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Can You Retire Comfortably On $31,722 per year?

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Can You Retire Comfortably On $31,722 per year?

Last week, I wrote an article about minimizing tax on Social Security income after retirement. Basically, if you receive $15,000 of Social Security benefit and withdraw $17,500 from your IRA, then you will pay very little income tax. Using the standard deduction and exemption, you will only pay $778. That’s a 2% effective tax rate and you’ll have $31,722/year of after-tax income to spend in retirement. Anyway, this article was syndicated on Yahoo! and it received a bunch of comments.

A bunch of whiners

retire on $32500 per yearThere were the usual complaints about Social Security and nitpicking about the amount of deductions you get. What surprised me were the vehement comments about how $31,722 means you have to “live in a cave, boil moss for dinner, wear rags, and are in abject poverty.” That’s $32,500 minus $778 federal income tax. Oops, I forgot about the state tax. Let’s just assume our imaginary retiree luckily lives in one of the states with no income tax.

Here is a popular comment –

“So in order to not pay taxes on my Social Security, you want me to not make money and lower my standard of living? What six kinds of a fool do you think I am? I tell everybody that I wish that I paid TEN TIMES AS MUCH IN TAXES because that would mean that I was making A WHOLE LOT MORE MONEY! You turkey!”

Retirement Preparation

Yeap, you need a thick skin to deal with those Yahoo! comments. That’s why I usually just ignore them. However, I really have to disagree with people who think $31,722/year means you are living in poverty. Working folks have a lot of expenses and they spend a lot of money. I assume most readers are still at working age and that they didn’t take into account the following:

  • My article is meant for a single person with no dependents. All the numbers are pulled from the single column, so a couple should have more income assuming they both have social security benefit.
  • The article is geared for retirees with no debt.
  • I suggested that it’s best to have paid off your mortgage before retiring.
  • I’m assuming you can get Medicare, although I didn’t explicitly put that in the article. Most people pay about $105/month for Medicare Part B.
  • I’m also assuming our retiree doesn’t have any financial obligations like alimony or child support.

Budget Your Retirement

If you are single and own your home, do you think you can live comfortably on $31,722/year? That’s $2,643.50 per month. I’m pretty sure I can live quite comfortably on this level of income. Let’s come up with a budget for our imaginary retiree.

  1. $800 Housing – property tax, HOA, maintenance, repair, insurance, etc…
  2. $300 Transportation – car maintenance, gas, and insurance.
  3. $200 Utilities
  4. $400 Groceries
  5. $200 Prescription, co pay, and other medical needs
  6. $105 Medicare
  7. $50 Clothes
  8. $588.50 Entertainment and misc. – eating out, vacations, etc…

OK, so it’s not exactly living in the lap of luxury, but this is NOT living in poverty. Does this look unreasonable to you? In fact, if we remove the mortgage payment from our monthly expense, we already spend quite a bit less than $2,643.50 per month.

Wrap Up

Anyway, I think people need to examine their expenses and see what they are really spending money on. If you are making a lot of money, then it’s your prerogative to spend what you want. But don’t tell me a single retiree with no debt can’t live on $2,643.50/month. I guess it depends on location too, but if you don’t have a lot of money, you probably shouldn’t live in Manhattan or San Francisco.

Do you think you can comfortably retire on $31,722/year? Assuming your health is reasonably good, I think it’s just fine. I don’t know what the Yahoo! readers are complaining about.  BTW, the federal poverty level for 2013 for 1 person is $11,490.

Related post: Do we really need $6,340,998 to retire?

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{ 80 comments… add one }

  • The College Investor March 25, 2013, 12:17 am

    I think it also depends on where you live and what you’re used to. I think your assumptions are completely possible, but maybe not in Southern California.

    I think housing is a little low, and isn’t Medicare closer to $450 (and don’t you need a supplement plan or you’re going to take it in the rear when you go to the doctor)?

    But regardless, I think you make a better point – ignore the Yahoo! crazies!

    • retirebyforty March 25, 2013, 10:58 pm

      I guess it also depends on where in Southern CA. I have families out in the dessert and housing is much more affordable out there. I guess if your property tax is high, then it would be more difficult.

  • My Financial Independence Journey March 25, 2013, 2:27 am

    A lot of it depends where you live and how much healthcare you need.

    That’s probably not enough to retire where I live. To be more specific, you’d probably be fine until an emergency pops up. Surprise, the house needs a new roof.

    On the other hand, you could move to one of the towns I used to live and retire there on ~$32K. I don’t think that this would be a very exciting retirement, but it would be comfortable.

    Healthcare costs are the big wild card here. It’s not hard to imagine that your estimates being very low for less healthy retirees.

    • retirebyforty March 25, 2013, 11:01 pm

      Perhaps you’re right, but I still don’t think it’s poverty level.
      Healthcare is a big wild card. Hopefully, we’ll be in relatively good health by the time we retire.

  • Steve Robbins March 25, 2013, 2:40 am

    Once you hit your sixties $200/month for prescriptions just won’t cut it.
    Your ailments are more numerous requiring more prescriptions as well as the drug companies are having a heyday
    raising prices at will.
    But hey, I’m alive aren’t I??? :)

    • retirebyforty March 25, 2013, 11:02 pm

      Thanks for your input. It’s hard to think about how much medication we’ll need when we’re older. How much do you spend on prescriptions monthly?

    • Jane March 10, 2014, 7:46 am

      My sister is 70 and wasn’t on any medication until recently. Now she’s on 2 generics and it’s costing her $20 a month.

  • Jane Savers @ The Money Puzzle March 25, 2013, 5:13 am

    I live on less than that now. My take home is more than that but I am putting so much towards debt that I am living on less than that.

    It will be tight and every penny will be spoken for. No winters in Florida for me, driving cars until they die and I will have to sell my house at some as so far undecided point to free up that money.

    I work in health care and I see far too many people who don’t get to enjoy their retirement and I am not wasting a possible healthy decade of retirement in my 60s working just so I can retire with more.

    • retirebyforty March 25, 2013, 11:03 pm

      You have a great point there. Retirement in your 60s can be very different than retirement in your 70s. I hope you reach your goal soon.

  • Michelle March 25, 2013, 5:38 am

    We are at around $3,000 right now, and that is with 2 brand new cars. I definitely think we could do $31K, we might have to cut out around $200 or $300 in expenses every month, but it is definitely doable.

    • retirebyforty March 25, 2013, 11:04 pm

      That’s pretty low with 2 brand new cars. Your Camaro looks great though. :)

  • nicoleandmaggie March 25, 2013, 6:19 am

    A person could, and my DH has relatives living in the small rural hometown where he grew up on less than that now with kids and housing expenses.

    I don’t particularly want to. I’d rather retire to an expensive suburb with great weather and lots of stuff (that is fun for me) to do.

    • retirebyforty March 25, 2013, 11:06 pm

      I’m curious. Why do you want to retire to an expensive suburb? Are there more fun stuff to do?

  • SavvyFinancialLatina March 25, 2013, 6:57 am

    We live on $3000 for two people a month. It would be very tight to live on this income. Doable, definitely not poor at this level.

    • dmm0126 June 17, 2013, 1:35 pm

      But he said that the $2643 was for one person so for two people it would be $5286. My husband and I live in Savannah, GA. We earn $4,338 a month combined right now. If we were getting $900 more a month than that and not paying a mortgage or car loans i.e. debt free I think we’d be pretty comfortable. This also doesn’t account for any other savings a person/couple might have. While I’d say your entertainment and groceries budget seem on the generous side (for our location) I think your utlities bill is low. Depending on the month, electricity alone will run us anywhere from $85 – $300 (think AC in 110 weather). Anyway – if this is what we’d have to live on I’d be happy.

  • Greg March 25, 2013, 7:26 am

    I definitely could live on this amount. By retirement, our house will certainly be paid off and all debts gone. I’m not sure that we spend more than this now.

  • William Cowie March 25, 2013, 7:41 am

    Doable, for sure, but, as a few commenters have pointed out, where you live does make a difference. Rural definitely is more affordable than places like New York, San Francisco or Seattle. And if anyone thinks that is poverty, let them spend a month or two in places like Equador or Rwanda…

    Social Security never was meant to be enough for a fancy lifestyle. America is the land of opportunity, not entitlement. If you want a better life, it’s there for the having, but you have to do what it takes to get it.

    • retirebyforty March 25, 2013, 11:08 pm

      I agree. Take a long trip to any 3rd world country and you’ll see what poverty really mean.

  • Tony@WeOnlyDoThisOnce March 25, 2013, 7:44 am

    Great insight, and agreed for the most part. Health concerns and insurance issues are a huge factor, at the same time.

  • Joe March 25, 2013, 7:55 am

    As others have indicated, a lot of this budget will depend upon where you live. In New York State, we have one of the country’s highest property tax rate per $1,000 of home value. Therefore, your $800/mo for taxes, insurance, etc., almost covers just the property taxes. Therefore, almost 1/3 of your proposed budget is allocated to just property taxes alone! The choice that we have is to move out of state to a more tax-friendly location. However, this is not always possible because of family considerations (i.e. assisting married children by providing dare-care for the grandchildren). Also, with mortgage interest rate being so low, we actually earn more (dividends, interest) on keeping the money in our investments instead of paying off the low interest rate mortgage. Paying off that mortgage only takes money out of our portfolio early thereby eliminating the earnings that would have accumulated if we continued to pay our monthly low-interest mortgage payment. I am in agreement that people need to examine their expenses, however, the amounts in the illustration need to be examined as well to see if the numbers are realistic for each person’s particular situation.

    • retirebyforty March 25, 2013, 11:10 pm

      Thanks for your input. Everyone will have to figure out their own situation. If you live in an expensive state and can afford it, then that’s great. Moving is still a good option for many people though.

  • Travis March 25, 2013, 8:33 am

    I just looked at my last year’s spending. I averaged $1,464/mo. I am 30, own my house and truck free-and-clear, traveled several times throughout the year, did things I enjoy, and eat very healthy. When you don’t have kids or rent/mortgage payments, it is very easy to live cheap without sacrificing quality. That monthly amount includes paying property taxes, insurance, etc. I built my house in 2005.

    I guess the first step to cheap living is to move out of California and other high-tax/high cost of living states. You can’t get ahead too easily when you had a rundown 1960s house that costs $8,000+ a year in property taxes. I was born and raised in California and gave myself almost a 100% raise simply by moving out of the state. The pay that most people get in California and New England states doesn’t go nearly as far as it should to offset the high taxes and high cost of living in the states.

    • retirebyforty March 25, 2013, 11:13 pm

      You are doing a great job with your expenses. We moved out of CA and wouldn’t want to go back. The cost of living is too high and there are just too many people there. Thanks for commenting.

  • Tina @ My Shiny Pennies March 25, 2013, 8:45 am

    Once my mortgage is paid off, it would not be a problem to live comfortably on $31,000 a year. I think some people forget that as we age, we tend to spend less so we don’t need as much money as in our 30s and 40s.

    • Rodger June 8, 2013, 6:42 am

      If you have a pension and good health insurance and paid off your house you could probably live off a $500,000 portfolio as long as you treat it like an endowment plan and invest 50% equities, 50% bonds or so. But at a 3% drawdown that will only give you a $15000.00 a year supplement. So, a 40 year old should have a networth of at least $1 million since you could live another 45-50 years. You wouldn’t want to draw down more than 3% the first year, adjust for inflation after that, so that will yield you $30,000.00 annual supplemental in today’s dollars. So if your pension is $25,000.00 that will give $55,000.00 a year to live on in addition to any monetary notes you might have. This is all assuming you fully own your house, have adequate health insurance, etc. Anything less then that you are not a good candidate for early retirement unless you want to live a lower class lifestyle which is ok if that is what you plan to do. Most people want to retire in the middle to upper class category . S0 to sum things up you should at the minimum have a pension, adequate health insurance, fully own your house, and have at least $1,000,000.00 invested in a balanced mutual fund or equivalent stock and bond portfolio if you want to retire at 40 years old. Don’t draw down more than 3% year one or you will risk running out of money once you hit 71 or so. Note that the previous withdrawal rate was assumed to be 4% but the economic environment has changed as the 4% rule is no longer viable. Also don’t count on Social Security because that program will be changed drastically real soon. Either benefits will be slashed, a means test will be put in place, or the application age will be increased to 70 or 75 years old. I forgot to mention sometimes one spouse wants to retire early but the other spouse wants to keep working so the scenario would change in that case as well. The secret to success is that even in retirement some of your investment should be allocated in equities. You can use your age or other formulas. If you are 40 years old 40% should be in bonds or equivalent and 60% in equities and rebalanced at certain intervals. You can be more aggressive if you have multiple pensions or other passive income such as rental real estate or owner financed housing that you own a note on. For me the hardest part was not investing money or building a portfolio, it being comfortable with the exact time when to put a withdrawal plan in effect. If we all knew when we were going to pass on to greener pastures it would be simple, but that is not the case. I am 50 years old and have been retired for nearly 12 years. I retired from the service so have an earned pension and health insurance. Fortunately I started investing at the age of 16 and dollar cost averaged into the market since then mostly using Vanguard Mutual Funds. I also owner financed secondary property so have good additional taxable income flow via with 20 year notes with 10.25% binding interest rate. Passive sources or streams of income are essential if you want to retire early without the risk of running out of money as you advance in age. Some people say that when you age you won’t need as much money but with the cost of medications, property taxes, that may not be the case. Even co pays are rising and those who rely on social security 25 years down the road are in for a rude awakening in my opinion.

  • Moon March 25, 2013, 8:59 am

    I think it’s doable Joe. Health care is the big caveat to the equation, but you listed out all other assumptions and I don’t see how one will scream about living with $2643 a month. If I don’t count our mortgage, student loan, IRA contributions, etc, our budget is $2700 a month for everything else (gas, groceries, eating out, car insurance, entertainment and shopping, charity, bills and utilities, medical bills (but not the premium) included). That’s for the 2 of us and our lifestyle fits nicely under most months.

    • retirebyforty March 25, 2013, 11:15 pm

      Thanks for sharing your budget. It’s hard for young people to imagine how much health care will cost in old age. I guess we’ll just have to live a healthy lifestyle and hope for the best.

  • Joe Freitag March 25, 2013, 9:06 am

    In the middle section of America (even cities like Louisville, Memphis, St Louis, Oklahoma City, Nashville and Kansas City), it is very possible to live on $31,000 per year after taxes.

  • Martin March 25, 2013, 9:22 am

    I think it all depends on lifestyle. I have friends that make way LESS money than me and they laugh when I cook my own food or go to the club before cover.

    Some people will always find excuses and bash things that they just can’t figure out.

  • Emily @ evolvingPF March 25, 2013, 9:23 am

    We live on far less than that now (per capita) while paying rent, giving, and saving, and we do live comfortably. Our county is right in line with the median expenses of the US. It’s fine to want more for your lifestyle or to want to live in a higher cost-of-living area, but at the same time it’s useful to realize that you can live just fine on less with a few different choices.

    • retirebyforty March 25, 2013, 11:16 pm

      Right. If you want to retire more luxuriously, then you need to save and make more money while you’re working.

  • Kurt @ Money Counselor March 25, 2013, 9:24 am

    You make a solid academic case Joe, but one key to your piece is your disclaimer “assuming your health is reasonably good.” Because of this, and lots of other uncertainties, it’s probably unwise to plan to retire comfortably on $31,722 per year, me thinks. Though I’m sure you’re not recommending that.

    • retirebyforty March 25, 2013, 11:17 pm

      I’m just saying it’s not poverty level. It’s hard for us younger folks to imagine how much health will impact our finance in retirement. I think you made the right choice to move north so you have more healthcare options. Thanks for the reminder about health.

  • Steve March 25, 2013, 9:37 am

    Is the $32k per person? For a married couple, even if one never worked, they could collect a spousal benefit of 50% of the primary earner’s amount.

    For my wife and I, our three biggest expenses are day care, mortgage, and taxes. All three of those will drop dramatically by the time we retire. At that point, living on $32k might be a little tight, but living on $47k-ish would be plenty comfortable.

    • retirebyforty March 25, 2013, 11:26 pm

      It’s 32k for a single person. I didn’t calculate the number for a couple. I think it’s probably around $40-45k.

  • John S @ Frugal Rules March 25, 2013, 9:41 am

    Like others have said, I think a lot of it would come down to where you might live. That said, I think it completely doable as long as you’re making wise choices to make that money stretch so you can do the things you want.

    • Steve Robbins March 25, 2013, 10:07 am

      I can see from most of the comments a peculiar naivete.
      You young people don’t understand how your senior living will be.
      One drug, Celebrex, that is very effective for arthritis costs OVER $200 per month alone, and no generic yet.
      Any other afflictions? Add up the costs.

      • jim March 25, 2013, 10:30 am

        Steve,
        Certainly some people will have high medical out of pocket.
        But doesn’t Medicare part D pay 75% and limit your total out of pocket costs??
        And its not a given that everyone will have multiple expensive prescriptions after the age of 65. My father has none.

      • retirebyforty March 25, 2013, 11:28 pm

        Thanks for the input. It seems older folks have a better idea of how much health care and prescriptions will cost. Hopefully there will be more generic medication by the time we’re retired…

  • jim March 25, 2013, 10:20 am

    Yahoo comments are not worth reading.

    “You will never find a more wretched hive of scum and villainy.”

    • jim March 25, 2013, 10:21 am

      Additional, I have recently been wishing there was a way to turn off Yahoo comments entirely so I simply don’t see them. Its just too annoying to read some random news article and then get to the bottom to see some idiotic/ belligerent insult against a random politician with 723 thumbs up and 513 thumbs down.

      • retirebyforty March 25, 2013, 11:29 pm

        I’m with you. Maybe that’s why some major news sites don’t let people comments. It can be a distraction.

  • Financial Samurai March 25, 2013, 10:35 am

    Without debt, most definitely! There are so many cheap places to live in America.

  • Pauline March 25, 2013, 10:39 am

    agreed with Sam, in a paid for home and low cost of living area, that can easily be done. I don’t have a family so of course it is cheaper for a one person household.

  • Cherie March 25, 2013, 10:48 am

    How refreshing to read something that seems to apply to me rather than people who make and need 200k per year. I live in Boise, Idaho, my house is paid for and it’s taxes run me just under $1000 per year. It’s a beautiful town with many activities to partake in. I am still 5 years away from social security but only make slightly over 30k per year and live quite comfortably on that. You were so correct when you said to pay off your mortgage. It’s a wonderful feeling knowing you don’t have to worry about a roof over your head and that you don’t have to make much money to cover your monthly bills. Keep up the good work!

    • retirebyforty March 25, 2013, 11:31 pm

      Thanks for sharing your property tax. It’s a huge contrast to what others are saying. If you live in an expensive part of the country and have limited income, why not move to a more affordable city? Seems silly to need 200k per year in retirement.

  • Pretired Nick March 25, 2013, 11:26 am

    I see no reason why most people can’t live under that threshold. My wife, baby and I need $2400 or less on a monthly basis. Add a bit more for incidentals or luxuries and we could still be under that threshold. It’s amazing people don’t see lowering your overhead is much easier than increasing your passive income by an equivalent amount. Hopefully your site and others will help break people out of their mental box.

    • retirebyforty March 25, 2013, 11:34 pm

      Great job holding your expense down. Lowering expense is a necessary first step to financial independent. Making more isn’t always the answer.

  • Brian @ Luke1428 March 25, 2013, 1:40 pm

    It is doable as my wife and I lived on basically that much when we first were married (living in a suburb of Atlanta). The keys, as you said, would be carrying no debt and no mortgage.

  • Maverick March 25, 2013, 1:48 pm

    Nice article, but I live in a state also where that’s not even close to being enough. And I’m not moving. Have you seen the approach of surrendering your current drivers license and getting a license in South Dakota (no income tax)? Then I could be a “vacationer” in my current state. Some RV owners do this. Would be a good article for you to consider writing from the RB40 perspective.

    • retirebyforty March 25, 2013, 11:19 pm

      I haven’t heard that one. Don’t you need a permanent address to get a driver license in the state? I’ll do a little research.

      • Maverick March 26, 2013, 1:26 am

        No permanent residence req’d, as you are, uh, an RV owner. But you need to be in state once to get the license photo. Companies provide mail forwarding for a nominal fee. No vehicle inspections required. You should easily find via Google search.

        • Diane April 1, 2013, 1:30 pm

          Glenn at “To Simplify” has covered this in depth. He’s another great writer. If you haven’t “met” him, you’re in for a treat.

  • Mike March 25, 2013, 3:14 pm

    I think it depends how one managed their finances before said retirement. If you just put away money into an account, then you might struggle. If you put money away in accounts and built up ways to make ends meet a little easier (kinda like what you are doing), then it becomes a lot easier. Also, I agree with some of the other comments about the location being a big factor in terms of how this effects your living expenses post-retirement.

    • retirebyforty March 25, 2013, 11:21 pm

      A little side income can make a huge difference when you’re retired. I’m sure retirement would be much easier financially if people are open to relocation. Living part time in another country can make a huge difference.

  • krantcents March 25, 2013, 5:40 pm

    I think it is very possible, although I would not choose it. $800 in housing is very low, if you live in or near a major city. You probably are renting a studio apartment! If your motivation is to pay the least in taxes, you can do almost anything. If the goal is to live an almost minimalist life, I think you achieved it.

  • Dividend Mantra March 25, 2013, 5:47 pm

    I live on way less than that now. I spend around $1,000/mo. before minor debt service (I pay about $190/mo for student loan repayment). I live a fairly healthy life and do not suffer or really want for anything.

    I’m planning on becoming FI on less than $20k/year. I don’t want to work for decade after decade to have more money…for…more…what? The things that make me happy require very little or no money at all. I enjoy sleeping in, hearing the waves come in at the beach, breaking a sweat in the afternoon, cuddling, spending time with family, late night conversation, board games, video games, riding on my 49cc scooter, writing…and the list goes on.

    Best wishes.

    • retirebyforty March 25, 2013, 11:24 pm

      $1,000/month is great! I love your outlook and hope you get there soon. If I’m single, I’m sure I can do something similar too. It’s harder when you have a family though.
      Cheers

  • First Gen American March 26, 2013, 9:44 am

    Healthcare costs are indeed the wildcard, but I agree, that income is not what I’d consider poverty level. But these days, older people are having their kids or grandkids move back in and that can have a huge impact on cash flow.

    • retirebyforty March 27, 2013, 8:56 am

      Hopefully the kids will contribute to the household expense. No free lunch after 18. :)

  • Alice @ RLD Investments March 26, 2013, 12:35 pm

    It is all about perspective. Once you made the qualifications about owning your own home and not having debt it should have become cleared up for everyone. the only people who think poverty is $2,700 a month have no grasp of reality. I don’t say that to be cruel, but look at the world around you. If you own your home and have no debt, why can’t you live on that? Am I in poverty if I don’t spend $12 on a cup of coffee and a muffin every morning? What if I have the money, but I don’t want to spend it on that, would those same people call me a penny-pincher?

  • Andy Hough March 26, 2013, 5:12 pm

    The average income in the U.S. is only a little over $40,000. I think a lot of people don’t have any idea how much (little?) the average person makes.

    I’ve never made close to even $31,722 a year and I think I have a pretty good quality of living.

    • retirebyforty March 27, 2013, 9:02 am

      I think people just got used to their inflated lifestyle. If they have less money, they’ll make do somehow.

  • Rob @FinancialSprout March 26, 2013, 8:26 pm

    My grandmother is retired and receives social security and my deceased grandfather’s pension. It totals up to be about 30k a year, and she lives pretty comfortably. She still pays a mortgage and buys all organic groceries, yet she still has money left over. You can definitely make it work with 31k per year, especially if you’re used to living on that amount.

  • Laura R. March 27, 2013, 2:57 pm

    I think a big problem with your calculations is that the cost of living is much more expensive in some areas of the country, as many other readers have pointed out. In S. Florida, our hurricane insurance alone is over $600 a MONTH, as are our property taxes (well over $13k a year for the two). We would love to pay our mortgage off early, but those two expenses make it very difficult, so we will definitely be carrying a mortgage with us into retirement until we can sell our home. Moving to a cheaper area after retirement is definitely something that we will look into, because I for one, do not want to be a slave to high taxes and insurance expenses until the day I die!

    • retirebyforty March 29, 2013, 1:26 pm

      Oh wow, that’s quite expensive. Moving to a cheaper would make a lot of sense for you. I wouldn’t want to spend a ton on housing in retirement.

  • Justin March 29, 2013, 9:42 am

    I have a family of four (soon to be 5) and live off of $2,800/month with a mortgage. Take out that mortgage and I would feel rich!

  • Integrator March 30, 2013, 5:03 am

    We are almost at the $30k/yr level in terms of passive income, but I wouldn’t dream of retiring any time soon. As you point out though, for someone thats single with limited debt in a more inexpensive city this could work. With a family of 4, our expense run rate is much closer to the $45k/yr level. That will fall over time, but what you need with a family is very different than with kids.

    • retirebyforty March 31, 2013, 7:44 pm

      You are right. It’s a huge difference when there are kids involve. You never know what you need to spend money on. Hopefully a retired person has some cushion if there are kids in the picture. College is our next big hurdle.

  • james March 31, 2013, 7:43 am

    Some of the comments on Yahoo, were pretty idiotic. One lady posted that its below the poverty line.

    Considering median household income in U.S is 50k$ pretax and that 80k pretax is about top 25% in US households, then I would think $63k after tax for a couple would be a comfortable life. The commentators on Yahoo don’t realize that 75% of American Households live on less . I think you would have to spell it out for them and then you might get 1/2 to understand.

    • retirebyforty March 31, 2013, 7:48 pm

      Thanks for your support. :)

  • Dan Mac March 31, 2013, 4:28 pm

    Here in the midwest where I live I think it is definately reasonable to think you can live off of $31,700 income a year no problem. As long as you have prepared like you said with no debt and a reasonable budget and spending control I think things should be fine. Personally I’d like to retire with more to spend on the fun stuff and therefore I won’t complain about paying the extra taxes that will come with that extra income.

    I laugh when I read those Yahoo comments because usually everyone is such a negative naysayer. It would seem impossible to achieve anything by reading those comments. For me it is humorous!

  • writing2reality March 31, 2013, 8:26 pm

    It goes without saying that it is possible! It is all about the choices one makes! Tens of millions of people in this country live on less each month. As most people have discussed, location is the primary factor in making this work. But even still, you can live a full and active life on 32k per year after taxes. Personally, I live on much less, and I don’t feel as if I am sacrificing tremendously in any sense of the word.

  • Felix Lee March 31, 2013, 11:47 pm

    I think that amount is pretty enough. It is better to invest a little amount of this also for an additional income.

  • Diane April 1, 2013, 1:36 pm

    Re: Yahoo. I agree that there are a lot of stupid, mean and even nonsensical comments. I rarely read them. However, Yahoo publishes some idiotic articles as well. So often it’s as if a writer practically mkes up something to fulfill a deadine. I admit that I tend to be a bit more opinionated should I decide to comment n a Yahoo article, but things distributed so widely should be held to a somewhat higher degree of accuracy than a personal blog, no?

  • steve April 2, 2013, 8:55 pm

    I retired at 45 (currently 53) and happily live on $1500 a month ($18,000/year). This is definitely NOT a poverty income: I spend 3 months every winter in Mexico on my sailboat, and 2-3 months every summer traveling around in my camper van, hiking, rock climbing, and rafting. With occasional lump sum withdrawals (see below) I’ve still averaged $22,000/year for the last 8 years. Being a lifetime backpacker and actually *enjoying* budget travel and cheap outdoor hobbies helps, as does living in a 4-plex I own that pays all my housing expenses.

    lump sums:

    Every 3 years or so I take a major trip overseas for around 3 months. Last trip to Asia cost me around $5K, so let’s average $2K/year

    I’m alloting $2K/year for vehicle replacement reserves, but haven’t actually replaced a vehicle since I’m retired. I’m perfectly happy driving old reliable cars and spent $4K of these reserves on the sailboat.

  • Retired Syd April 3, 2013, 9:57 am

    I just read this today. According to the Social Security Administration, your number is very close to the real-life average:

    “The SSA Chartbook also reveals, he said, that only 13% of senior Americans are spending $35,000 a year or more in retirement—a level which permits a greater opportunity to pursue long-awaited lifetime goals. Yet most of the income for those in this 13% upper level is derived from continued work, not from accumulated retirement savings.”

    Here’s the link to the full article: http://www.marketwatch.com/story/housing-health-care-costs-are-retirement-killers-2013-03-28?pagenumber=2

    • retirebyforty April 3, 2013, 11:25 pm

      Thanks for the link. I think working a bit post retirement is a good thing. It keeps you active. 13% is quite low.

  • Brenda April 19, 2013, 9:23 pm

    31 K is what I make now after taxes and deducts. I live pretty comfortably on this. I plan to retire within the next month and live solely on my 2K pension. I know it will be difficult, but I have some strategies in mind to lower my expenses I have went over the budget again and again and have pared it down to the essentials. I may have to go and get a part time job somewhere eventually but for the next 6 months or so , I’ ll be ok . The exhilaration I feel at finally quitting a job that has been a millstone around my neck for 10 yrs, far outweighs any dismay about living on a good deal less. Carpe Diem Yall !

  • the crud January 17, 2015, 6:04 am

    I live in Virginia and add 100.00 to everything you have there except medical bills.
    As an older person you have more 500 a month more.

    You forgot dental old people need a dentist that is why Dental is only offered to the young.
    I live in the worst apts on the planet have not had a decent night sleep sense the day I moved here.

    Mortgage you cant save for the down. Used car I had a coil pack go out the wanted to change all of them for 2,000 buck. I am disabled I had to do it myself it took a few days but the pain only cost 300.00.

    I sometimes think suicide is better than being old and sick.

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