and I have one.
 

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