Goal Setting, Retirement, saving money

2019 Goal: Living on our future retirement income – with real numbers.

black calculator near ballpoint pen on white printed paper
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One of my 2019 goals is to live off an amount we will need in retirement…an amount we believe we need to live a life we want to live in retirement.  For us, that includes travel and spending three months every winter in a warm climate (destination undetermined).  (I write the last part with conviction, as the temps are cold and there is 10 inches of snow on the ground.)

So what is our magic number?

After numerous calculations and a bit of guess work (who knows what healthcare will be when we retire), we figured we will need between $7,000 – $8,000 a month.  For 2019, I will be taking the lower number of $7,000 (which includes our $2,400 mortgage).  We hope to have our mortgage paid off by the time my husband retires at 62, however we kept the $2,400 in the budget as it most likely will be replaced by purchasing health insurance until the age of 65.

How will we come up with $7,000 in retirement?  We will have three sources to pull from:

  1. Personal Savings;
  2. Social Security (yes, we will be taking it at 62); and
  3. Retirement accounts

Social Security will provide $3,000 of the $7,000 (at least as of this writing), and we can use personal savings/retirement accounts for the rest.

By withdrawing $7,000 a month from our retirement accounts, our savings will still last more than 30 years based on very conservative calculations.  So, between social security and our retirement accounts, we can go as high as $10,000 a month (to help with inflation) if we need to.

MONTHLY RETIREMENT BUDGET

Here is our monthly retirement budget *in real numbers*  (and what we will be living on for 2019 and beyond).

*Please note we do not have any debt.  Being debt free is very important when entering retirement, including your mortgage.

  • *Utilities/Water/HOA $500
  • Food/Eating Out $600
  • Household $125
  • Subscriptions (i.e. Netflix, Amazon Prime) $50
  • Gasoline/Car $200
  • HealthCare  $2400 (Our mortgage for now)
  • HSA – Medical Expenses $500
  • Vacation/Travel $500
  • Misc. (clothes, personal care, etc.) $400
  • Cell/Cable/Internet $300
  • *Insurance/Taxes  $1,000
  • Gifts/Christmas $200
  • Home/Car Maintenance  $225

*These are figures based on where we live now (a high cost of living area).  It is probable that we will be moving out of our large home into one that is smaller and fits our future lifestyle.  We are hopeful that insurance/taxes/utilities will all be lower when we do so.

This is our plan, but of course everyone’s retirement plan will be different. Some will need more, some less.  My parents, who live in upstate NY, live comfortably on $2,500 a month.  My MIL, who lives in PA, unfortunately, attempts to live on a social security check of only $1,500 and it’s rough.  So, don’t plan on living on Social Security alone, you won’t make it.

We have seven years before we actually take the plunge into our third phase of life called retirement.   A lot can happen between now and then, but I’m hopeful our health stays good and the retirement accounts continue to grow.

If you are in retirement now, or are gearing up for retirement, how does your budget look?

 

 

 

 

 

19 thoughts on “2019 Goal: Living on our future retirement income – with real numbers.”

  1. Hi Sharon. I love this post. We are also 7 years away from my husband’s retirement, so are crunching numbers as well. Unfortunately, we still have debt, but plan to have it gone before he leaves his job. The mortgage will either be paid off or close to it – the payment is not high so it’s not as big of a concern. We will also be taking SS early (he will be 63). We are fortunate that he has a pension and we have been actively building our 401k account. We would like to leave the 401k untouched for awhile, but it is there if we need to tap into it. It’s true what they say – retirement gets here a lot faster than you thought it would!

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    1. Hi Sharon, I retired 21 years ago at 45 to help my elderly parents 500 miles away which was my priority for ten years and became a widow in this time frame too. You never know what the future hold but from my experience both your aging parents may throw different scenarios in your futures.
      I have learned so much from so many blogs that I wish I Had known earlier .
      The Madfientist shows incredible mathematical reasons of the best way to save for retirement. He also has a great comparison of rewards credit cards.
      Go Curry Cracker has Aloha Uncle Sam that shows a way to get almost free travel by paying your estimated taxes with the rewards credit cards.
      I started doing estimated taxes 2018 when I started doing large Roth conversion to reduce my RMD at 70 and take advantage of the lower tax brackets. If I were you I would contribute maximum Roth IRAs for 2018 for both of you for the next seven years. These accounts can become your emergency money but are also so advantageous when you start taking Social Security. Tapping them does not figure in the Social Security worksheet that is used to determine how much of your SS is taxable..
      And finally I would check your state website on health exchange under Obama care because it will have a wealth of information to find out what income limitations to qualify and you will be able to determine the perfect mix to tap your various accounts for the three years before you become Medicare eligible. Sincerely, Lara

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      1. Hi Lara! Thank you for taking the time to comment! Great info. As far as Roth IRAs go, we don’t qualify because of my husband’s income. HOWEVER, he is offered a Roth 401K, which we will definitely take advantage of. His company puts in 7% of his income. I’m considering going back to work for the next 7 years to bulk up our funds as well. I would like to have 2 years worth of expenses in cash. I have already been to the exchange site and have found it confusing. Not sure how to calculate income when you are retired?

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      2. You could dprobably do Spousal Roth for you and what they Call a backdoor Roth for your husband this where you do an after tax traditional IRA and immediately convert to a Roth. Does your Virginia health access have FAQ section or online chat or phone help we do here and any of these can help with income questions . Pose it as your husband may get laid off and want to understand what is offered. Sincerely, Lara

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      3. You need to become familiar with the Social Security worksheet found in the 1040 instruction book. There’s an article on MarketWatch on $100,00 retirement income and tax free Social Security. I think there is also articles at AARP on taxes and retirement. Sincerely Lara

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      4. Hi Again, Planning your income streams now allows your Social Security to not be taxed at all. I did a quick calculation with the married limits and Your $36,000 of SS benefits .using the worksheet. If your income came from $14, 000 total from taxable accounts like interest, municipal bonds, capital gains and tax deferred accounts and $34000 from Roth and personal savings accounts all of your Social Security is tax free. You would owe zero in federal income taxes. You could switch another $14,000 between your taxable income streams and Roth or personal savings and still owe no Federal income tax using standard deductions. Qualified Capital Gains changes the calculation. Health insurance subsidies enters into where you take the money tooSincerely, Lara

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      5. Everything you need to know about your IRA and taxes
        By Bill BischofF this is on
        MarketWatch .com
        Sincerely, Lara

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  2. Hi Sharon. Thanks for posting this. I think it gives a good preview of things for you and it is smart to try to live on your retirement income for a few years before you retire. My hubby is going to have to work until 65 for health benefits, we do not have retiree health care and I am a cancer survivor. Our medical now is very reasonable, the owner of the company he works for subsidizes the health insurance heavily, which is a blessing. One thing we are doing now is paying medical bills OOP and saving the money in our HSA for when we retire and will need it more. I appreciate that you used real numbers in your projections. I am reworking our budget now that the house is paid off, and going to automate some things like property taxes so the $$ will be there when we need it. We are thinking in the area of the country we live in, $5000/mo should be a reasonable amount.

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  3. Good to see you again Sharon! Stopped over when I saw you on Sluggy’s blog.
    You are drawing up a great budget. You might think about a sinking fund for replacement cars and major household expenses. We will make our bathroom accessible next year- about $15,000. The following year the roof will be redone- about $20,000 at current rate. We already bought the first car- about $30,000. Maybe if 1/3 of your savings is set aside for such things, it will make the rest of it flow easier. We do 1/3 of our current retirement income for those sinking expenses.

    We, also, budgeted $200 a month for gifts. I had to revisit that line this year. We are way closer to $400 with the addition of spouses and grands. OW (and woo hoo at the same time). You might find your food bill also increasing we have. Monthly gatherings are a bit pricy with 12 people.

    It is good to get a rough estimate. Retirement is great. Our health is a whole lot better without the stress. Enjoy all of it!

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    1. Hi Janette! So good to hear from you!! 🙂 Great idea for the car replacement and major household expenses. We hope to be in a home with all NEW everything, so it will be a while before we would need anything. We do have personal savings for such things, but adding more would be good. And YES to the gift category. I have 5 grandbabies now, and it’s gotten expensive.

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  4. Interesting post, Sharon! I like the idea of trying out retirement numbers before it happens. I completely agree that having zero debt is imperative. What about potential long-term care costs? That is one thing that really concerns me.

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    1. Hi Lucy, great point on the long-term care. We probably will exchange what we pay for life insurance with long term care insurance but I imagine it will be much more. I’ll have to recalculate. Thank you so much for the reminder! 🙂

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  5. We’ve been saving for retirement for a long time, so have quite a bit in our 401Ks. The power of compound interest! Now that my husband is 50, he’s able to do an even larger amount to his 401K, which is fantastic.

    Our plans for retirement are fluid right now (I’m in my early 40s), but we would ideally like to have our house paid off in 10 years, have the kids college largely paid for, and for both of us to stop working at that point. (I’d like to go part time/reduced hours before then.) We will likely sell our current house, as it’s in a very expensive area due to HCOL, and live somewhere less expensive. Given what we can predict now, we are planning well. But, plenty of things happen in life, and the more flexibility you build into your plan, the easier it is to make changes!

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  6. Hubs retired 3 years ago and his take home with SSI and state retirement is a little over 3000. I will never bring in more than 1000 from SSI as i have been self employed so much of my life. But once our house is paid for we will have 1500.00 more a month to live on. If we didn’t have a car payment it would be 2000.00. So we will not have to touch our savings for a long time. We live in a low cost area and have always lived very tight.

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    1. Hi Kim,
      I hope to live in a lower cost of living area, but all grandbabies are here. The best I’ll be able to do is pay off my mortgage and downsize to a smaller home. It’ll be amazing for you to pay off your mortgage and car, right?

      Like

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