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Author: TMFBuySellBelle One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1491  
Subject: Re: Win the lottery...and keep working? Date: 2/9/2013 11:49 AM
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Thank you so much for your informative post. What's weird is that I don't live high on the hog. I haven't owned a car in 21 years (I walk everywhere or take public transportation = $107/month), I've never been in debt (I worked my way through college both times and have never bought anything I couldn't afford), I buy my clothes at a wholesale discount store called DII (total usually comes to about $35/year, if that), I never go to bars, I don't smoke, I have no children or pets, I cut my own hair, and I don't believe in "impulse purchases." I buy most of my necessities (toothbrushes, soap etc.) online using credit card rewards so that I don't have to pay out of pocket for them. Fortunately, my biggest hobby is taking pictures--and because I already own the camera, it doesn't cost anything to snap/share photos with others (it's digital). I do spend significant sums on food (I have a $25/day food budget, which includes bfast/lunch/dinner/snacks/desserts/beverages per day). Altogether, the amount I have saved (in relationship to what my salary has been, anyway), is decent. But say, for example, one retires with $200k in the bank. Assume also that they collect $1000/month in SS. That's $12,000/year in SS (and in some cases, SS income is taxable so that the actual total is even lower). The interest one would earn on $200k in a *completely safe* investment vehicle (insured interest-bearing account) is nothing--even 3-year CDs barely return more than 1% right now; some aren't even earning 1%. On $200k, that's $2000 in interest annually--*before* taxes kick in--and that's assuming that you haven't had to touch any of the original $200k. So, if you leave the $200k alone and live on only the SS, it means you're living on around $12K/year. Particularly with the price of gas/insurance being what it is and the cost of home repair (a friend recently had leaking window issues in his house and had to pay $20,000 to get them replaced--this was in a cheap, modest house in PA), I still don't see how it's feasible. It seems like it would be feasible as long as nothing ever broke or went wrong. Fortunately, it sounds like you guys have been very lucky--which is great, because it sounds like you deserve it. The pension would also make a difference, albeit small. (Every bit helps!) I guess it's the lack of income beyond SS that scares me--one big unexpected expense, and... boom! (But then again, I suppose the same could be true even if you had saved millions and suddenly contracted a major illness that maxed out your insurance.) Am I worrying too much? Haha.
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