<p>It really depends on where you live. At bay area, 50,000 is tough. </p>
<p>When my D went to a private school, I moved from a high living cost suburban to countryside, save lots of money from housing, tax and food. There is no fancy restaurant around the area, so, I go eat out just once a week. The change of living style I also found I didn’t go shopping as often as before and I didn’t look at the expensive luxuries anymore. Practical is my style now and I feel comfortable and confidence too.</p>
<p>Over the past month I’ve worked through a variety of spreadsheets to get a handle on spending, assets, and retirement possibilities. Surprising/notable findings are:</p>
<p>1) Mortgage, property taxes and income (Fed+state) taxes account for 51% of total spending this year and will be 62% of total spending next when our mortgage resets.
2) Running the numbers through various scenarios indicates we’ll have enough to support our retirement, even withdrawing 4-10% of principal per year.
3) Moving to a cheaper house in the Bay Area won’t save us very much money.
4) Renting a house would save us money in the short term.</p>
<p>I’m finding that my largest expenses are property taxes ($21K/year) and mortgage ($$$$$/year). The rest is all in the noise. DH and I are considering downsizing but even then if we want to stay in this area (south of SF on the Peninsula), the savings would only be a couple thousand/month. Rent is around $3000/month if we want to go that route.</p>
<p>Our grocery bill averages around $600/month with a high of $850/month in the summer when the 2 college sons are home, and a low of $400/month when they’re back in college. We don’t eat a lot of meat; probably $100/month of our total is spent at the farmers’ market. We rarely eat out.</p>
<p>Housing prices are so high here it’s hard to imagine living on $22K/year. Even $50K/year, as in the linked article, is difficult.</p>
<p>Since this is a retirement thread, I would assume the mortgage would be paid off by the time one retires. I also did qualify with the statement “excluding mortgage payment”.</p>
<p>On the side comment, something is not right with the SFgate article. If a family brings home roughly about $4K/month(assume very little tax for this family because of the low income) and they only pay about $750/month for a 1-bedroom apartment, where does the rest of the money($3250/month) go to? Did I misread something?</p>
<p>“But that means that almost half of all households in the region don’t take in what the Budget Project reckons is needed to make ends meet. Those families often must do without some of the things viewed as essential to middle-class life, such as health insurance or a separate bedroom for the kids.”</p>
<p>The family paid $400/month for credit card debt. Maybe another $400/month for food. Also “heavy” out-of-pocket expenses (car? medical? utilities?) Hard to say where the remaining $3250 went.</p>
<p>Also, even if the mortgage is paid off (difficult but not impossible in an area where median home prices are over $1 million) there’s still the issue of property taxes. Prop 13 protects owners who bought in the 70s and 80s; more recent buyers, not so much.</p>
<p>I read that article and had to question it too. If they make 4,000 and 750 goes to rent, that leaves 3250 for everything else. Since they are only making in the 20k’s their jobs might not have insurance… which could be expensive for a family of 4. I’m sure they eat and have transportation as well. Also 400 dollars minimum payment on credit cards means they were probably very irresponsible… that’s a LOT of credit card debt.</p>
<p>I did a little calculation for the family in that article. The couple have a combined income of 53k. Their federal and FICA tax liability is slightly less than 14% (about $7400, assuming standard deduction, 4 exemptions and 7.65 FICA and they probably pay less than $7400). I don’t know how much state and local taxes they have to pay on their income with 4 people in a family, but assuming another $4000 (which is another 7.5% on total gross income), that would leave them with $41600. They rent a one-bedroom apartment for $750/m ($9000/y), which leave them $32600 ($2700/m) for food and other expenses. Personally, I think they can make it as long as they don’t buy a house and I think they should be able to make it with renting a two-bedroom apartment. </p>
<p>I believe we are all very flexible/ elastic. During 87-90, when H and I were graduate students in a big city (Chicago), our combined stipends were $16K per year. We survived. We rented an efficiency (one-room with kitchen), had one used car (did pay garage parking), cooked for ourselves and actually saved a portion (20%) of that stipend income. You just need to consciously live under your mean. Since we actually saved a portion of our stipends, we never felt being poor.</p>
<p>UCLAri-
Your point about savings is well taken. People should save as much as they possibly can. But I’d like my kids to start with 10%. They can go from there. Older s does a good job. Younger s hasn’t quite gotten the knack of it, and really isnt doing much saving. We will have to have that “talk”. Hope he isn’t counting on his inheritance to subsidize his later years :</p>
<p>I have been on CC for several years. I must say, this is one of those threads that are up there in terms of usefullness. Thank you to many who shared their situations.</p>
<p>As the first generation of immigrants, I really did not have informations like this. All I know was from my own parents’ situation. They came to US in '90s and had some working credits for SS. They are surviving with minimal SS - with less than $2,000 in their name. All their medical related - except dental - are covered by one program or the other. One of them had a by-pass done recently and the only thing they paid was $7 because we did not reject the inroom TV right away. </p>
<p>As for the dental care. It is far less expesnive to fly back to China at off season to have all service done every couple of years, than do it here in US. </p>
<p>So, my plan for retirement did not include much for all these medical expenses. In order to pay for two tuition bills, we are not even fully funding my 401K now. A full review with my banker is due.</p>
<p>but there can be Adequacy, at least for a while. </p>
<p>In the W’s credit boom and bust;
2008, lost so much retirement $$$$ that the only alternative was to double down, big. Invested in more company stock and international/global/small company.</p>
<p>In the 9/11 aftermath. Lost value ~ 2/3 of kid’s college fund, so much that we had to take a lot of loans. Full pay FAFSA family. Used the EE’s to amortize student loans. Couldn’t sell the equities because if we sold, then we would never have the ability for the equity shares to recover. Remember it was a time that “Debt Doesn’t Matter”, whether be it for Wars or to fund Government, or to build Houses. Loans were cheap and equities had no where to go but up. Short-term CD’s were paying you more than the cost of any loan. We are in a near similar situation, debt cost is cheap and equity is increasing. </p>
<p>So the question in the future is "What Will Happen, If… "</p>
<p>drgoogle-
your link shows this(for 1 wage earner):
</p>
<p>And the figures I posted upthread show what my wages will be if I retire at 62,66 or 70, and its higher than 2k if I can wait til I am old and gray(er).</p>
<p>But my point, and question to DadII is that he is vague as to how much his parents get in monthly SS wages. How much under 2K do they get, DadII? And is that per person? Please clarify Dad II</p>
<p>Dang–just had a well-written treatise disappear into cyberspace–took too long!</p>
<p>Anyway, even tho HI is one of the highest cost of living places in the US, there are clearly a significant number of people who live with very low incomes. A recent report shows that 33.1-48.1% of our public school students live in families who qualify for free and reduced lunches, $27.5K to $39K/year for two adults & two kids.</p>
<p>This is likely NOT how many of us would like to live, but it just goes to show that there is a lot of flexibility on what people can and DO live on, with varying degrees of comfort.</p>
<p>Like a prior poster, I believe it makes sense to break retirement up into different periods, where there are likely to be different retirement spending (go/go, some/go, no/go or similar).</p>
<p>I’ll post this before it disappears into cyberspace too.</p>
<p>jym, I know you are asking DadII and waiting for his answer.
I was just curious about your question hence I posted the link above.</p>
<p>
</p>
<p>Here is how I parsed his comment, his parents are getting minimal SS ($674/individual, $1011/couple) and with less than $2,000 in their name refers to the resource limits($2000/individual, $3000/couple). So it sounds like his parents are getting $1011 because they came here with less than $3000. I don’t think they are getting $2,000 a month.</p>
<p>I took it the same way as Dr. Google. I didn’t think the $2000 was SS income…I took that to be their total assets (are they the ones with the personal bankers?? Or was that Dad II?).</p>
is due.</p>