I know this will upset Hawkwin, but it's very relevant to Retirement.A big reason I was able to retire before age 40, was that I had a high wage job as an engineer in the oil & gas industry, but lived in a city (Houston, TX) where you could rent a comfortable garden apartment with a pool and a tennis court for $500 or $600/month. Treating real estate as an expense to be minimized rather than as an investment, allowed me to plow a much larger percentage of my gross salary into the stock market where I received much higher investment returns.The Top 3 expenses for most people are Housing, Food, and Transportation. There's often a lot of low-hanging fruit to cut.Cutting these expenses can add $500K to retirement savings, study findshttps://finance.yahoo.com/news/cutting-expenses-add-500k-ret...</snip>intercst
If I could get arid of one of my cars and use ride sharing for $1k/year, that would be wonderful. $1k is less than my auto insurance, let alone maintenance, fuel & registration.
I bought a new Honda Acord in 1990 and drove it for 17 years. Got tired of it. Put 1/3rd my salary as a telecom engineer into investments. Ate breakfast and dinner at home most days, and bought sandwich in company cafeteria. Many others went out every day for lunch and spend $$ on lunch. I spent #1.70 or so for a sandwich then. Retired in 1999 after a nice 10 year run in the stock market. Most of my co-workers couldn't 'believe' that anyone could retire at 52..... but they all had much bigger houses, bigger fancier cars or two.....ate out 4-5 days a week.....and likely for dinner, too..... had 'fantastic vacations' ......etc. Sadly, many got caught in the telecom meltdown and used a big chunk of what savings they had to survive months till they found new jobs. And they worked and worked till 65 or 70. Luckily, I bailed out at the right time and was 'ready' to do so. t.
As long as you live until retirement
reallyalldone observes,As long as you live until retirement </snip>Well, if you don't make it to your retirement date, there's less to worry about and retirement planning is much simpler. Longevity is what causes the most expensive retirement problem (i.e., "outliving your money".)intercst
I bought a new Honda Acord in 1990 and drove it for 17 years. Got tired of it. Two of the cars in my "fleet" are a Pontiac and an Oldsmobile, to give you an idea of the age of my cars. I hate having to put a set of $400 tires on a car worth less than $2000, but some things are too important to cut corners. Once or twice a year, there's a repair, and $200 to $500 is still less than a monthly new car payment.We do keep a newer vehicle (minivan) which is the one used for long trips. Hearing a weird noise or noticing a strange smell is worse when you're far from home.We're in the same house we bought 33 years ago. In addition to the costs of buying a really expensive home, I think that costs of constantly upgrading and moving are "friction" to building wealth. My kids have some friends who eat out EVERY DAY. I'm not exaggerating, the family really does eat at a restaurant more than seven times a week. Talk about food expense.
"Two of the cars in my "fleet" are a Pontiac and an Oldsmobile, to give you an idea of the age of my cars. I hate having to put a set of $400 tires on a car worth less than $2000, but some things are too important to cut corners. Once or twice a year, there's a repair, and $200 to $500 is still less than a monthly new car payment"Well, by the time my Honda was 17 years old, I was already 7 years into early retirement. Honda Accord was nice car , but at 17 years old, the rubber gasket around the door was beginning to deteriorate. The seat was definitely 'worn out' from sitting on it too many hours. The suspension/rubber bushings were getting tired and it probably could have used new 'struts' ($500 plus). The car was worth about $2000. Sure I put new tires on it every 45,000-50,000 miles it seemed. Had 165K miles on it when I parted with it. Around that time, I inherited a Buick LeSabre from my mom with 100,000 miles on it. Drove it 100,000 more miles in the next 3 years as I traveled all over the country. Nice cars but the transmissions crap out at over 200K miles. Drove it to 225,000 miles then sold it for $2,000 or so. Bought a new 2001 one and drove it 200,000 miles. When I sold the Honda, I bought a 2007 Prius for around town. Nice around town car and got the HID lights which I really like. it's got 60,000 miles on it now.....12 years old. One of these years I'll likely buy something else. Before I retired, the Honda provided low cost car cost. Now that I retired in 1999, I got more than enough to have two cars, and the road car gets replaced about every 7 years with 175,000 plus on it. After than mileage, I really don't trust the cars for long road trips - too many things living on 'borrowed time' and I'd really rather not get stranded in' boondock' somewhere waiting for a 3 day repair on something where the spare part has to come from 250 miles away by wagon train. My last couple cars (GM) have been trouble free to over 100,000 miles - and then maybe 1 repair after that. Of course, you're likely to need a new battery at 4-5 years down here. So it gets replaced once in it's life.If I were SAVING for retirement, I'd probably push the cars a bit further, but since I travel 1/3rd of the year (by car), I can AFFORD now to have cars less than 7 years/200K miles. Why not? You can't take it with you. Since 1975, I never had 'car payments'. Saved up, bought cars for cash. Some folks spend $10,000+ a year at the country club. I spend that much traveling around (or more). Meanwhile, the portfolio is pretty much on auto-pilot with Vanguard index funds and stocks I've held for years. Sell very little. Buy only index funds with excess cash. t.
The Top 3 expenses for most people are Housing, Food, and Transportation. There's often a lot of low-hanging fruit to cut.Cutting these expenses can add $500K to retirement savings, study findshttps://finance.yahoo.com/news/cutting-expenses-add-500k-ret......</snip>intercstThat's a good article.Yes, the big three gotcha expenses are indeed housing/transportation/food. Keep housing and transportation costs low (as well as eating out costs) - chances are highly likely you'll win the game from the get go. Intercst points out some of the other low hanging fruit that might be able to be trimmed early on to boost savings and potentially grow the nest egg enough to FIRE.Another additional link that helps you take a look at your current spending vs. others in your age category:https://www.gobankingrates.com/saving-money/budgeting/how-mu...According to the charts provided, my wife and I are in the young baby boomers category that, according to the data presented, averages a daily spend of $178.01 per day (equals $64,973.65 annually) for that age category. That's not too far off from where we actually are (now that the nest is empty). The spending categories within those figures do not include income taxes or savings, but do include most everyone's household expenses (needs/wants/variables) and I am assuming the housing costs also includes PITI and repair/maintenance for homeowners. At least we include that in our housing costs in our annual expenses and when breaking it down daily:•Groceries•Housing (Rent/Homeownership) •Utilities •Health Insurance •Charitable Donations •Education •Gasoline •Vehicle Insurance•Eating Out •Alcohol •Entertainment •Cellphone Service •Clothing/Apparel •PetsAs we think about expenses we all do have or will have in retirement, breaking it down into a daily cost is one way to look at it, as well as weekly, monthly, annually - it all works. Taking a close look certainly helps one plan in terms of reaching a multiple in your risk portfolio that will cover all of the expenses whether one is factoring in no SS, pension, annuities, or other income streams - or if one is factoring all of those income streams and when they come on line at particular ages.Obviously, in the decades leading up to retirement being able to cut expenses beyond the big three of housing/transportation/food is another ticket to being able to place more income into savings. No pets? Save a buck or two a day. Walk to work? Save on gas and parking. No cell phone? Save a few bucks a day. Don't eat out? Save nearly $8-10 a day if you average out the year. Don't drink booze? Save a buck or two or more a day. Don't donate to charity? Save $6-8 bucks a day. Live in lower cost housing? Save a nice chunk each day. And on and on.After going through a layoff a year ago, you bet we took a close look at trimming any low hanging fruit as part of the hunker down routine to adjust to our new household income reality and fear of losing out on any OMY's of working and producing income from our combined human capital. Luckily, since our nest emptied a couple of years ago I had spent a lot of time examining our low hanging fruit expenses to start with so we could dial in the lifestyle for two in the house as opposed to four in the house. It's always been one of the maddening steps for me of planning for retirement during our 30's/40's/early 50's due to not really having an idea or being able to calculate expenses that are closer to what it will actually cost two of us compared to a full house of four of us. The layoff led to a closer examination. Things like subscription creep, cell plan, charity, annual memberships, religious tithing, etc... . As the article that intercst linked, for those under retirement age, there is still time to boost retirement savings via cutting some of the low hanging fruit. Maybe not to the tune of boosting it an additional $500K+ that could be accomplished if one had started way earlier in their 20's/30's, but certainly for those in their 40's and 50's the article shows you can still boost your retirement nest egg by $35K - $145K for those who are age 45-64 if they simply cut their non-essential spending in half between now and then. In other words, it is never too late to teach an old dog new tricks!Where do all of your expenses on a daily basis fit into the age categories listed here?https://www.gobankingrates.com/saving-money/budgeting/how-mu...BB
My kids have some friends who eat out EVERY DAY. I'm not exaggerating, the family really does eat at a restaurant more than seven times a week. Talk about food expense.Since going keto, I've started doing a lot of my own meal preps, so I can better control what goes into my meals. One thing I do is base my meal preps on the proteins that are on sale in any given week:https://www.reddit.com/r/OgreZed/comments/92x7pi/my_cheap_an...For example, in one of my extreme examples within that link, I did a meal prep of nearly 7000 calories for under $10, which included over six pounds of chicken thighs (@ $0.87/#) and nearly three pounds of low carb veggies.However, if I do get something from McDonald's, it's pretty much just one or two McDoubles (without buns). No large fries. No large soda. No shake or apple pie. These days, that satisfies me.Before keto, with processed foods full of carbs, I was ravenously hungry all the time. I used to buy 5 or 6 Whoppers and Big Macs whenever they were on sale, and still be hungry after finishing them.
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