Expense Related Thread (Retirement, etc.)

[musical comedy]

I was googling for something yesterday and came across this website with some interesting data. You can toggle between the USA cities and get the specific data for that city.

https://smartasset.com/financial-adviso ... nnsylvania

Scroll down. You can see the costs for the various things like food, housing, utilities, etc. I am assuming from where they get their data that it is reasonably accurate.

However, my expenses don't mimic that at all. Utilities for $4500 a year??. HaHa. My oil bill alone has been 6k and my electric averages $200/month. Even without my barn lights, it would be $100/month for the house. The food expenses, which I researched before, always boggles my mind at how little some people spend on food. Well, I include other supplies in the food bill; things like detergent, paper towels, etc. Also, I have to admit that I am a bit of a gormet and I like high quality foods. So, I suppose I could decrease my food bill if absolutely necessary. What does Transportation Expenses consist of? Anyone know? That figure is high. My car insurance plus gas and car expenses is very low; nothing like that figure. Now the housing costs for my area are on target. I pay 9k a year for taxes. I guess I'm very lucky I have no healthcare expenses other than my Medicare money they take out of my SS check.

Does anyone want to discuss this topic? Obviously, I'm a bit obscessed with having enough cash to support the rest of my life and looking for the best way to manage my money. I know a few people that are in far worse shape than I am financially and they don't seem to have a concern in the world about it.

[Tsavo]

Well I think the best advice is to talk to a qualified financial planner.

Although my husband has an MBA and has been managing our financials, his company made an adviser available for free so he consulted him. He made some projections calculation ... how much money we will need in retirement and how much we can expect to have under various scenarios (stock market return, whether SS will exist, etc.). I also want to ensure a meaningful inheritance for my kids in case they can't work.

I don't think you will regret talking to a trusted qualified financial planner.

[musical comedy]

I don't think you will regret talking to a trusted qualified financial planner.

No! BTDT. I'm not paying someone 1% of my money each year nor am I paying the expense fee to a fund manager.

[Tsavo]

I am talking a one time consult like my husband did.

[PaulaO]

I have a 401(k) or 403(b) through my work. It matches up to 6%. I contribute 15% of my gross pay. The fund has an appropriate mix for my estimated year of retirement. Northern Illinois is not exactly an ideal retirement location, but the cost of living is reasonable. My only debt is my mortgage. I get a pension from a previous job which covers Miss A. Social Security will cover mortgage and utilities. As of today I have about 500K in my IRA. I could technically retire but want the health insurance, money, and I don’t hate my job. BTW, I’m 62, single, and no kids.

[silk]

Check out MMM - Mr Money Moustache. He is American so we Kiwis struggle with the tax and superannuation portions ie it does not apply to us.

But in essence...
1. Determine what you need to spend every year. This pattern may be different in retirement than when you were working/earning.
2. Determine what "income" streams you will have - part time work, a side hustle, your retirement fund/s (for us we have a pension that is not means assessed and provides the equivalent of a basic/low wage, anything above this you would need to save for yourself), rental property income, share dividends, sales of items like shares or properties, etc etc etc.
3. Determine how long you think you will live/need to live off this money.
4. Multiply number of years by annual expenditure and voila, you need that amount of money. There are various strategies to determine this number ie save a bigger number and draw down on it every year, keep some form of income stream going, etc.

FWIW, I haven't done any of that. I don't know "my number". I'm just living my best frugal life, with some property investment, and I'll worry about the specifics later, ha.

[Kyra's Mom]

I feel am pretty well set (I think ). I retired in July at 63 and 11 months. So, I do have to pony up for the full health care bill for another year (until Aug 2020). I was physically worn out and just felt I needed to go and give my body time to heal. I am doing Cobra...it was much cheaper than the ACA and I already have paid my deductible and max out of pocket this year so anything I use is covered (in-network) for the remainder of this year. I worked 40 years, 10 months at the same job. I do have a pension and it will be quite nice factoring in the employer match and another savings plan that was used for a few years by the employer. I have a very healthy 403b account, another regular IRA and a smaller Roth IRA (damn it...didn't take the best advantage of this). I will delay SS at least until my full retirement age (66 and 2 months). With all that tax deferred money, the pension and SS...my tax bill in old age is likely going to suck. I will possibly be paying more taxes after 70.5 than I did in my working life. I am going to try and convert some of the 403b to Roth money (paying the taxes now) before the current tax rate expires (2026) and I have to take my MRD's at 70.5 years.

I do have a financial planner. I find it quite complex in subjects that frankly, I do not enjoy spending my time with (trying to learn). My vocation (pharmacy) has been hard enough to keep up with. I figure it is money well spent. For what I have mismanaged on my own or not understood...I would probably have another 200-300k in those accounts. Like Paula, I am single with no kids. I plan on most of this money being for long term care (as opposed to actually buying LT insurance). My pension and SS will easily pay for independent or assisted living then I can tap into the IRA's for any difference should I need nursing home care. Although, by the time I reach the point of needing other living arrangements (which hopefully won't be for another 15 years or more), it will probably be 1 million dollars a year for such a place( sarcasm) . Not factoring in a nursing home, my planner figured that I should be good to around 100 years old. Most of the Morgan women (my Dad's side of the family) lived into their mid-late 90's. My Mom is 89 and still independent at home with some assistance. So I will need all of that (hopefully).

I am currently looking at switching planners as the current one isn't very communicative. I have met a couple times with the prospective new planner and I really like him and how he does business. He involves his clients and helps educate. I have understood more from him in 2 meetings than with several years with the current planner.

As far as expenses...Idaho is pretty low for utilities. My electric and gas are about $1500/year (that is a generous calculation). Caveat, I do not have a farm...just my modest house. I think health care expenses as shown could be low and I budget food for about what they show. Our property taxes are going up fast due to the explosive growth in this area so thank goodness for the modest house. I live pretty frugally. I do have one horse who is 17 years old that I board. When she is gone, that is it for my horse owning. If I still feel the need to ride, I will search out a part lease. She is boarded at a bare bones partial care barn which I anticipate will close in the next 2-5 years due to the owners' age/retirement and I am not sure what I can find then. Land around here is disappearing at a very rapid rate due to growth in the area. I guess I will cross that bridge when I come to it.

Susan

[musical comedy]

My electric and gas are about $1500/year (that is a generous calculation).
Susan

You mean electric and gas heat? If so that is truly astonishing. How can anyone heat a house that cheaply?

[heddylamar]

The combined gas and electric for our 2,000 square foot home is $2,800 annually. We have gas heat, a very inefficient AC unit (needs to be replaced), plus a home charger for the Tesla. The charger adds $75-110/month to the electric bill, so the power bill includes roughly $1,000 in car fuel.

Our house isn't terribly energy efficient, but we've updated a bit: all LED lighting, HE appliances, extra insulation in the attic. I'd like to add solar panels through something like Solar City, but the HOA doesn't allow them, and we plan to sell within 10 years, so it's not worth the fight.

For anyone considering a Tesla, that ~$1,000 in extra annual electric is pretty much the entire "fuel" bill for ~27,000 miles/year. It has the long range battery, and except for the rare road trip, we charge at home.

[Kyra's Mom]

My electric and gas are about $1500/year (that is a generous calculation).
Susan

You mean electric and gas heat? If so that is truly astonishing. How can anyone heat a house that cheaply?

Well, I got online and checked my last 12 months of (natural gas) gas bills and it was a whopping $281.00. I have gas for the stove, the furnace and the water heater. My biggest bill was $45 and change.
My house is about 1500 sq feet. I keep the thermostat at 68 F during the day and 65 F at night for heat and in the summer keep it at 80 F during the day and 78F at night. I will change it to make myself comfortable if I am truly hot or cold...I am not that much of a cheapskate. I do supplement my gas heat with a couple of space heaters in the dead of winter. The front of my house (dining room, kitchen and living room) is all windows. I love the light but there is a payoff with lost heat. Being a manufactured home, the furnace is in the utility room and I don't like it running constantly because of the noise so I supplement it with a little electric heat (only when I am home of course). My electric bill runs between $20 and $50/month. Last month using the AC and fans quite a bit, my electric bill was $31. The $50 ones are in the winter when I am running the space heaters.

So that $1500 was really way overblown. Using an average of $40/month for electric, the gas and electric come to $761/YEAR. Yes, we are blessed. It is cheap for utilities here. The water bill can be hefty. We live in a desert but we like our green lawns. My house is a patio type home with a very small lawn so my bill isn't very bad but my mother pays about $100/month for June, July, Aug and Sept.

I don't have a Tesla but do have a hybrid car that gets at least 50mpg so my daily driver vehicle gas is pretty cheap. For quite a while, I have been unable to ride and therefore haven't hauled the horse anywhere, I top off the truck maybe 3-4 times per YEAR. I have been driving it just enough to keep the battery charged and working. Hopefully soon, I can say I am using it more (or I am going to sell it).

So, it can be done. If you have the right sized house and live in the right part of the country where both are cheap.

Susan

[Tsavo]

In re food bills, I can't take anyone seriously until they become vegan. Come to fight psychopathy in factory farms; stay for the health benefits.

[musical comedy]

I looked up Idaho utilities. It's almost the lowest in the county. Truly I am shocked. And Maryland? That is even a bigger surprise. I suppose gas heat is available somewhere here in NJ but it's never been in places I've been. I wouldn't complain about paying a little bit more for something, but this difference is huge!

[Kyra's Mom]

I looked up Idaho utilities. It's almost the lowest in the county. Truly I am shocked. And Maryland? That is even a bigger surprise. I suppose gas heat is available somewhere here in NJ but it's never been in places I've been. I wouldn't complain about paying a little bit more for something, but this difference is huge!

Yes, apparently the 'secret' is out. People are moving here in droves. My nice quiet mid sized town is no more.

Susan

[Sue B]

Susan, pm me the name of your new financial coach. The one we had retired a while back and I need one not only for me, but to educate my teenager on how to manage his finances effectively as he enters adulthood.

Hubby and I had a massive hole to climb out of when we got married; suffice it to say we are now on terra firma and debt-free. Now all i have to do is get some actual dollars in the bank! I'm not yet 60, but when the time comes and I'm on my own, I will probably downsize and use that money to fund my retirement. We own our own business so no 401k or pensions coming our way.

Tsavo, we are the opposite of vegan and raise our own food, thank you very much.

[piedmontfields]

I don't think you will regret talking to a trusted qualified financial planner.

No! BTDT. I'm not paying someone 1% of my money each year nor am I paying the expense fee to a fund manager.

As Tsavo mentioned, there are fee-based financial advisors whom one pays for their consultation time only. I also would have no interest in an advisor skimming off my accounts! This is a good resource for finding what Tsavo is describing: https://www.napfa.org/financial-plannin ... y-advising

We save >30% of our incomes for retirement There are other savings for shorter term things. That is a luxury of savings that not everyone can match, I know. We're from the generation that was taught not to count on Social Security being there for us (it "probably" will be...in which case, we'll have a party). We do not expect any inheritances and we have no children. Maybe it will be "enough"; it will no doubt be a whole lot more than most people have in the US.

BTW, utilities are quite affordable here in TN TVA land, too. For heating/cooling of a 2500 sq foot house, it is around $1000/year. That is with an electric heat pump + passive solar design + a wood stove. No gas, no oil. Just coal, nuclear and hydropower!

[musical comedy]

As Tsavo mentioned, there are fee-based financial advisors whom one pays for their consultation time only. I also would have no interest in an advisor skimming off my accounts! This is a good resource for finding what Tsavo is describing:

I've very aware of fee-based advisors. It's around 15k so they can tell me I need to be in a 60 bond 40 stock portfolio. I'm no newbie to investing. I've been self directed for a couple decades after I lost a fortune in the 2000 tech crash thanks to a Merrill Lynch financial advisor. I spend a good part of my day on financial related stuff and keep on top of the market constantly.

Anyway, this thread was not intended to pry or ask anyone about their personal financial situation. I was interested in the breakdown in that linked site that said how much people were spending the various things in the various big cities.

I'll ask again what do you think they meant by Transportation Costs? I spend next to nothing on gasoline. Probably $100/month if that cause I don't go anywhere. Maybe they meant insurance, but even with that my expenditure doesn't track with the averages.

[Josette]

I'm going to guess maybe commuting to work costs? When I did a lot of commuting I commonly put 38K to 40K a year in miles on my car. So those costs for gas and car maintenance. Likewise, when DH commuted into NYC the monthly cost for car park at the station, train tickets and subway costs. These costs were expensive per month - but maybe the plus was minimal mileage on the car.

[piedmontfields]

I've very aware of fee-based advisors. It's around 15k so they can tell me I need to be in a 60 bond 40 stock portfolio. I'm no newbie to investing.

OK! I think your comments have said it all!:-D

I'll ask again what do you think they meant by Transportation Costs?

Typical transportation costs could include:
-Car purchase/lease
-Gas/charging
-Auto maintenance/repairs
-Insurance
-Transit tickets
-Tolls
-Parking

As someone who drives about 30,000 miles a year, I do have some transit costs! Insurance costs can also vary tremendously between states and locations.

[Tarlo Farm]

The year before I retired I paid for EVERYTHING with a credit card (except for the occasional $1 item), then I checked the statements to see if I fact, I could support myself. Worked just fine for me, and seven years later, continues to do so.

[musical comedy]

Piedmont...yes, it is all those items you list that go into that Transportion Figure. In further checking, the data is coming from AAA. Keep in mind though, that the figures are for retirees and assuming most retirees don't work. I would hope that a retiree has their autos paid for and also their mortgage. Maybe I'm lucky, but I don't have a lot of auto maintenance bills and I have two vehicles. I don't carry comp and collision and my liability insurance is low.

Tarlo, how to you pay your real estate taxes by credit card? My mowing people don't take credit cards, my handyman doesn't take credit cards, my riding instructor wants cash, etc. etc. I even pay my farrier by cash to avoid sales tax. Same goes for local mechanic.

[Logan's Mom]

I retired after 26 years in law enforcement. I board my only horse at a nice facility. I have a good pension, but I also work park time to supplement my income. I have pared down expenses. Then I moved into another home. I do have some investments, but they are in low interest accounts. I shop sales and try to keep utility costs low by reasonable temperatures.
Yes, NJ's taxes are high. But I like it here. My taxes run 6500.00 a year.

I think it is about living within your means and trying to put a few dollars away each month. If I lived in another state.....I'd be rich! But I am not moving just yet.