As I mentioned in an earlier post, eight years before I retired, I started keeping a budget. It forced me to consider my actual expenses. I learned that I was very wasteful – a lot of impulse shopping, expensive spa treatments, buying clothes I’d wear once, etc. Once I learned to curb spending, I found that I didn’t need much to still live an enjoyable life.
***Please note, I am not a financial expert and my experiences are solely my own.***
What follows is my current budget. Note: I do not have mortgage payments because I paid cash for a condo.
My Typical Monthly Budget (2018):
129 Internet and cable (Cox)
145 Electric in summer (in winter, $25 – I don’t turn on the heat in Vegas!)
40 Cell phone plan (Consumer Cellular)
57 Extra Space storage unit in California (I need to move my stuff out, as this is an unnecessary expense)
200 Gas for the car
40 household items
172 HOA fee**
200 Entertainment (movies, eating out, usually once a week)
250 Shopping (Amazon, mostly)
**My HOA pays for water, sewer, trash, landscaping, exterior building maintenance, pool, and security gate.
Additionally, I also budget for the following annual expenses:
*Car insurance (approximately $600)
*Condo insurance ($250)
*Professional dues ($400)
*Property taxes ($250 a year – condo living has its advantages!)
=$1,500/year, or $125/mo
Thus, my total monthly expenditure averages $2,500, or $30,000/year. After adding 20% for unexpected items, my annual budget is around $36,000/year. This is far less than the amount I budgeted for retirement. The difference seems to be due to moving to a less expensive state and the lower cost of condo living versus owning a house. Plus, I have embraced the concept of minimalism as I have gotten older. I am streamlining my wardrobe, my housing, and my diet. This helps me mentally and (hopefully) physically.
I should point out, there are bloggers who have mastered the art of frugality. Probably the most famous one is Mr. Money Mustache. He and his family live on a budget of $30,000/year. So living on less than what you (and most financial planners) believe you need is possible, with some restraint.
UPDATED BUDGET: 11/6/19
I sold my condo in June 2019 and, as of July 2019, am now renting. I decided to postpone buying a new place for a year in anticipation of another recession.
Since July, my monthly budget has changed as follows:
Electric: $88 average, from low of $50 to a summer high of $125)
Internet: $45 (CenturyLink)
Cell: $64 (discounted AT&T Premium plan, includes WatchTV)
Southwest Gas: $30
Gas for car: $100
Food, household stuff: $300 (around $220 for food, 80 for other)
Shopping, gifts, charity: $300
Or, approximately $2,500/month which equates to $30,000/year. Notice, I reduced my travel budget. I found that I traveled a lot more when I first retired compared to now. However, I do plan several trips next year and may need to revisit the $400/month figure I set aside for travel.
Costs not included in the above budget are the amount I paid for dental insurance, effective 12/1/19, from AARP. It was $388/year. I decided to buy insurance versus renewing my $158/year dental plan because, under my current dental plan, I am out of pocket $4,500 for dental costs. On my last visit, I had to have dental planing, and I paid for a bone graft, implant, and a dental flipper.
A flipper ($240 for a flimsy bit of plastic seems ridiculous!)
I have to wait six months (until Feburary 2020) to get a new tooth. In addition to the dental expenses, I also must pay for bar dues ($400), car maintenance ($500), car insurance ($680/year), and renter’s insurance ($105/year).
So, my additional, nonrecurring expenses have increased my annual budget to $36,573 (388+4500+400+500+680+105).
A word on healthcare
I served as a Captain in the U.S. Air Force during the Gulf War. While serving, I was diagnosed with several medical conditions, but the conditions were not considered severe enough to keep me from working. After completing my active duty service commitment, I applied for VA Disability. The VA found that I was over 10% disabled and I receive a small VA disability check and free medical care. If my earned income falls below a certain threshold, I do not have a copayment. Because I currently have no earned income (my savings and pension are not “income”), I have no medical premiums. However, if I need a medication unrelated to my disability, my cost is $8 per script. I must also see a VA doctor. Thankfully, my doctor is excellent.
If you pay for your own healthcare (either the full or a subsidized premium), your annual expenses could be $10,000+ over my budget.
A word on emergency funds
Because life happens, I have an emergency fund. Most experts say 6 months to a year’s worth of income should be set aside for emergencies. I say, the more the better: you need some available cash on hand to weather any storms (natural or manmade).