Though I’m not close to retirement myself, one GRS reader recently sent me a link to an article from the monthly newsletter from AARP (the American Association of Retired Persons). In the April 2009 issue of AARP Bulletin, Elizabeth Pope wrote about how to live well on less money.

Pope profiles three families who have structured their personal finances in order to pay for necessities — and luxuries — now that they’re finished working. One family shares housing with several other couples. Travis Thrower practices voluntary simplicity, but doesn’t skimp on the things that are important to him. And Sky Yardley and Jane Dwinell follow the advice set forth in Your Money or Your Life.

The most interesting part of the article to me was the sidebar featuring the annual budget from the last couple. Yardley and Dwinell don’t make a lot ($21,500 through investment income), but they have a comfortable lifestyle. Here’s their budget:

House: $3,600 (taxes, water/sewer, utilities, trash, insurance, supplies for house—cleaners, shampoo, hardware, linens, etc. — and for pets: 1 dog, 2 cats)

2 cars: $2,600 (gas, insurance, upkeep, registration)

Food: $4,800 (garden, monthly bulk food order, CSA share, grocery store, eating out; includes France)

Beer/wine: $1,200 (includes France)

Health care: $1,000

Clothes: $500

Sports: $1,000 (primarily downhill skiing, passes and equipment)

Entertainment: $100

Gifts: $500 (holidays and birthdays)

Charitable contributions: $200

Trip to France: $6,000 (airfare and local transportation, boat insurance, port fees, canal pass, boat maintenance and supplies, diesel fuel, propane, Internet/phone) “The most expensive part is getting there,” says Dwinell.

I love looking at other people’s budgets. Any sort of glimpse into how other people spend their money can be helpful. That’s one reason I publish my discretionary spending every year. It’s fun (and instructive) to compare my annual spending with that of other people.

The Yardley-Dwinells spend $1200 a year on alcohol? That’s twice as much as I spend! (But I spend far more on food — especially dining out.) Just $100 on entertainment? “We decide what we want to do, then figure out how to do it for free,” says Dwinell.

She also says, “I’d rather hang my laundry on a rack by the stove and spend a couple of months in France every year.” It’s all about priorities.

To me, the most interesting part of this article is seeing that after their mortgage has been eliminated, the Yardley-Dwinells are able to get by on less than $2,000/month. And they have a good life. By keeping their costs low — and buy consciously embracing frugality — they’re able to get by on a modest income. (An income that comes exclusively through their investments!)

Many articles about retirement focus on boosting income. There’s no question that’s an important element to preparing for the future. Still, it’s refreshing to see a story about how average people are able to create budgets that let them meet their expenses while also allowing them to enjoy retirement.

[AARP Bulletin: Fabulously frugal: Living well on less money]

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