If expenses are low, are some of us over saving?

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randomguy
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Re: If expenses are low, are some of us over saving?

Post by randomguy » Thu Nov 08, 2018 3:34 pm

Sam1 wrote:
Thu Nov 08, 2018 1:52 pm
Good question. We earn 400k HHI+. When you subtract our mortgage, savings, college savings and childcare we spend around $4k per month. So $48k per year. This includes transportation costs. This is eating out frequently, cleaning service, weekly babysitter, taxis etc.

Whereas we are saving around $150k into retirement funds and our private brokerage. The breakdown is $18.5k - 410k, $14.2k - 401k match, $3k 401k match, $18k pension contribution (rolls into 401k if I leave), $15k company stock, ~$100k (roughly 8k per month) = $187k. So this is almost 5x just one year of annual expenses.

The only expense that should increase is healthcare.

I realize many don’t calculate the matches in their savings rate and that’s fine but it’s still going into my 401k and is vested immediately. So it’s for retirement expenses day.

My point is that I almost want to take half of that 100k and either buy a nicer home or travel a lot more with our children. We both stand to inherit money but we don’t count on it. Hard to know what to do.
Your probably saving too much:). You would have to put in the numbers but under any realistic case (lots of unknowns) your going to have assets for 2x+ your current spending in 15-20 years. But why take half of that savings? Why not just take 25%? 25k is a lot of money to spend on travel with the kids. 12k/year gets you another 150k or so of house. EVen 10% is a lot more spending.

JGoneRiding
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Re: If expenses are low, are some of us over saving?

Post by JGoneRiding » Thu Nov 08, 2018 3:38 pm

I didn't read everything but do actually agree with the premise. Ej projections currently have me dying with 17 mil bec ss will cover more than 100% our projected retirement needs. The savings is for pre ss spending on the kids and old age care

Sam1
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Re: If expenses are low, are some of us over saving?

Post by Sam1 » Thu Nov 08, 2018 3:50 pm

randomguy wrote:
Thu Nov 08, 2018 3:34 pm
Sam1 wrote:
Thu Nov 08, 2018 1:52 pm
Good question. We earn 400k HHI+. When you subtract our mortgage, savings, college savings and childcare we spend around $4k per month. So $48k per year. This includes transportation costs. This is eating out frequently, cleaning service, weekly babysitter, taxis etc.

Whereas we are saving around $150k into retirement funds and our private brokerage. The breakdown is $18.5k - 410k, $14.2k - 401k match, $3k 401k match, $18k pension contribution (rolls into 401k if I leave), $15k company stock, ~$100k (roughly 8k per month) = $187k. So this is almost 5x just one year of annual expenses.

The only expense that should increase is healthcare.

I realize many don’t calculate the matches in their savings rate and that’s fine but it’s still going into my 401k and is vested immediately. So it’s for retirement expenses day.

My point is that I almost want to take half of that 100k and either buy a nicer home or travel a lot more with our children. We both stand to inherit money but we don’t count on it. Hard to know what to do.
Your probably saving too much:). You would have to put in the numbers but under any realistic case (lots of unknowns) your going to have assets for 2x+ your current spending in 15-20 years. But why take half of that savings? Why not just take 25%? 25k is a lot of money to spend on travel with the kids. 12k/year gets you another 150k or so of house. EVen 10% is a lot more spending.
This is a good point. I say half because where we live we have to move up significantly in price to get more space, bedrooms etc. If we go up just a little more in price it’s not really worth moving. But you’re right I should consider 25 percent instead of 50 percent.

delamer
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Re: If expenses are low, are some of us over saving?

Post by delamer » Thu Nov 08, 2018 4:06 pm

KlangFool wrote:
Thu Nov 08, 2018 11:09 am
imfocusedman wrote:
Thu Nov 08, 2018 10:46 am
Helpful to hear from everyone and seems that at least some see it the same way I do. I’m not suggesting no savings or extreme lifestyle creep.

I’m suggesting that a couple earning $250k, who might be paying a $4k mortgage and maxing 2 401k’s is “living on” less than $100k/year after taxes, mortgage and 401k savings (and even less than that if they are currently paying off other debts). Since this couple is basically maxing out SS contributions, they will get a great benefit...$5k/month as some have suggested. So their gap (if mortgage is paid) is only about $3k/month, and there are many threads suggesting a $1 million portfolio could easily bring that. However, even with a $0 employer contribution, at this level of savings (although a sub 15% savings rate would be considered incredibly insufficient by Bogelhead standards) this couple would be on track to have far beyond $1M at retirement age.
imfocusedman,

<<who might be paying a $4k mortgage >>
<<So their gap (if mortgage is paid) is only about $3k/month,>>

This may not be true depending on the size of the property tax. My PITI is about $1,800 per month. Even if I pay off my mortgage, I still have to pay about $5,000 per year on the property tax.

KlangFool
Somehow, people often think that if they own their home outright that they’ll have no housing expense in retirement.

To stay in our house will cost us at least $11,000 per year for taxes and utilities. So that does not include any maintenance or lawn care.
Last edited by delamer on Thu Nov 08, 2018 6:29 pm, edited 1 time in total.

LiterallyIronic
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Re: If expenses are low, are some of us over saving?

Post by LiterallyIronic » Thu Nov 08, 2018 4:09 pm

bottlecap wrote:
Wed Nov 07, 2018 5:41 pm
So your proposal is to have no retirement savings and live on $36k (maybe) a year during retirement because you have your house paid off?

Sounds like a wonderful retirement. I hope it doesn't last too long!

JT
$36k is way too much for me. I worked too long if I'm able to spend $36k annually in retirement.

To answer OP's question, I save a lot because I want to retire long before SS would kick in and I also don't want my retirement hinging on SS actually existing in the future (or hinging on getting enough from it). Banking on things that are out of my control is not something I want to do.

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Re: If expenses are low, are some of us over saving?

Post by AerialWombat » Thu Nov 08, 2018 4:30 pm

imfocusedman wrote:
Wed Nov 07, 2018 5:28 pm
The thread on Baby Boomer savings brought this to mind. For a higher earning couple, assuming they’re debt free and have a paid off home at retirement, why not aim to have expenses be at/below the expected Social Security benefit? Assuming that’s ~$3k to cover property taxes, healthcare, food, transportation, etc.

I have trouble seeing how that’s not sufficient for most couples in this simplified example.

If that’s the case, then “retirement savings” is not really needed and the strategy prior to retirement would be to 1. Stay employed, 2. Throw all extra at debt and mortgage rather than into savings 3. Spend the rest.
I concur with this. I’m currently 40 and single, and for reasons that are irrelevant to this post, my life expectancy is significantly shorter than most American males. 65-70 will be a stretch for me. I already live a lifestyle under $30k per year, even though my income is 10x that. These factors heavily impact my retirement planning.

I plan to “FIRE” in 2-3 more years. By that time, I will have aggressively paid off half my rental properties, providing enough retirement income to support my current standard of living. Combined with a low to mid six figure amount in taxable, and $150k or so in 401k, I’ll have a fairly comfortable 15-20 year retirement.

If some miracle technology extends my life longer than expected, the other rentals will significantly add to cash flow after about age 65, and Social Security (if it still exists) will merely be icing on the cake.

The key for me is keeping my lifestyle costs at less than the free cash flow from the rentals I know I can pay off within three years. I’m already at that lifestyle, and in reality I can probably pay off the rentals in question within the next 15 months.

I see nothing wrong with your plan as presented.

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Elsebet
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Re: If expenses are low, are some of us over saving?

Post by Elsebet » Thu Nov 08, 2018 6:01 pm

I wonder about this especially since we have no children, but I'd rather have a little too much than too little. We live a very simple life and don't need to spend a lot to be happy. Right now our expenses living a comfortable life in a HCOL area are about 5k per month. Half of that is housing related, which in retirement assuming a paid off house would change into a healthcare expense. It think we could live comfortably on 5k per month in retirement in a lower COL area and it's my goal to have my portfolio be large enough for that at 55. I think I would rather risk over-saving until I reach my baseline target and then adjust if necessary.

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Re: If expenses are low, are some of us over saving?

Post by shell921 » Thu Nov 08, 2018 6:26 pm

delamer wrote:
Thu Nov 08, 2018 4:06 pm
KlangFool wrote:
Thu Nov 08, 2018 11:09 am
imfocusedman wrote:
Thu Nov 08, 2018 10:46 am
Helpful to hear from everyone and seems that at least some see it the same way I do. I’m not suggesting no savings or extreme lifestyle creep.

I’m suggesting that a couple earning $250k, who might be paying a $4k mortgage and maxing 2 401k’s is “living on” less than $100k/year after taxes, mortgage and 401k savings (and even less than that if they are currently paying off other debts). Since this couple is basically maxing out SS contributions, they will get a great benefit...$5k/month as some have suggested. So their gap (if mortgage is paid) is only about $3k/month, and there are many threads suggesting a $1 million portfolio could easily bring that. However, even with a $0 employer contribution, at this level of savings (although a sub 15% savings rate would be considered incredibly insufficient by Bogelhead standards) this couple would be on track to have far beyond $1M at retirement age.
imfocusedman,

<<who might be paying a $4k mortgage >>
<<So their gap (if mortgage is paid) is only about $3k/month,>>

This may not be true depending on the size of the property tax. My PITI is about $1,800 per month. Even if I pay off my mortgage, I still have to pay about $5,000 per year on the property tax.

KlangFool
Somehow, people often think that if they own their home outright that they’ll have no housing expense in retirement.

To stay in our house will cost us at least $11,000 per year for taxes and utilities. So that does include any maintenance or lawn care.
RIGHT ! My house IS ALL paid off but I have property taxes, insurance, gardener and house cleaner ! Plus upkeep. My home is only 9 years old but I just paid $300 to have 2 tankless water heaters flushed, $255 for a furnace inspection, $1600 for brush clearance ! Last year I paid $500 to have my garage doors refinished and $450 to have my wrought iron work sanded and refinished. I refinished my front door myself. Next year I will need rain gutters cleaned out again. And will need to buy another new swimspa cover! I have periodic landscaping expenses to maintain irrigation lines.
Other things that are not coming to mind at the moment !

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Re: If expenses are low, are some of us over saving?

Post by Clever_Username » Thu Nov 08, 2018 8:24 pm

I'm 35. If my current retirement savings grows at 3.5% annual real average until I'm 60, at that point 4% would be much more than my non-housing expenses; if my mortgage were paid off (so I only need to pay maintenance and utilities and property taxes), it's still enough to cover.

But saving more? I'm not giving up anything I want in life by not doing so. And that means I can handle a lower average growth rate and still be comfortable in retirement, or a lower withdrawal rate, or have money to leave to whatever cause(s) I decide to leave money to, and so on.
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getthatmarshmallow
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Re: If expenses are low, are some of us over saving?

Post by getthatmarshmallow » Thu Nov 08, 2018 11:05 pm

Quite possibly, but it's not a problem unless one feels that one is missing out on life, and that's a very personal decision. I'm reasonably certain we would just be fine with social security and a paid-off house, once we're in our 60s or 70s, as my grandparents lived very comfortable, modest lives without much more (my grandfather invests well, but really has no interest in spending so I think he's actually made money since retiring.) No spendy travel or fancy restaurants, but they had their hobbies and cars and well-maintained houses and friends and family.

I'd rather spend the money traveling in my 40s and 50s when it's physically easier. But I can't guarantee that I'll work to full retirement age, or that I'll want to, and it really takes only one or two things (health, SS being slashed, Medicare changing) going sideways to make old age uncomfortably tight financially. So, 30% it is.

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Re: If expenses are low, are some of us over saving?

Post by willthrill81 » Thu Nov 08, 2018 11:31 pm

Our current essential spending is about $35k annually, and that would roughly be covered by SS if we deferred to age 70, which we currently plan to do.
But we want to travel a lot during retirement and are making arrangements to spend much more than that.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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CyclingDuo
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Re: If expenses are low, are some of us over saving?

Post by CyclingDuo » Fri Nov 09, 2018 12:00 am

unclescrooge wrote:
Wed Nov 07, 2018 5:43 pm
You didn't need to have low expenses to be over saving.

Once I realized how much we'll probably have in retirement, I decided to loosen the purse strings a bit.

That does create some internal conflict. For example, when hiring a piano teacher for my daughter, I'm pretty sure I can knock off about 10% from his hourly rate just by asking... However, as a young musician starting out, he probably needs those extra few dollars more than I do. But asking for a discount is so ingrained, I'm really conflicted over this minor amount.
Off topic with regard to the OP's post. However, worth responding to based on your comments.

As someone who plays the piano 6-8 hours per day and teaches music lessons, I can say the following....

It's highly likely your daughter has very little talent when it comes to playing the piano. She is guaranteed to be a Joe - or in her case - a Jane average at best. She will not continue with it. 1% or less continue with the instrument for the rest of their lives. Only about 5% stick with it for a maximum of 2 years. The odds are not in her favor.

Hence, not only should you pay her piano teacher full price. You should also provide him with a bottle of expensive wine on top of the usual fee for every lesson he teaches her since he has to put up with her lack of talent and suffer through the experience of trying to teach yet another lack of talent Jane Average piano player since she the data shows she will not stick with it for more than the average of 1-2 years.

If she had real talent for playing the piano, most teachers would charge nothing for the pleasure of working with her. The remaining 99.9% of lesson fees come from those who are attempting to learn how to use the piano as a tool and struggle mightily.

Science shows that good piano player's brains are actually different than the brains of everyone else.

https://mic.com/articles/91329/science- ... .37mXaXtr6

https://www.lifehack.org/517069/science ... body-elses

https://www.learning-mind.com/piano-pla ... ue-brains/

End result: no discount. Join a nice wine club or two and include a bottle with every lesson fee. :mrgreen:
"Everywhere is within walking distance if you have the time." ~ Steven Wright

FireProof
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Re: If expenses are low, are some of us over saving?

Post by FireProof » Fri Nov 09, 2018 2:30 am

Sure, most Bogleheads oversave, in the sense that they are epically overcautious. And, yes, 36k/year essentially tax-free with a house is well above the median lifestyle, and certainly very comfortable.

But that doesn't mean saving nothing is an optimal solution - relatively small savings early in life have a high value later in life, and certainly, for example, would seem to be preferable to being required to work until retirement age.

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Re: If expenses are low, are some of us over saving?

Post by pennywise » Fri Nov 09, 2018 7:25 am

=ResearchMed post_id=4203887 time=1541693714 user_id=11759

I suspect an awful lot of this depends upon whether one is living in a LCOLA or a VHCOLA.
It can make a huge difference.
Indeed. We are a high earning couple; we max out our 403b accounts, own our residence, a rental property and a vacation home, only the latter of which has a mortgage-it is paid via rental income so at some point we will sell one of our other properties, retire the mortgage and ourselves and be living in a paid off house with no debt.

However, even with that accomplished our property taxes/insurance will be ~$1000/month and health insurance another $1000/month and income taxes at least another $1000/month. So there goes the mythical $3000 social security income :D (actually as pointed out up-topic, our SS income will be ~$5000/month but still). In our case even living a frugal lifestyle, which we do, our fixed expenses are going to consume more than the figure the OP cannot understand being insufficient. And yet it is.

Simplistic assumptions about some mythical dollar amount that one person can live on being the canonical optimum for everyone are actually pretty meaningless. People have a vast range of economic and fiscal parameters.

changingtimes
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Re: If expenses are low, are some of us over saving?

Post by changingtimes » Fri Nov 09, 2018 1:12 pm

I'll add in another comment on "oversaving," which is that if you are part of a twosome and are living frugally-ish in order to have a well-funded retirement, remember that one of you may not make it to the retirement starting line--then the one left behind has a big pile of money, and the one who died didn't get the chance to spend that money that was so meticulously diverted.

And then expenses vs SS for the one remaining might actually go up--less SS, smaller standard deduction, perhaps needing to spend more to have work done on a house if the deceased spouse was the handyman, etc. etc.

I am glad that DH and I did a lot of traveling and ate a lot of great expensive meals even while plotting an early retirement, which he didn't make it to.

Notsobad
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Re: If expenses are low, are some of us over saving?

Post by Notsobad » Fri Nov 09, 2018 1:34 pm

I think everyone should front load savings and debt repayment for several years then loosen the screws and spend more. This way the magic of compounded interest can work for you while you allow for some pleasure spending. The percentage of saving does not need to be static.

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Meg77
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Re: If expenses are low, are some of us over saving?

Post by Meg77 » Fri Nov 09, 2018 2:32 pm

I agree with your original premise as well as your revised question. Short answer: yes, many of us are over-saving. Studies indicate that most retirees - even those with "only" $100k - $250k in retirement accounts - NEVER spend down their retirement savings. Many retirees die with more than they had when they retired. They live off social security, pensions, and maybe the income from their investments, never touching the principal (or touching so little that the accounts continue to grow).

This is on average though, and certainly many retirees struggle. And you never know if you'll be in the unfortunate minority who retire into a brutal bear market (or Depression or World War) or if you'll suffer an expensive debilitating disability or illness or if you'll end up divorced or supporting relatives you assumed would be independent. So we over-save, and that's not irrational.

But humans are adaptable and tend to adapt to whatever their income happens to be - whether it rises unexpectedly or is less in retirement than they'd hoped. Worst case, most people can (and many do) live off social security alone. They may get roommates or live with relatives to pool income; they may work part time; or they may just get by in a very inexpensive area of the country. Many of my relatives with paid off homes spend less than $50k a year and would not consider their lifestyles constrained by finances. It sounds unthinkable to many living off several times that, but remember that your tax burden drops to near zero, you don't have to save, and you have no payments. So nearly all of your income is effectively discretionary.
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Re: If expenses are low, are some of us over saving?

Post by stoptothink » Fri Nov 09, 2018 3:59 pm

CyclingDuo wrote:
Fri Nov 09, 2018 12:00 am
unclescrooge wrote:
Wed Nov 07, 2018 5:43 pm
You didn't need to have low expenses to be over saving.

Once I realized how much we'll probably have in retirement, I decided to loosen the purse strings a bit.

That does create some internal conflict. For example, when hiring a piano teacher for my daughter, I'm pretty sure I can knock off about 10% from his hourly rate just by asking... However, as a young musician starting out, he probably needs those extra few dollars more than I do. But asking for a discount is so ingrained, I'm really conflicted over this minor amount.
Off topic with regard to the OP's post. However, worth responding to based on your comments.

As someone who plays the piano 6-8 hours per day and teaches music lessons, I can say the following....

It's highly likely your daughter has very little talent when it comes to playing the piano. She is guaranteed to be a Joe - or in her case - a Jane average at best. She will not continue with it. 1% or less continue with the instrument for the rest of their lives. Only about 5% stick with it for a maximum of 2 years. The odds are not in her favor.

Hence, not only should you pay her piano teacher full price. You should also provide him with a bottle of expensive wine on top of the usual fee for every lesson he teaches her since he has to put up with her lack of talent and suffer through the experience of trying to teach yet another lack of talent Jane Average piano player since she the data shows she will not stick with it for more than the average of 1-2 years.

If she had real talent for playing the piano, most teachers would charge nothing for the pleasure of working with her. The remaining 99.9% of lesson fees come from those who are attempting to learn how to use the piano as a tool and struggle mightily.

Science shows that good piano player's brains are actually different than the brains of everyone else.

https://mic.com/articles/91329/science- ... .37mXaXtr6

https://www.lifehack.org/517069/science ... body-elses

https://www.learning-mind.com/piano-pla ... ue-brains/

End result: no discount. Join a nice wine club or two and include a bottle with every lesson fee. :mrgreen:
:shock: Umm....what the heck?

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Re: If expenses are low, are some of us over saving?

Post by willthrill81 » Fri Nov 09, 2018 4:10 pm

I don't believe that I've ever heard anyone say that they regretted saving money earlier in their lives.

But it is very common for people to say that they regret not spending more time with loved ones earlier in their lives.

If a high savings rate is truly preventing you from spending time with your loved ones, then it may be harmful to your overall well being. But it's important to keep in mind that spending time with loved ones does not necessitate spending a large amount of money either.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: If expenses are low, are some of us over saving?

Post by randomguy » Fri Nov 09, 2018 11:44 pm

willthrill81 wrote:
Fri Nov 09, 2018 4:10 pm
I don't believe that I've ever heard anyone say that they regretted saving money earlier in their lives.

But it is very common for people to say that they regret not spending more time with loved ones earlier in their lives.

If a high savings rate is truly preventing you from spending time with your loved ones, then it may be harmful to your overall well being. But it's important to keep in mind that spending time with loved ones does not necessitate spending a large amount of money either.
I have heard it plenty and I bet you have to:). When someone says "I wish I would have spent X on Y when I was young" they are regretting saving money early in life.

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Re: If expenses are low, are some of us over saving?

Post by willthrill81 » Fri Nov 09, 2018 11:47 pm

randomguy wrote:
Fri Nov 09, 2018 11:44 pm
willthrill81 wrote:
Fri Nov 09, 2018 4:10 pm
I don't believe that I've ever heard anyone say that they regretted saving money earlier in their lives.

But it is very common for people to say that they regret not spending more time with loved ones earlier in their lives.

If a high savings rate is truly preventing you from spending time with your loved ones, then it may be harmful to your overall well being. But it's important to keep in mind that spending time with loved ones does not necessitate spending a large amount of money either.
I have heard it plenty and I bet you have to:). When someone says "I wish I would have spent X on Y when I was young" they are regretting saving money early in life.
I haven't heard that very often. But even then, do they regret saving or that they spent money on Z instead of Y?
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: If expenses are low, are some of us over saving?

Post by smitcat » Sat Nov 10, 2018 8:28 am

randomguy wrote:
Fri Nov 09, 2018 11:44 pm
willthrill81 wrote:
Fri Nov 09, 2018 4:10 pm
I don't believe that I've ever heard anyone say that they regretted saving money earlier in their lives.

But it is very common for people to say that they regret not spending more time with loved ones earlier in their lives.

If a high savings rate is truly preventing you from spending time with your loved ones, then it may be harmful to your overall well being. But it's important to keep in mind that spending time with loved ones does not necessitate spending a large amount of money either.
I have heard it plenty and I bet you have to:). When someone says "I wish I would have spent X on Y when I was young" they are regretting saving money early in life.
Yes - I have heard it often lately that folks say they regret they did not do x or y or Z at an earlier age. Some of these would have been very inexpensive or free but many of them would have required them to spend more money. As we do some of these same things now it becomes clearer that it would have been very nice to do them earlier when the family was younger - in some of the cases members of the family are no longer capable.

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Re: If expenses are low, are some of us over saving?

Post by SQRT » Sat Nov 10, 2018 8:39 am

It certainly is a balancing act. So many uncertainties over a fairly long time period. You don’t want to live like a “pauper” for 30 years while working-then like a “king” during retirement which could be cut short due to health issues. Not to mention the difficulties you might have spending more after such a period of high saving. Balance is key. Having said that, it’s always better to have a little more than needed rather than be a little short.

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Re: If expenses are low, are some of us over saving?

Post by lostdog » Sat Nov 10, 2018 9:00 am

My wife and I are debt free including mortgage. We don't keep a budget.

We had a great time this past year. Eating out, kayaking, biking, fishing, visiting family and friends. Staycations etc....Next year we're adding some traveling to our list which will add about 5k.

According to Quicken we're on track to spend only 25k this year. Life is great!

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Re: If expenses are low, are some of us over saving?

Post by randomguy » Sat Nov 10, 2018 9:35 am

smitcat wrote:
Sat Nov 10, 2018 8:28 am
randomguy wrote:
Fri Nov 09, 2018 11:44 pm
willthrill81 wrote:
Fri Nov 09, 2018 4:10 pm
I don't believe that I've ever heard anyone say that they regretted saving money earlier in their lives.

But it is very common for people to say that they regret not spending more time with loved ones earlier in their lives.

If a high savings rate is truly preventing you from spending time with your loved ones, then it may be harmful to your overall well being. But it's important to keep in mind that spending time with loved ones does not necessitate spending a large amount of money either.
I have heard it plenty and I bet you have to:). When someone says "I wish I would have spent X on Y when I was young" they are regretting saving money early in life.
Yes - I have heard it often lately that folks say they regret they did not do x or y or Z at an earlier age. Some of these would have been very inexpensive or free but many of them would have required them to spend more money. As we do some of these same things now it becomes clearer that it would have been very nice to do them earlier when the family was younger - in some of the cases members of the family are no longer capable.

At a high level the point is simply people aren't going to regret a positive thing so you aren't going to here that. You often hear regrets about the tradeoffs required to get there. Do you regret saving money? Nope. Do you regret working those 20 hours of overtime to get that money? Maybe.

And yes we tend to be talking about a small portion of the population that are oversavers. But they all post on bogleheads:)

Traveler
Posts: 646
Joined: Fri Aug 30, 2013 9:07 pm

Re: If expenses are low, are some of us over saving?

Post by Traveler » Sat Nov 10, 2018 2:17 pm

I'm single with no debt, paid off home, newer car and save more than twice what I spend each year. I live in a medium COL city and live moderately frugally, but don't want for much of anything. I still spend $45-50K/year. The thought of working until medicare age of 65 makes me ill so my expenses, especially in the first decade of retirement will be quite a bit more than what I have now, primarily due to health insurance. How do people live on $3K a month with property taxes, home maintenance, transportation, food, general household items and fun/leisure?

randomguy
Posts: 6504
Joined: Wed Sep 17, 2014 9:00 am

Re: If expenses are low, are some of us over saving?

Post by randomguy » Sat Nov 10, 2018 10:01 pm

Traveler wrote:
Sat Nov 10, 2018 2:17 pm
I'm single with no debt, paid off home, newer car and save more than twice what I spend each year. I live in a medium COL city and live moderately frugally, but don't want for much of anything. I still spend $45-50K/year. The thought of working until medicare age of 65 makes me ill so my expenses, especially in the first decade of retirement will be quite a bit more than what I have now, primarily due to health insurance. How do people live on $3K a month with property taxes, home maintenance, transportation, food, general household items and fun/leisure?
Property taxes are 1500/year [edit was month but that was a typo] on a 500k house in places I have lived. Health insurance is bascailly free with a 36k income. Food is 200/month. A car is 500. Utilities, cable, cell phone and the rest are like 350. House maintenance is maybe 500/month. Thats like 1800 bucks/month to spend on misc stuff and toys. Live in a cheaper house (plenty of <200k ones) and you have even more to spend. 3k/month is pretty much an average family income after taxes and housing in the US. It isn't really frugal in the absolute sense. One the other hand if you making 200k, it is pretty frugal to chose to live on that. It is all about what standard of living you like. I would have no problem living 3k in some areas of the country. I don't think I would want to live on 2k in any of them. Where to draw the line on how many luxuries you want is up to you.

And of course other areas of the country the property tax on a 500k house is north of 12k/year. A lot harder to live on 36k when you paying another 10k in taxes.
Last edited by randomguy on Sat Nov 10, 2018 10:43 pm, edited 1 time in total.

ResearchMed
Posts: 7470
Joined: Fri Dec 26, 2008 11:25 pm

Re: If expenses are low, are some of us over saving?

Post by ResearchMed » Sat Nov 10, 2018 10:20 pm

randomguy wrote:
Sat Nov 10, 2018 10:01 pm
Traveler wrote:
Sat Nov 10, 2018 2:17 pm
I'm single with no debt, paid off home, newer car and save more than twice what I spend each year. I live in a medium COL city and live moderately frugally, but don't want for much of anything. I still spend $45-50K/year. The thought of working until medicare age of 65 makes me ill so my expenses, especially in the first decade of retirement will be quite a bit more than what I have now, primarily due to health insurance. How do people live on $3K a month with property taxes, home maintenance, transportation, food, general household items and fun/leisure?
Property taxes are 1500/month on a 500k house in places I have lived. Health insurance is bascailly free with a 36k income. Food is 200/month. A car is 500. Utilities, cable, cell phone and the rest are like 350. House maintenance is maybe 500/month. Thats like 1800 bucks/month to spend on misc stuff and toys. Live in a cheaper house (plenty of <200k ones) and you have even more to spend. 3k/month is pretty much an average family income after taxes and housing in the US. It isn't really frugal in the absolute sense. One the other hand if you making 200k, it is pretty frugal to chose to live on that. It is all about what standard of living you like. I would have no problem living 3k in some areas of the country. I don't think I would want to live on 2k in any of them. Where to draw the line on how many luxuries you want is up to you.

And of course other areas of the country the property tax on a 500k house is north of 12k/year. A lot harder to live on 36k when you paying another 10k in taxes.
I had to read this twice.
Did you mean, in the first section, that property taxes would be $1,500 per YEAR, not per month?
Otherwise :confused
I didn't realize that possible typo until I saw the second paragraph.

Yes, it certainly depends what standard of living one had before "retirement", and what one wants to have during retirement.
But in VHCOLA's, $3k/month after taxes/housing is not going to go very far at all...
I cannot imagine living in our VHCOLA on anything close to that.

RM
This signature is a placebo. You are in the control group.

randomguy
Posts: 6504
Joined: Wed Sep 17, 2014 9:00 am

Re: If expenses are low, are some of us over saving?

Post by randomguy » Sat Nov 10, 2018 10:43 pm

ResearchMed wrote:
Sat Nov 10, 2018 10:20 pm
randomguy wrote:
Sat Nov 10, 2018 10:01 pm
Traveler wrote:
Sat Nov 10, 2018 2:17 pm
I'm single with no debt, paid off home, newer car and save more than twice what I spend each year. I live in a medium COL city and live moderately frugally, but don't want for much of anything. I still spend $45-50K/year. The thought of working until medicare age of 65 makes me ill so my expenses, especially in the first decade of retirement will be quite a bit more than what I have now, primarily due to health insurance. How do people live on $3K a month with property taxes, home maintenance, transportation, food, general household items and fun/leisure?
Property taxes are 1500/month on a 500k house in places I have lived. Health insurance is bascailly free with a 36k income. Food is 200/month. A car is 500. Utilities, cable, cell phone and the rest are like 350. House maintenance is maybe 500/month. Thats like 1800 bucks/month to spend on misc stuff and toys. Live in a cheaper house (plenty of <200k ones) and you have even more to spend. 3k/month is pretty much an average family income after taxes and housing in the US. It isn't really frugal in the absolute sense. One the other hand if you making 200k, it is pretty frugal to chose to live on that. It is all about what standard of living you like. I would have no problem living 3k in some areas of the country. I don't think I would want to live on 2k in any of them. Where to draw the line on how many luxuries you want is up to you.

And of course other areas of the country the property tax on a 500k house is north of 12k/year. A lot harder to live on 36k when you paying another 10k in taxes.
I had to read this twice.
Did you mean, in the first section, that property taxes would be $1,500 per YEAR, not per month?
Otherwise :confused
I didn't realize that possible typo until I saw the second paragraph.

Yes, it certainly depends what standard of living one had before "retirement", and what one wants to have during retirement.
But in VHCOLA's, $3k/month after taxes/housing is not going to go very far at all...
I cannot imagine living in our VHCOLA on anything close to that.

RM
Sorry per year:). And yes it is stupid low. You did have to pay 150 bucks/year for the fire department.:) You can also have property taxes that low in a VHCOL area. You just need to buy you house for 30k in CA in 1970:). I lived in a VHCOLA in the 00's for about 3k/month (caveat with employer paid health insurance and a paid off car). Paid 1400 for rent, 1000 for things like food, utilities, car insurance, gas and then had spend 600 a month doing fun things like movies, dates, day trips and so on. Wasn't exactly slumming it or doing any crazy frugality things (i.e. I didn't spend hours clipping coupons or anything like that). Spouse probably would have bumped me up to 4k:) And I was living it up compared to grad school where I was living on under 1k/month after housing (which to some extent was subsidized). Granted without a job to entertain me for 60+ hours/week I would have had to spent more on entertainment and the like.

Jazzysoon
Posts: 37
Joined: Tue Jan 09, 2018 3:05 pm

Re: If expenses are low, are some of us over saving?

Post by Jazzysoon » Sat Nov 10, 2018 10:44 pm

Traveler wrote:
Sat Nov 10, 2018 2:17 pm
I'm single with no debt, paid off home, newer car and save more than twice what I spend each year. I live in a medium COL city and live moderately frugally, but don't want for much of anything. I still spend $45-50K/year. The thought of working until medicare age of 65 makes me ill so my expenses, especially in the first decade of retirement will be quite a bit more than what I have now, primarily due to health insurance. How do people live on $3K a month with property taxes, home maintenance, transportation, food, general household items and fun/leisure?
This thread make me re-look at my budget , I'm with Traveler, I'm not sure how someone living in MCOL can live on 3k/month. Property taxes are significant and I live in a more rural area, have a much less than <500k house. Unless I can play the ACA cliff game and still try to get the income I need to live on, my health insurance premiums on ACA are 1000-1300/month. Plus add house maint, house ins, utilities, car ins, car maint, food, etc, etc... And I use firewood partially from trees on my property for fuel during the winter.

averagedude
Posts: 254
Joined: Sun May 13, 2018 3:41 pm

Re: If expenses are low, are some of us over saving?

Post by averagedude » Sun Nov 11, 2018 12:35 am

I do think the original poster makes a good point that it is possible that many people can live on social security alone. Actually it is going to be a reality for a vast amount of people living in the US. It is my opinion that social security will be there in the future because it is political suicide for a politician to cut benefits. If you have a modest house paid for, you can make it on 36k a year if it is a necessity. Im average and have made way less than members on this forum, but i believe the difference between a wealthy person and an average person isnt much. Just a better house, better vehicles, and better vacations. Things that arent that important to many people in their seventies. I however believe a person should save and invest at least 10% of their income. The overwhelming majority of people that do this at an early age, will most likely have no financial difficulties in their lifetimes.

Slacker
Posts: 629
Joined: Thu May 26, 2016 8:40 am

Re: If expenses are low, are some of us over saving?

Post by Slacker » Sun Nov 11, 2018 1:12 am

There really isn't much I want to spend more money on at this time.

Work too much to go on any vacations longer than a few days. Don't care for another car. Have plenty of house (tried living in a 4000sq ft home and 2800 sq ft home ... Much prefer sub 2000sq ft). I don't plan to go on tour in a band so I'll keep my 20yr old instrument that works just fine. Have all the gym equipment I need. Already go out to eat 1 or 2 times a week (and I have found many places can't prepare food to my tastes as well as I can).

HHI about $250k/yr
Mortgage $2000 ($300/month for taxes and insurance; 15yr mortgage)
Other spending is less than $3000/month including a car payment, student loan payment, and about $250 expected car and home maintenance per month.

The only thing I'm planning to spend big on is free time once we hit our FI number.

We would go on european trips, but can't get that much time off from work in one chunk and flying across the Atlantic for a 4-5 day trip sounds unpleasant at best.

SGM
Posts: 2746
Joined: Wed Mar 23, 2011 4:46 am

Re: If expenses are low, are some of us over saving?

Post by SGM » Sun Nov 11, 2018 4:37 am

We went out every weekend when we were first married and both working. We lived off of one paycheck and invested the other. We bought a nice affordable house although we could have bought a bigger house higher up in the hills. It seemed foolish to overextend ourselves with a larger mortgage. The only regret was that houses doubled in price within 4 years. So maybe we over saved in that 4 year period. Who knew prices would double after being stagnant for the prior 5 years? We were far better off than the couple that previously owned our house. They decided to get out of the housing market and rent in order to buy a better house later on. They were priced out of the market completely.

I don't believe we over saved. Savings gave us early financial independence. Although I had no interest in retiring early as I was having too much fun working as an industrial scientific consultant and then later as a physician.

smitcat
Posts: 1994
Joined: Mon Nov 07, 2016 10:51 am

Re: If expenses are low, are some of us over saving?

Post by smitcat » Sun Nov 11, 2018 7:02 am

randomguy wrote:
Sat Nov 10, 2018 10:01 pm
Traveler wrote:
Sat Nov 10, 2018 2:17 pm
I'm single with no debt, paid off home, newer car and save more than twice what I spend each year. I live in a medium COL city and live moderately frugally, but don't want for much of anything. I still spend $45-50K/year. The thought of working until medicare age of 65 makes me ill so my expenses, especially in the first decade of retirement will be quite a bit more than what I have now, primarily due to health insurance. How do people live on $3K a month with property taxes, home maintenance, transportation, food, general household items and fun/leisure?
Property taxes are 1500/year [edit was month but that was a typo] on a 500k house in places I have lived. Health insurance is bascailly free with a 36k income. Food is 200/month. A car is 500. Utilities, cable, cell phone and the rest are like 350. House maintenance is maybe 500/month. Thats like 1800 bucks/month to spend on misc stuff and toys. Live in a cheaper house (plenty of <200k ones) and you have even more to spend. 3k/month is pretty much an average family income after taxes and housing in the US. It isn't really frugal in the absolute sense. One the other hand if you making 200k, it is pretty frugal to chose to live on that. It is all about what standard of living you like. I would have no problem living 3k in some areas of the country. I don't think I would want to live on 2k in any of them. Where to draw the line on how many luxuries you want is up to you.

And of course other areas of the country the property tax on a 500k house is north of 12k/year. A lot harder to live on 36k when you paying another 10k in taxes.
"I would have no problem living 3k in some areas of the country. I don't think I would want to live on 2k in any of them. Where to draw the line on how many luxuries you want is up to you."

I can see living on less when yuo are in your 70's if many of these 'staple expenses' have been limited to your numbers.
IMHO - I cannot see limiting myself to anywhere near these numbers when i am in my 50's or 60's and have kids and parents.
Our list of items to do and experience is maybe 50 or more in length after the basic expenses which are also higher, as a result all our lines are higher.
Everyone is different but choosing wisely is a good idea, soem choices are irreversable...

SQRT
Posts: 917
Joined: Sat Feb 05, 2011 9:44 am

Re: If expenses are low, are some of us over saving?

Post by SQRT » Sun Nov 11, 2018 9:09 am

It is amazing to me the wide range of living expenses people discuss here. Clearly these represent very different lifestyles in very different places. Hard to put yourself in the other peoples’ lives and understand their spending levels.

Eye opening to me and one of the reasons I frequent this site. To see how other people live.

ResearchMed
Posts: 7470
Joined: Fri Dec 26, 2008 11:25 pm

Re: If expenses are low, are some of us over saving?

Post by ResearchMed » Sun Nov 11, 2018 9:33 am

smitcat wrote:
Sun Nov 11, 2018 7:02 am
randomguy wrote:
Sat Nov 10, 2018 10:01 pm
Traveler wrote:
Sat Nov 10, 2018 2:17 pm
I'm single with no debt, paid off home, newer car and save more than twice what I spend each year. I live in a medium COL city and live moderately frugally, but don't want for much of anything. I still spend $45-50K/year. The thought of working until medicare age of 65 makes me ill so my expenses, especially in the first decade of retirement will be quite a bit more than what I have now, primarily due to health insurance. How do people live on $3K a month with property taxes, home maintenance, transportation, food, general household items and fun/leisure?
Property taxes are 1500/year [edit was month but that was a typo] on a 500k house in places I have lived. Health insurance is bascailly free with a 36k income. Food is 200/month. A car is 500. Utilities, cable, cell phone and the rest are like 350. House maintenance is maybe 500/month. Thats like 1800 bucks/month to spend on misc stuff and toys. Live in a cheaper house (plenty of <200k ones) and you have even more to spend. 3k/month is pretty much an average family income after taxes and housing in the US. It isn't really frugal in the absolute sense. One the other hand if you making 200k, it is pretty frugal to chose to live on that. It is all about what standard of living you like. I would have no problem living 3k in some areas of the country. I don't think I would want to live on 2k in any of them. Where to draw the line on how many luxuries you want is up to you.

And of course other areas of the country the property tax on a 500k house is north of 12k/year. A lot harder to live on 36k when you paying another 10k in taxes.
"I would have no problem living 3k in some areas of the country. I don't think I would want to live on 2k in any of them. Where to draw the line on how many luxuries you want is up to you."

I can see living on less when yuo are in your 70's if many of these 'staple expenses' have been limited to your numbers.
IMHO - I cannot see limiting myself to anywhere near these numbers when i am in my 50's or 60's and have kids and parents.
Our list of items to do and experience is maybe 50 or more in length after the basic expenses which are also higher, as a result all our lines are higher.
Everyone is different but choosing wisely is a good idea, soem choices are irreversable...
Don't be so quick to discount how *you* might be feeling in your 70's :happy

We just started our too-long-delayed travel at approximately 70, and we are doing our very best to make up for lost time!
We do take out travel insurance, but it's been mostly useful for sometimes hefty costs due to cancelled or interrupted travel, not the medical costs themselves.
And we do have MedJetAssist, in case of hospitalization abroad and *we* would prefer to be transferred to a home (or specialty) hospital, just in case.

We've had such wonderful experiences that we upped the frequency/length of trips, and thus the spending.
Even without the travel, as I mentioned above, in our VHCOLA, we'd be hard pressed to live on the 3k/month mentioned.
But more importantly, we have just about zero interest in *not* continuing to travel as long as we can.
(And we've also decided that should health issues interfere such that bringing along someone to help would make a difference, then we'll do that!)

There are some types of trips/destinations, we can no longer do, due to some aging/health issues, but there are still too many destinations on our list that we *can* do. It also seems that we might check off one, but then add two more...

RM
This signature is a placebo. You are in the control group.

smitcat
Posts: 1994
Joined: Mon Nov 07, 2016 10:51 am

Re: If expenses are low, are some of us over saving?

Post by smitcat » Sun Nov 11, 2018 10:29 am

ResearchMed wrote:
Sun Nov 11, 2018 9:33 am
smitcat wrote:
Sun Nov 11, 2018 7:02 am
randomguy wrote:
Sat Nov 10, 2018 10:01 pm
Traveler wrote:
Sat Nov 10, 2018 2:17 pm
I'm single with no debt, paid off home, newer car and save more than twice what I spend each year. I live in a medium COL city and live moderately frugally, but don't want for much of anything. I still spend $45-50K/year. The thought of working until medicare age of 65 makes me ill so my expenses, especially in the first decade of retirement will be quite a bit more than what I have now, primarily due to health insurance. How do people live on $3K a month with property taxes, home maintenance, transportation, food, general household items and fun/leisure?
Property taxes are 1500/year [edit was month but that was a typo] on a 500k house in places I have lived. Health insurance is bascailly free with a 36k income. Food is 200/month. A car is 500. Utilities, cable, cell phone and the rest are like 350. House maintenance is maybe 500/month. Thats like 1800 bucks/month to spend on misc stuff and toys. Live in a cheaper house (plenty of <200k ones) and you have even more to spend. 3k/month is pretty much an average family income after taxes and housing in the US. It isn't really frugal in the absolute sense. One the other hand if you making 200k, it is pretty frugal to chose to live on that. It is all about what standard of living you like. I would have no problem living 3k in some areas of the country. I don't think I would want to live on 2k in any of them. Where to draw the line on how many luxuries you want is up to you.

And of course other areas of the country the property tax on a 500k house is north of 12k/year. A lot harder to live on 36k when you paying another 10k in taxes.
"I would have no problem living 3k in some areas of the country. I don't think I would want to live on 2k in any of them. Where to draw the line on how many luxuries you want is up to you."

I can see living on less when yuo are in your 70's if many of these 'staple expenses' have been limited to your numbers.
IMHO - I cannot see limiting myself to anywhere near these numbers when i am in my 50's or 60's and have kids and parents.
Our list of items to do and experience is maybe 50 or more in length after the basic expenses which are also higher, as a result all our lines are higher.
Everyone is different but choosing wisely is a good idea, soem choices are irreversable...
Don't be so quick to discount how *you* might be feeling in your 70's :happy

We just started our too-long-delayed travel at approximately 70, and we are doing our very best to make up for lost time!
We do take out travel insurance, but it's been mostly useful for sometimes hefty costs due to cancelled or interrupted travel, not the medical costs themselves.
And we do have MedJetAssist, in case of hospitalization abroad and *we* would prefer to be transferred to a home (or specialty) hospital, just in case.

We've had such wonderful experiences that we upped the frequency/length of trips, and thus the spending.
Even without the travel, as I mentioned above, in our VHCOLA, we'd be hard pressed to live on the 3k/month mentioned.
But more importantly, we have just about zero interest in *not* continuing to travel as long as we can.
(And we've also decided that should health issues interfere such that bringing along someone to help would make a difference, then we'll do that!)

There are some types of trips/destinations, we can no longer do, due to some aging/health issues, but there are still too many destinations on our list that we *can* do. It also seems that we might check off one, but then add two more...

RM
Thank you - it was kind if a generic answer for the vast majority and not really a reflection of our own tendencies.
We also cannot see living on $3K per month ...but again it could be done if we moved to a LCOL area and did away with the 'non necessities".
Travel insurance is something we typically get with the credit cards and/or the travel package - if we cancel the travel insurance with at least 2 days notice the fees are refiunded.
We have budgeted retirement funds in 4 catrgories - 1.necessities, 2. how we want to live, 3. for heirs and charities and 4.buffer/extra

User avatar
cockersx3
Posts: 173
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Re: If expenses are low, are some of us over saving?

Post by cockersx3 » Sun Nov 11, 2018 11:11 am

bottlecap wrote:
Wed Nov 07, 2018 5:41 pm
So your proposal is to have no retirement savings and live on $36k (maybe) a year during retirement because you have your house paid off?

Sounds like a wonderful retirement. I hope it doesn't last too long!

JT
Well, this may end up being the default position for many. My parents are doing this right now, albeit on less than $36K (they were not super high earners). House is paid off, so this budget (barely) works for them. Enough to basically exist and not starve to death while waiting for the inevitable....

Not the kind of lifestyle I'd want to live, but one that is possible and is also likely to be the reality for many future retirees.

ResearchMed
Posts: 7470
Joined: Fri Dec 26, 2008 11:25 pm

Re: If expenses are low, are some of us over saving?

Post by ResearchMed » Sun Nov 11, 2018 12:53 pm

smitcat wrote:
Sun Nov 11, 2018 10:29 am
ResearchMed wrote:
Sun Nov 11, 2018 9:33 am
smitcat wrote:
Sun Nov 11, 2018 7:02 am
randomguy wrote:
Sat Nov 10, 2018 10:01 pm
Traveler wrote:
Sat Nov 10, 2018 2:17 pm
I'm single with no debt, paid off home, newer car and save more than twice what I spend each year. I live in a medium COL city and live moderately frugally, but don't want for much of anything. I still spend $45-50K/year. The thought of working until medicare age of 65 makes me ill so my expenses, especially in the first decade of retirement will be quite a bit more than what I have now, primarily due to health insurance. How do people live on $3K a month with property taxes, home maintenance, transportation, food, general household items and fun/leisure?
Property taxes are 1500/year [edit was month but that was a typo] on a 500k house in places I have lived. Health insurance is bascailly free with a 36k income. Food is 200/month. A car is 500. Utilities, cable, cell phone and the rest are like 350. House maintenance is maybe 500/month. Thats like 1800 bucks/month to spend on misc stuff and toys. Live in a cheaper house (plenty of <200k ones) and you have even more to spend. 3k/month is pretty much an average family income after taxes and housing in the US. It isn't really frugal in the absolute sense. One the other hand if you making 200k, it is pretty frugal to chose to live on that. It is all about what standard of living you like. I would have no problem living 3k in some areas of the country. I don't think I would want to live on 2k in any of them. Where to draw the line on how many luxuries you want is up to you.

And of course other areas of the country the property tax on a 500k house is north of 12k/year. A lot harder to live on 36k when you paying another 10k in taxes.
"I would have no problem living 3k in some areas of the country. I don't think I would want to live on 2k in any of them. Where to draw the line on how many luxuries you want is up to you."

I can see living on less when yuo are in your 70's if many of these 'staple expenses' have been limited to your numbers.
IMHO - I cannot see limiting myself to anywhere near these numbers when i am in my 50's or 60's and have kids and parents.
Our list of items to do and experience is maybe 50 or more in length after the basic expenses which are also higher, as a result all our lines are higher.
Everyone is different but choosing wisely is a good idea, soem choices are irreversable...
Don't be so quick to discount how *you* might be feeling in your 70's :happy

We just started our too-long-delayed travel at approximately 70, and we are doing our very best to make up for lost time!
We do take out travel insurance, but it's been mostly useful for sometimes hefty costs due to cancelled or interrupted travel, not the medical costs themselves.
And we do have MedJetAssist, in case of hospitalization abroad and *we* would prefer to be transferred to a home (or specialty) hospital, just in case.

We've had such wonderful experiences that we upped the frequency/length of trips, and thus the spending.
Even without the travel, as I mentioned above, in our VHCOLA, we'd be hard pressed to live on the 3k/month mentioned.
But more importantly, we have just about zero interest in *not* continuing to travel as long as we can.
(And we've also decided that should health issues interfere such that bringing along someone to help would make a difference, then we'll do that!)

There are some types of trips/destinations, we can no longer do, due to some aging/health issues, but there are still too many destinations on our list that we *can* do. It also seems that we might check off one, but then add two more...

RM
Thank you - it was kind if a generic answer for the vast majority and not really a reflection of our own tendencies.
We also cannot see living on $3K per month ...but again it could be done if we moved to a LCOL area and did away with the 'non necessities".
Travel insurance is something we typically get with the credit cards and/or the travel package - if we cancel the travel insurance with at least 2 days notice the fees are refiunded.
We have budgeted retirement funds in 4 catrgories - 1.necessities, 2. how we want to live, 3. for heirs and charities and 4.buffer/extra
Charge card "travel insurance" doesn't work for everyone. For one thing, there are limits to the amount of coverage per trip, and at least one card vendor recently lower their limit even more.

But far more importantly for some - and that includes us - most (or all?) card-related travel insurance does *not* include any coverage for losses/expenses due to pre-existing medical conditions.
At our ages, we've got a few of those.
Our two "big" travel insurance claims... well, we don't think they were related to pre-existing conditions. However, we can imagine how an insurer might try to state that they were, and thus deny the claim. And we certainly wouldn't want to get into a fight with an insurer and their "experts", or how loose of a "link" there might need to be...

RM
Last edited by ResearchMed on Sun Nov 11, 2018 1:59 pm, edited 1 time in total.
This signature is a placebo. You are in the control group.

MnD
Posts: 3793
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Re: If expenses are low, are some of us over saving?

Post by MnD » Sun Nov 11, 2018 1:42 pm

We saved enough so our after-tax income in retirement (starting next month) will be roughly the same as our after-tax after-retirement savings income in the couple years prior to retirement. That clearly defines the line for us between under-saving and over-saving. "$3K" seems like a meaningless number in the context of this discussion and ridiculously low for this hypothetical $250K income while working household.

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Watty
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Re: If expenses are low, are some of us over saving?

Post by Watty » Sun Nov 11, 2018 2:27 pm

One thing that has not been mentioned is that the median household income in the US is only about $59,000 a year and for most people that includes paying for rent or a mortage payment. In probably 80% of the country that will support a modest but comfortable lifestyle.

https://en.wikipedia.org/wiki/Household ... ted_States

I live suburban Atlanta which is a moderate cost of living area and I have a paid off house. My property taxes are only about $750 a year(that is not a typo) for a pretty average house because the county I live in is one of the few that exempts seniors from paying school property taxes. Without that exemption it would be around $2,500 a year.

I have not started Social Security yet but when I do then my wife and I will get a combined amount somewhere in the ballpark of $40K depending on when I start it.

I figure that we will also spend something like another $20,000 to $25,000 a year from our retirement savings. I have not crunched the numbers recently but we will be paying very little if any federal income tax. My state does not tax Social Security and there is a significant retirement income exemption so I will not need to pay any state income taxes then.

Around here with a paid off house $60K a year should be plenty to have an above average middle class lifestyle including plenty of things like travel.

If only one of us is surviving when long term car is needed then the house can be sold to help pay for that. One advantage of living in a low to moderate cost of living area is that long term care is also less expensive.
https://www.genworth.com/aging-and-you/ ... -care.html

There are of course all sorts of other factors like only having one Social Security check if one of us dies but at least around here retirement does have to cost all that much.

smitcat
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Re: If expenses are low, are some of us over saving?

Post by smitcat » Sun Nov 11, 2018 5:30 pm

Watty wrote:
Sun Nov 11, 2018 2:27 pm
One thing that has not been mentioned is that the median household income in the US is only about $59,000 a year and for most people that includes paying for rent or a mortage payment. In probably 80% of the country that will support a modest but comfortable lifestyle.

https://en.wikipedia.org/wiki/Household ... ted_States

I live suburban Atlanta which is a moderate cost of living area and I have a paid off house. My property taxes are only about $750 a year(that is not a typo) for a pretty average house because the county I live in is one of the few that exempts seniors from paying school property taxes. Without that exemption it would be around $2,500 a year.

I have not started Social Security yet but when I do then my wife and I will get a combined amount somewhere in the ballpark of $40K depending on when I start it.

I figure that we will also spend something like another $20,000 to $25,000 a year from our retirement savings. I have not crunched the numbers recently but we will be paying very little if any federal income tax. My state does not tax Social Security and there is a significant retirement income exemption so I will not need to pay any state income taxes then.

Around here with a paid off house $60K a year should be plenty to have an above average middle class lifestyle including plenty of things like travel.

If only one of us is surviving when long term car is needed then the house can be sold to help pay for that. One advantage of living in a low to moderate cost of living area is that long term care is also less expensive.
https://www.genworth.com/aging-and-you/ ... -care.html

There are of course all sorts of other factors like only having one Social Security check if one of us dies but at least around here retirement does have to cost all that much.
It is always good to hear about places that we could go where the costs would be less.

Sam1
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Re: If expenses are low, are some of us over saving?

Post by Sam1 » Sun Nov 11, 2018 6:57 pm

Watty wrote:
Sun Nov 11, 2018 2:27 pm
One thing that has not been mentioned is that the median household income in the US is only about $59,000 a year and for most people that includes paying for rent or a mortage payment. In probably 80% of the country that will support a modest but comfortable lifestyle.

https://en.wikipedia.org/wiki/Household ... ted_States

I live suburban Atlanta which is a moderate cost of living area and I have a paid off house. My property taxes are only about $750 a year(that is not a typo) for a pretty average house because the county I live in is one of the few that exempts seniors from paying school property taxes. Without that exemption it would be around $2,500 a year.

I have not started Social Security yet but when I do then my wife and I will get a combined amount somewhere in the ballpark of $40K depending on when I start it.

I figure that we will also spend something like another $20,000 to $25,000 a year from our retirement savings. I have not crunched the numbers recently but we will be paying very little if any federal income tax. My state does not tax Social Security and there is a significant retirement income exemption so I will not need to pay any state income taxes then.

Around here with a paid off house $60K a year should be plenty to have an above average middle class lifestyle including plenty of things like travel.

If only one of us is surviving when long term car is needed then the house can be sold to help pay for that. One advantage of living in a low to moderate cost of living area is that long term care is also less expensive.
https://www.genworth.com/aging-and-you/ ... -care.html

There are of course all sorts of other factors like only having one Social Security check if one of us dies but at least around here retirement does have to cost all that much.
Two things come to mind:

1. While property taxes are low, your home maintenance most likely won’t be. Many of the suburban Atlanta homes are hitting that age where they need new roofs, ACs, etc. Most are on decent sized lots and require regular landscaping. I wouldn’t discount the cost to upkeep a four bed suburban home.


2. Transportation costs are VERY high in Atlanta. People spend a lot on cars as they are almost required for daily life, especially in the suburbs. It’s a safe assumption you don’t walk to the grocery store or for regular errands. This could force you into assisted living sooner than if you lived somewhere less car dependent. Cars are expensive to maintain. We don’t require cars where we live and it saves us so much money. Also what will you even do as a senior citizen...just sit in your suburban home and watch TV? Most of the suburbs are just houses and chain restaurants.

randomguy
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Re: If expenses are low, are some of us over saving?

Post by randomguy » Sun Nov 11, 2018 9:18 pm

We can argue about details for ever but basically some people will say how can I possibly spend 4k/month and someone else is going to go there is no possible way I can live on 4k/month. Both are true and really aren't worth discussing as they are very personal choices. What I do find suspect is the idea that I am going to be happy spending say 12k/month when I am working and then I will retire and be happy with 5k. Just far too large of gap. So not the we are off savings and just debating how much.

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willthrill81
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Re: If expenses are low, are some of us over saving?

Post by willthrill81 » Sun Nov 11, 2018 9:36 pm

randomguy wrote:
Sun Nov 11, 2018 9:18 pm
We can argue about details for ever but basically some people will say how can I possibly spend 4k/month and someone else is going to go there is no possible way I can live on 4k/month. Both are true and really aren't worth discussing as they are very personal choices. What I do find suspect is the idea that I am going to be happy spending say 12k/month when I am working and then I will retire and be happy with 5k. Just far too large of gap. So not the we are off savings and just debating how much.
Considering the number of people on this planet who live on $1 a day, I'd say that anyone who says "I cannot possibly live on $48k a year" is misinformed. What they should say is "I do not want to live on $48k a year."
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

imfocusedman
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Re: If expenses are low, are some of us over saving?

Post by imfocusedman » Sun Nov 11, 2018 9:42 pm

randomguy wrote:
Sun Nov 11, 2018 9:18 pm
We can argue about details for ever but basically some people will say how can I possibly spend 4k/month and someone else is going to go there is no possible way I can live on 4k/month. Both are true and really aren't worth discussing as they are very personal choices. What I do find suspect is the idea that I am going to be happy spending say 12k/month when I am working and then I will retire and be happy with 5k. Just far too large of gap. So not the we are off savings and just debating how much.
That’s not the crux of the argument. It was never the person “spending” 12k/month. It was the person with 12k/month of income, who after mortgage, student loan payments, and savings was “spending” 3k. It seems that most people on this tread get it and I think have provided some helpful insights and additional consideration.

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HomerJ
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Re: If expenses are low, are some of us over saving?

Post by HomerJ » Sun Nov 11, 2018 9:51 pm

Notsobad wrote:
Fri Nov 09, 2018 1:34 pm
I think everyone should front load savings and debt repayment for several years then loosen the screws and spend more. This way the magic of compounded interest can work for you while you allow for some pleasure spending. The percentage of saving does not need to be static.
This is a very good idea.

Much easier to loosen the purse strings a bit once the nest egg is well on it's way. That's how we did it.
The J stands for Jay

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HomerJ
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Re: If expenses are low, are some of us over saving?

Post by HomerJ » Sun Nov 11, 2018 9:55 pm

CyclingDuo wrote:
Fri Nov 09, 2018 12:00 am
As someone who plays the piano 6-8 hours per day and teaches music lessons, I can say the following....

It's highly likely your daughter has very little talent when it comes to playing the piano. She is guaranteed to be a Joe - or in her case - a Jane average at best. She will not continue with it. 1% or less continue with the instrument for the rest of their lives. Only about 5% stick with it for a maximum of 2 years. The odds are not in her favor.

Hence, not only should you pay her piano teacher full price. You should also provide him with a bottle of expensive wine on top of the usual fee for every lesson he teaches her since he has to put up with her lack of talent and suffer through the experience of trying to teach yet another lack of talent Jane Average piano player since she the data shows she will not stick with it for more than the average of 1-2 years.

If she had real talent for playing the piano, most teachers would charge nothing for the pleasure of working with her. The remaining 99.9% of lesson fees come from those who are attempting to learn how to use the piano as a tool and struggle mightily.
Is is true that those who can't do, teach?

Joking (somewhat) aside, read what you wrote again.
The J stands for Jay

randomguy
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Re: If expenses are low, are some of us over saving?

Post by randomguy » Sun Nov 11, 2018 10:31 pm

imfocusedman wrote:
Sun Nov 11, 2018 9:42 pm
randomguy wrote:
Sun Nov 11, 2018 9:18 pm
We can argue about details for ever but basically some people will say how can I possibly spend 4k/month and someone else is going to go there is no possible way I can live on 4k/month. Both are true and really aren't worth discussing as they are very personal choices. What I do find suspect is the idea that I am going to be happy spending say 12k/month when I am working and then I will retire and be happy with 5k. Just far too large of gap. So not the we are off savings and just debating how much.
That’s not the crux of the argument. It was never the person “spending” 12k/month. It was the person with 12k/month of income, who after mortgage, student loan payments, and savings was “spending” 3k. It seems that most people on this tread get it and I think have provided some helpful insights and additional consideration.
When did we switch example from the 250k/year couple with 8k of spending after saving 3k/month and paying for 4k/month in mortgages? You know the one that will be just under 12k if they stop saving?:) Who is this new couple who is only making 12k/month and nets out to 3k. I don't know anything about but it sounds like they might be in a far different situation than the one we have been talking about:)

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CyclingDuo
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Re: If expenses are low, are some of us over saving?

Post by CyclingDuo » Sun Nov 11, 2018 11:06 pm

HomerJ wrote:
Sun Nov 11, 2018 9:55 pm
CyclingDuo wrote:
Fri Nov 09, 2018 12:00 am
As someone who plays the piano 6-8 hours per day and teaches music lessons, I can say the following....

It's highly likely your daughter has very little talent when it comes to playing the piano. She is guaranteed to be a Joe - or in her case - a Jane average at best. She will not continue with it. 1% or less continue with the instrument for the rest of their lives. Only about 5% stick with it for a maximum of 2 years. The odds are not in her favor.

Hence, not only should you pay her piano teacher full price. You should also provide him with a bottle of expensive wine on top of the usual fee for every lesson he teaches her since he has to put up with her lack of talent and suffer through the experience of trying to teach yet another lack of talent Jane Average piano player since she the data shows she will not stick with it for more than the average of 1-2 years.

If she had real talent for playing the piano, most teachers would charge nothing for the pleasure of working with her. The remaining 99.9% of lesson fees come from those who are attempting to learn how to use the piano as a tool and struggle mightily.
Is is true that those who can't do, teach?

Joking (somewhat) aside, read what you wrote again.
Yup, I admit I was hot under the collar in my response. :annoyed

I was simply stating my disappointment at the suggestion of negotiating a fee for a private music lesson that was most likely set at a competitive going rate for the locale by the said teacher who is most likely striving to make ends meet.

I don't teach piano. I do play it for a few hours 5 days a week as part of my job in the field of classical music and remember well the 8 years of weekly lessons I had as a kid before I even got to my collegiate training as a music student preparing for a professional career in music. I do teach music lessons in a different discipline at the college/university level after having performed it professionally all over the world for 25+ years on professional stages, and after having studied it and earned advance degrees in how to perform as well as how to teach it. The fee for all lessons I teach are set by the institutions where I teach. They are charged per credit hour and paid up front before the semester even begins.

The cost of a good pedagogue - be it piano, voice, guitar, violin, trumpet, organ, flute, tuba, clarinet, cello, percussion, saxophone, etc...is worth its weight in gold. If the poster I responded to was looking for a negotiation or bargain from a professional pedagogue for their piano lesson services at the price quoted - I figured pointing out the possible reality of what happens to the majority of those who study beginning piano as a child might save him even more money by avoiding lessons all together. Obviously, he could simply choose a lower cost teacher to begin with before the discussion even got into the focus of choosing the best pedagogue available to teach his daughter how to play the instrument to the best of her abilities. To me, when I read his post, it sounded a bit condescending that he felt he could simply negotiate the lesson fee, but figured the pedagogue was young and just starting out so he might pass on any negotiation as a - or what read to me like he was doing the piano teacher a - favor. Yup, that drew ire from me. So color me guilty as charged!

Thread on piano lessons and the various costs:

viewtopic.php?t=173274

Here's to all the music teachers that dedicate their lives to passing on the craft of making music by taking and making musicians out of a variety of subjects. :beer
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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