retirement income

[katy]

About how much does it take to live a modest but not cramped retirement in the Midwest USA?

[puzzleannie]

it depends on how much it takes you to live a moderate, not cramped, life in the Midwest while you are still working. There is no special reason the cost of living drops when you stop working. possibly commuting expense, but not much else, changes. medical bills definitely go up. Medi part A does not pay for everything, anymore then the insurance you have at work does.

[Al Masetti]

Originally Posted by puzzleannie

it depends on how much it takes you to live a moderate, not cramped, life in the Midwest while you are still working. There is no special reason the cost of living drops when you stop working. possibly commuting expense, but not much else, changes. medical bills definitely go up. Medi part A does not pay for everything, anymore then the insurance you have at work does.

After you retire, coffee only costs five cents a cup!!!!!

[ I had the time, so I used our digital postal scale to weight out one measure of coffee and divided into the total weight of the can to arrive at the number of cups per can and then divided that into the cost per can. By the way, I wait for sales on coffee. Sooner or later, it's always shows up on sale. Then I stock up. Of course, by the time I get around to the last of that batch of cans of coffee, it might be a year old.]

Last week I was wearing chinos and my neighbors asked why I was dressed up. Big laugh. I said I was taking my wife out on a hot date!! We took the train into NYC. Used to be I had to wear suits. Now I live in blue jeans ... buy two new pair every three years. Whether I need them or not.

All those business suits ... I may just get rid of them all except one to be buried in ... genetically won't need that for another 20 years, although ya never know.

The livin' is definitely cheaper. Although we have more time for hobbies and personal interests, so those costs do go up. We cook less, so eating out costs more, but that's an "elective" expense. Sometimes I cook my very own risotto/paella concoction. And all those weird ingredients cost ... saffron costs more than gold, platinum and uranium combined. Take a look at the cost per pound. It's like $50,000 ... some humongous number ... funny price tag for the unit price.

I used to have to pay for my own medical insurance, so Medicare plus an Aetna supplemental top of the line policy is maybe half or less of what I was paying before.

Income is Social Security plus doling out carefully from savings. Spend a lot of time studying and trying to outguess the stock market (HA!).

No more buying of cars.

[katy]

Since our house is paid for and the kids are off the payroll, I'm expecting a major drop in spending. The cars are paid off also, but will probably need to be replaced at some point.

[Al Masetti]

Originally Posted by katy

Since our house is paid for and the kids are off the payroll, I'm expecting a major drop in spending. The cars are paid off also, but will probably need to be replaced at some point.

The last new car(s) we bought were in 1967.

I think the key is to try to find an older car with a separate steel frame and separate body. Where we live, cars rust out from the road salt used in winter. Unit body cars just don't last long, in my opinion.

Ever since then, we have purchased used cars. Cars are generally good for 20+ years. Or much more, if they don't rot out due to rust.

So, we currently have a '94 Saturn ... which we got free third-hand ... now with around 200,000 miles on it (the odometer quit at 160,000) and a second-hand '90 Lincoln, that we got for cheap in 2003 or so, that had been rebuilt from a wreck ... that we use for trips. More comfortable seats than the Saturn.

Previously we had a '74 Chevy Monte Carlo that we got for $500 and drove for eons until the frame broke (where the exhaust pipe crossed under the steel frame became a magnet for rust and eventually it rotted through there). [I wanted to reweld the frame, but it was too close to the gas tank ... sparks and all that.]

And we had an '85 Mercury Grand Marquis that we got in '88 and we ran that until it got a musty smell from a water leak through an unrepairable rust spot above the windshield. Musta been somewhere around 2003 or so.

In 1988, the Grand Marquis replaced the '67 VW Karmann Ghia which had 200,000 miles on it and needed a third engine overhaul/replacement and had a lot of water leaks around the fenders which I was finally unable to find and / or repair.

The Monte Carlo replaced my wife's '67 Olds Cutlass. The Cutlass was a wonderful car, but the bolts holding the body to the frame kept rusting out and falling out. I manufactured some bolted clamps to force the frame and body together. Eventually, the electrical system shorted out and that was that.

In every case, in my opinion, there was Divine Intervention at work ... picking out our cars and making a Command Decision when to "retire" the old cars.

Learned to change the oil myself and do tuneups (before cars got computerzed) and could do any and all bodywork. Including painting. But anyway, just change the oil four times a year and keep up with replacing the parts that normally wear out and you're good to go.

[Ridgerunner]

Originally Posted by katy

About how much does it take to live a modest but not cramped retirement in the Midwest USA?

Depends on how much of it is discretionary and where a person lives. I live in what could be thought of as the southern part of the Midwest or the upper part of the South, so heating is not too expensive. If a person owns his home free and clear and lives in a small town or rural area, and doesn't have some kind of unusual expenses, a couple could do it quite comfortably on $2,000/month without having to do anything most would consider unusual. In the spring and fall, most could save a modest amount of money with an income like that.

One's expectations matter a lot. If people in a given area characteristically live modestly, one's spending has a way of automatically being lower.

Not surprisingly, we get a lot of retirees in places like this.

[katy]

Originally Posted by Ridgerunner

Depends on how much of it is discretionary and where a person lives. I live in what could be thought of as the southern part of the Midwest or the upper part of the South, so heating is not too expensive. If a person owns his home free and clear and lives in a small town or rural area, and doesn't have some kind of unusual expenses, a couple could do it quite comfortably on $2,000/month without having to do anything most would consider unusual. In the spring and fall, most could save a modest amount of money with an income like that.

One's expectations matter a lot. If people in a given area characteristically live modestly, one's spending has a way of automatically being lower.

Not surprisingly, we get a lot of retirees in places like this.

Around $2000 per month net is what we expect. We live on the edge of a city, but have never been very high on the hog, so to speak. Kids prevented that from happening.

[geezerbob]

I'm living comfortably on my social security. House is paid for, so all I have to budget for are utilities, insurance, and property tax. Car was paid for until I bought a 2007 4 cylinder in January. My gas bill is down tremendously. I filled up two or three times a week when working. I ride a large motor scooter on most of my local trips and fill it up about every week or ten days at a current cost of under $7. I'm still on the third tank of gas in my new car which I bought Jan. 10, and am wondering why I even bought it.

I've scoped out the cheap eateries for when I don't feel like cooking. I frequently hit one of them on the way home from the county operated gym ($10 a month membership) and never spend more than $8, including tip. A fish place has a $5 lunch special which is huge and I usually go there on Thursdays when they serve Alaskan whitefish and baby shrimp. Besides the burger joints, I found a locally owned restaurant in a run down strip mall that has a blue plate for $6.25 that includes a meat and three, bread, drink and dessert.

Insurance was a concern before I retired and was forced to study Medicare. The first year I had standard Medicare and bought a Blue Cross supplement. Then, Humana came into this market and I bought their Gold Choice plan which replaced both the standard Medicare and the supplement. This plan is currently costing me less than $20 a month for Part D and the standard amount for Medicare for the other coverage. The roughly $1,200 annual savings are partially offset by co-payments, but I'm still coming out way ahead. Last year, I was hospitalized with a heart attack and, even with all the specialists and co-pays, I still saved several hundred dollars for the year by not having to buy a supplemental policy.

So far, I have not had to withdraw any 401k money and am trying to wait until the mandatory withdrawal age. I need to do some major home repairs (heat pump, roof, water heater, and refrigerator) which I can't pay for out of the monthly budget but have more than enough in savings to cover them. I even manage to get a couple vacations a year out of my pittance by going on my scooter and staying in inexpensive motels.

Obviously, I live simply, don't go to the theater, concerts or movies, and eat at nice restaurants only a couple of times a year, but I did that when working, so no big deal. Groceries come from Sam's or Wal-Mart and clothes from Fred's or Dollar General. I don't have to impress anyone and jeans or khakis are fine except for weddings and funerals.

If both of you will be drawing SS, you'll probably get by just fine. After all, what's to do in the midwest other than watch the corn grow?

[Al Masetti]

Many years ago, there used to be a financial columnist in the newspaper named Sam Shulsky.

Before he retired, he wrote that the way people behaved with money never ceased to amaze him.

He wrote that he would get desperate letters from people with hundreds of thousands of dollars of annual income and they absolutely needed every possible idea so they could squeeze more income from their assets.

Other folks would write and say that they had an income of $2000 per year and wanted some ideas of where they could invest their surplus.

Go figure.

[puzzleannie]

I really think here in the Rio Grande Valley of Texas is the cheapest place you can live, 500,000 Winter Texans can't be wrong. We know all the senior specials all over town, what day to get a free meal, who has free drinks, and of course our new Denny's is a hot spot. Order a senior entre and split it, both of you can eat dinner for under $10.

some stores give bigger senior discounts certain days or hours, and movies and admissions to most events and cultural institutions is cheaper.

Other than that, you don't save much when you retire. Utilities cost the same, and most seniors here at least do as much driving around to the doctor's office and their various volunteer, charitable and leisure activities as they did when they were working. We have the busiest retirees in the nation, on the move from 6 am to 8pm (we tend to hit the sack early).

huge mistake: thinking you don't need medicare part B or drug plan, and dropping low cost health insurance offered by your employer or pension plan administrator--once you drop health insurance you almost never can get it back for the same price
huge mistake #2: buying too much whole life insurance
huge mistake #3: thinking you only need to have your savings last for 20 years or so, nowdays seniors often spend as many years retired as they did working.
huge mistake#4: leaving assets to your children and leaving your retirement underfunded as a result. unless your child or grandchild is disabled or they have some other special needs, the best gift you can leave them is standing on their own two feet.
huge mistake #5: obsessing about money to the extent you can't enjoy what you have, deny yourself or your spouse necessities, and limit your charitable giving.

[LeahInancsi]

The retirement income issue has also been bothering me lately. Calculators on various websites are very unpredictable.

I expect to have about $800K to start with and live off the income. I don't have any family, so any remaining assets will be left to charity. Lately, I'm beginning to worry if this will be enough.

[whatevergirl]

If you were to retire at say age 65, and live until 90 (the life expectancy of people goes up, yearly, but let's just use that for an example) you would then take $800k and divide by 25 years. That roughly comes out to $32k per year. Now, you might need a live in nurse by then, or to live in an assisted living facility. Social Security, if it's even left, might come into play, but let's say you are using $800k as the main number. Can you live on $32k, for 25 years during retirement (or more), if you were to live until you're 90, at least?

That is really how you have to figure out these things. Now, if it's based on a single person, that might work...but even if you're looking at a couple...I can se eonly needing one car in our retirement years, as opposed to one. Downsizing our home, and the kids moving out will also 'create' more disposable income. But, when you really want to figure it all out...think about what it might be like living into your 90's, and then divide by the years you have been retired, to what you have in mutual funds, IRA's, 401k's, pension, and go from there. I leave SS out of it, because one just can't count on it, I don't think. It would be nice...but you can't count on it.

My dd is a cutie pie...she told me and my husband that if we don't save enough, 'she' will be our retirement plan. I love that kid. LOL

[puzzleannie]

Originally Posted by whatevergirl

If My dd is a cutie pie...she told me and my husband that if we don't save enough, 'she' will be our retirement plan. I love that kid. LOL

my kids have promised to find me the best nursing home my money can buy

[Al Masetti]

Originally Posted by puzzleannie

my kids have promised to find me the best nursing home my money can buy

Reminds me of the cute saying: "Be nice to your kids; they are going to pick out your nursing home."

[Rolltide]

Something else to consider...

When you're figuring out how much you need to save, a surprising amount of people forget to figure in inflation. Prices in 20, 30, or 40 years are bound to be substantially higher than they are right now, so it's always better to overestimate a bit.