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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The thing about charity, is like all things related to personal finance, it’s personal.
I don’t care at all when I see in this post or other posts, the idea that if somebody isn’t donating to charity, that they are somehow making a bad or less worthy choice. They aren’t. They are making the right choice for themselves.
It is entirely acceptable to prefer not to give money to charities. It’s nobody else’s business. It doesn’t even matter if they are giving in some other way. It’s still a personal choice. There’s no room for others to take a moral high ground and judge another person for what they do or don’t give to charity.
You can guess where I fall on this spectrum. I don’t place a high value on giving money to charities. I give occasionally, when the mood strikes me. I’ll help out a friend or stranger in need, if I can. But it’s not important to me to tithe or give large sums of the money that *I* worked for to other people. Don’t like it? I don’t care.
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Enjoyed reading this particular thread. As always, most folks here let their hearts lead and give the benefit of the doubt for opinions that may differ from their own.
Here’s our story on (early) retirement: I am 49; DH is 54. I’m a nurse; he’s a deisel mechanic. We’ve been married 32 years and have two grown children, 30 and 28. Always lived fairly simply, both worked at least one job each, were savers, and didn’t ever get into debt problems, because 1) we were so fortunate to have had good health, and 2) we didn’t buy much of anything new or anything that we couldn’t pretty much afford outright. Nothing fancy, nothing trendy, definitely nothing to keep up with the Joneses.
Paid for 1/2 of each child’s in-state tuition to a 4-yr college–let them pay the rest through loans, scholarships and part-time jobs as they saw fit, so that they had a vested interest in the process and gained a greater appreciation of the experience. Worked like a charm.
We paid off our home mortgage in 2002, and newly debt-free, decided that if we planned carefully and worked hard over the next 5 years that the we could *retire* at the end of 2007, living happily off of the return of our lifetime savings and investments. We figured we’d need around $45-50k/yr in returns. We factored in continuing to pay for our own health insurance, currently at $650/mo, all fixed and customary expenses, holiday and charitable giving, clothing, transportation, some travel (not Europe, however) and a little padding for sick pets, new appliances or whatever. We did not ever bring Social Security into any long-term equation as we are too young presently, and also didn’t want to hitch the wagon to a horse that might not always be there.
What we didn’t count on was 1) the market taking such a major correction, and 2) how much more money you spend when you’re still relatively young and have all that free time! :p
Fast forward to today: Retirment was good while it lasted. Realistically, what we probably needed in income is closer to $60k/yr, and since our investments are now only returning about $30K/yr we are now back to working PT jobs each to fill that gap.
Lest you think that our lifestyle must be somehow fast or flashy, know that we heat with wood and are DIY’ers, growing and preserving from a 1000sq/ft vegetable garden, sewing, doing own home/car maintenance–well, you get the picture.
So my honest advice for anyone hardy enough to have stuck through this loooooong comment is this: 1)retirement can (and probably will) be more expensive than you might have planned for, and 2)don’t trust in the market to safeguard your money. Fortunately we had half of the portofolio in fixed investments that are FDIC-insured and return a guaranteed interest rate that you can count on, but over a third is *poof*! Gone.
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I personally found this post inspirational. I am a ways off of being able to live off 2K a month, but it’s something to shoot for. Since I work and have little time, I donate to charities. Like them when I ever retire I would cut way back how much money I gave (as I would have little to give) and instead give more time to organizations/issues I believe in. Yes as Americans we have so much it would be great if we gave more (and in fact both as a country and individually we are at the top for giving to charity) but I truly think that the amount and where someone gives to charity is a personal issue. I am also interested in having more information about their health care “safety net”.
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@ JD (#11) You’re likely to find a lot of mispellings in my posts (including this one). I’m a two-fingered typist and sometimes those “two fingers of fury” don’t hit the right keys at the right times.
I also tithe+. I was a little afraid when I started…afraid I would not have enough money left each month. Once I started and treated it as an off-the-top part of my budget, it was fairly painless. I have it in my monthly budget spreadsheet right there with my mortgage. Tithing is a very personal choice. I made the choice and didn’t dwell on what I might spend the money on otherwise, but I understand the choice is not an easy one for every situation. It has become a regular part of my life and one of the parts of me I like. I also end up with a significant charitable giving deduction when I itemize my taxes each year.
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Some of you have been critical of tithe paying people on this board, saying that writing a check is the easy way out. I’d like to add that in addition to our tithe (and donations to schools, veterans, and assistance groups) we teach Sunday School, voluteer for a youth choir and are Boy Scout troop leaders (oh and we’re childless so it’s not like we’re doing it for *our* kids). People who tithe aren’t just looking for the easy way out. We’re committed to giving.
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@Sarah:
I’m happy that your giving (both of personal time and money) brings happiness to your lives. That’s as it should me.
My own comments weren’t designed to critize anybody who does tithe, donate time to charity or anything like that. It was aimed at certain posters who seem to think that people who DON’T do those things are somehow failing to do something they should do. Tithing and charity work need to be undertaken freely or it’s meaningless.
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There is an elephant in the room that the author glossed over…..HEALTHCARE….
“The family has chosen to go without health insurance, preferring to pay cash for care—as they did when Dana fell off a ladder and needed elbow surgery. “The hospital gave us a 20 percent discount” because they paid in cash, says Dwinell, a former nurse.”
Now I’m all for large deductible policies and HSAs, but you HAVE to have catastrophic coverage!
They are one injury, illness away from financial ruin! Remember Medicare dosen’t cover everything. An accident, cancer, etc can run easily into the hundreds of thousands. Guess who picks up the pieces? You and me, the taxpayers…
Health insurance should be mandatory or else you waive the right to get care. Why should I bust my butt to work hard and do things the “right way” when others are reckless and I have to pick up the pieces.
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I would like to know more about the trips to France and the 28′ houseboat. Sounds extravagant. How do they do it? Do they own the boat? I know some old craft that are probably in such condition that they are practically given away but long distance ownership of a boat sounds impractical.
All the other critiques about charitable giving sound too judgmental. My goodness, they volunteer.
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If they are living in France half a year and expect their 21/18 year olds to run and pay for the house in the US- and they have been doing this for “a while” – they are simply living off of their kids.
I could see this as my lifestyle now that my children are raised and gone. I do not see this as a fair lifestyle while you have children at home. I certainly would not expect my teen to pay for my lifestyle. Maybe their children are just happy to not have their parents around.
The Charity thing? I give at work. Food for the kids who do not have any at home, new book bags, a ride to babysitting, boxes to dads and moms in Iraq. I have a number of friends who have GREAT salaries working for non profits (much more than my teacher’s pay). Boots on the ground is the way to go.
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#28 – heh, heh, I’m with you there…
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Two interesting points for me.
1. They own their own home and can pay their expenses now, but what happens when the taxes go up or the insurance goes up? What happens when their health gets to a point they can’t do the fixing up of their home by themselves? What happens when they need a new roof or new appliances? I live in Florida and see many older folks who have no mortgage have to get out of their homes [or let them fall down around them] because they can’t afford them anymore. I think the rent instead of own folks are really on to something in retirement. Landlords love older folks because they tend to pay their bills on time and take care of the homes. Here in Florida you can certainly rent cheaper than owning. An it makes much more financial sense for frugal living on a budget.
2. Health care if they aren’t 65 poses a problem. Either they free-load on society when something bad happens or they get insurance which is costly. Maybe their church provides for their insurance?
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“(An income that comes exclusively through their investments!)”
Really? I see from the comments here that one of the couple is a retired minister, and I don’t think ministers pay into SS, but is there really no SS income at all from the husband?
And, JD, wow. I do think that charity is a personal matter, and there are a number of ways one can contribute to one’s fellow-man that are all perfectly fine, but if your defense for not giving is just “you didn’t grow up in a culture of giving,” I have to say I find that to be downright embarrassing. You really think it’s acceptable to say, “eh, no one ever TOLD me I had to do this, so I really haven’t ever bothered to think about it?” Are you an adult or aren’t you? Do you have an adult’s moral capacity or not?
Of course it’s more natural (not really easier) to give to charity if your parents always made it clear to you that it’s an expected part of your budget, but if you’re sophisticated enough to be budgeting for yourself, you’re certainly sophisticated enough to have worked out a position on charity.
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…Oh, yes, and I agree with the people who say that, unless this couple happens to die together in a plane crash or something, their budget is almost certainly going to be blown up by health-care costs before too long. Their health care budget is barely realistic for a single person in her 30s.
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I am still 20 some years from retirement but I really believe that it is NEVER to early to start living on less and saving more. I got rid of my dryer two years ago and now air dry all my laundry on clothes drying rack.
The other part of this frugal lifestyle I have chosen, I am hoping my kids will have a better chance for a healthy planet.
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many people for some reason do not make any real plans for retirement. maybe they think they will win the lotto or something before retirement age.
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