typical retirement expenses

[robbase]

Can you please list some typical expenses in retirement? I realize medical, dental, electric, utility, phone, cable, food, clothing---what else?

Basically mom has about $200 K in savings and thinks that and SS will give her enough for a minimal retirement...I am trying to counsel her that at least for the immediate future that she should keep working as long as she is able (she is very healthy and gets around real well, does 20 minutes of dumbbell (5 lbs) exercises each morning) and as long as her employer will keep her or doesn't go bankrupt

she currently makes about $35 K a year (has been in this range for the last 5-6 years or so)--she lives fairly sparse already (although she buys ORGANIC food sometimes and doesn't return 5 cent deposit bottles !!!! (WTF- even I returned bottles this when I lived in NY and was making decent $)

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back story

I am visiting my mom....painful experience, close minded & doesn't act on any of my advice over the MANY years

anyways, she has it in her head when she turns 65 she is "supposed" to retire, like it is "magic" she can just retire even though she has minimal savings

she has the idea to move from NY to Florida where she says she can buy a condo for $30 K

we were going through the notional expenses she would have and she thinks it is do-able and I don't, of course the conversation caught me by surprise so I did not have all my facts, but I already increased her "notional" budget to the borderline with some things off the top of my head that she did not consider

thanks

[resolution]

How much would her social security be at65 and what would it be at 67? What is the monthly maintenance, taxes and insurance on the condo she wants to buy? Will she get any medical benefit from her employer when she retires? How old is she now and is the $200,000 what she has now or what she is projected to have when she hits 65?

[Deleted]

She probably intends to keep a car. What happens when she needs to replace it? That's a big chunk of income, even if you buy a beater. Then there are ongoing repairs/maintenance. As for maintenance- it may be less in a condo but it's not free. There are monthly maintenance fees which may be steep if she's near the coast (they'd include insurance on the building). She may be responsible for what goes on inside the unit- sinks, toilets, hot water heaters.

Medical expenses can be steeper than she anticipates if she's been healthy up to now. Hearing aids can run $5,000 a pair- that's what DH's cost. He spent too much time working around jet engines in the Navy. Other baby boomers may have spent too much time in bars or concerts with loud music and will need hearing aids as they age.

One thing to tell her (and you may be able to find some links) is that financial planners recommend that you start by withdrawing only 4% of your savings your first year of retirement, then increase that every year for inflation. With $200K, your mother is better off than most, but that's only $8K per year to start if she doesn't want to outlive her savings.

[Gardening Grandma]

How old is your mom now? Have you and she been looking at the statements that SS sends out? They will give you pretty accurate estimates of what her benefit will be at various ages. Also, 66 is now considered full retirement age for SS. If she retires at 65 and starts drawing, her benefit will be reduced. That will clearly be shown on the statement. If SS is going to be her only source of income, she really should not start any sooner than age 66. 67 would be better.

To answer your original question, we've found that typical expenses after retirement are pretty much the same as before retirement.....

[april47]

Full retirement age at 66 is for those born between 1945 and 1956. Those born after 1960 it is 67. In between 1954 and 1960 it is prorated by the month. It may be 66 and 2 months etc. Also remember that if your mom is a widow, she may take her husbands SS after 62 and apply for her own later when it is higher. If his is higher than just keep taking his. I am getting my late husbandsnow as of 63 and 4 months and plan to take mine at either 66 or 67 since mine will be much higher by then.

[Deleted]

One thing to consider if people live for a long time in your family is that life will get more expensive when she reaches that age where she can't do certain things. Women live longer than men but hit the "frail" stage at the same age- which means that the extra years are spent during a time when you can't drive (or shouldn't), need more doctor visits, and maybe aren't up to cooking, cleaning or doing laundry. Even if she wants to stay in her house she'll need paid help, and you don't want to get the cheapest in that category.

So, even though her current expenses might be low, they could be steep in her later years if she wants to age in comfort and on her own terms.

[cronewitch]

Medical expenses, Medicare cost a couple hundred a month and you need a supplement policy. Drugs, supplies and over the counter things like denture adhesives cost money too.

I would find out the cost of the insurance policies then add a hundred a month or more for drugs and supplies. Those will increase in cost over the retirement years.

Entertainment is expensive too, she will want to go to lunch with her friends and maybe take a trip with the senior group.

Also look at what she is invested in. If she is in equities she might be able to get 4% but if money is in CD's it might be 1%.

Living on SS and 2K a year while paying 6K a year in medical cost can be painful. She may need roommates and to of course give up driving and high quality food.

[wodehouse]

Being here in Florida myself, I can vouch that there really are condos for her $30K. Maybe not very nice ones. And who knows how long this RE slump will last, if it'll still be that way when your mom retires.

[wodehouse]

My wife (away attending to some family problems) just found out (more family problems) that her retired parents have a shortfall of $800 Cdn each month. They're near 80 and no way can they work part time. They...and their family...should've thought this through a bit more 20 years ago.

[tskeeter]

rob, here are some of the line items in my retirement budget that I don't see on your list.

home maintenance (new roof? paint house? new carpet?)/condo fees
auto expenses:
purchase of new car?
fuel
maintenance (oil changes, etc.)
repairs (brakes, tires, timing belts, accident damage, etc.)
auto insurance
home owners/renters insurance
travel expenses
entertainment/meals out
gifts
income taxes (at 25K of income, a portion of SS becomes taxable and some state tax SS as income)
property taxes on home or condo

[Deleted]

Jun 17, 2011 11:01:51 GMT -5 wodehouse said:

Being here in Florida myself, I can vouch that there really are condos for her $30K. Maybe not very nice ones. And who knows how long this RE slump will last, if it'll still be that way when your mom retires.

One concern I have about condos, especially inexpensive ones, is that they may have kept the monthly maintenance expenses low to attract buyers and because the owners' association refused any increases- but eventually the chickens come home to roost, especially if it's in an area near the ocean, where the sea winds and salt spray eat everything. Some associations have been forced to assess members for a very large amount per unit in an emergency when there aren't enough reserve funds. This might happen if the roof needs replacing or the parking lot needs resurfacing. If she's buying a condo she should look very carefully at the condition it's in, what work the whole structure may need, and whether the association has enough funds to do it.

[april47]

My present retirement budget:

Rent $662
Electicity $ 75
Car ins $ 38
Gas $ 40
Meds $59
Cobra $426
Food $200
Misc/Ent $100
Cell phone $46
Cable/Internet $60

Total $1706

I don't have pets, don't drink, don't smoke. My Cobra will be done within a year but I will be on Medicare at that point. That's $110 instead of $426 if I use an Advantage plan and $100-200 more if I use a supplement plan.
I pretty much do this on SS but will receive a small pension within a year also.
This is do-able depending on your lifestyle and needs. Luckily, my favorite thing to do is read. Hope this helps you ( if it doesn't scare you.)

[robbase]

How much would her social security be at65 and what would it be at 67? What is the monthly maintenance, taxes and insurance on the condo she wants to buy? Will she get any medical benefit from her employer when she retires? How old is she now and is the $200,000 what she has now or what she is projected to have when she hits 65?

this is the big issue, she talked to someone from SS on the phone and from some stuff I looked at on the internet I do not believe she was told correct info....also she says well "x" (x is a friend of hers around the same age) says the SS people told her the same thing over the phone so it must be correct.....I told her (since back in Jan) she should physically go to the SS office, talk to someone face to face, and get it in writing.....I even offered my last 2 visits to go with her to the SS office and assist--result- no action by mom as of yet

the complicating factor is she was married for more than 10 years than divorced and he is since deceased, so her SS statements in the mail do not reflect his SS info (which should be substantially more)...based on this I know there are all different strategies for withdrawing (her or her husband's) SS at what age and possibly switching to a different benefit (her or her husband's) at another age, but I would not go fwd w/out a visit to the SS office and getting printed info in hand...but I guess that is just me

[robbase]

Also look at what she is invested in. If she is in equities she might be able to get 4% but if money is in CD's it might be 1%.

Currently in Treasury bills and passbook savings account...she has no risk tolerance and has had zero risk tolerance her entire life :-(

[april47]

I had back and forth e-mail for about 3-4 days with someone from SS.
I would ask questions and he would answer and ask me one, etc. It was someone from my local office that was assigned to me online. At some point I then made an appointment with him and he finished my paperwork and I signed my application. He was the one who actually suggested I take my late husbands now and switch later. I have no complaints how things were handled.

[marvholly]

Another thing NOT being considered that family is facing right now:

Need for assisted living or a prsonal caretaker. My Dad will be 93 in July. He has had a series of health issues in the last year that have left him unable to do the basics of daily living (showering, dressing, shaving.......) and also now is in a wheelchair.

Cost of any decent assisted living in north suburban Chicago is $9200-$9500/mon for a small 1 room set up at his care level.

Cost of his enior apt (2.5 room) which inc meals, housekeeping is 3500 + personal 24/7 caretaker $6500. Total = $10,000.

He still has to pay for
phone
electric
Medicare B (its 115/mon-just paid mine)
Medigap (his is $4XX bimonthly)
medicines
personal care (toothpaste, barber, diapers......)
clothes (generally covered by gifts)

At the moment we have decided to keep him in his apartment. The care is better (we lucked out on the caregiver). There is more space. There is less emotional trauma for him. Physical therapy (Medicare pays) is right in the building. However, even w/ his soc income his assets will only cover about 20 months and ALL the places that I checked have waiting lists for Medicaid so we would have to go in private pay & then change.

[marvholly]

Ratchet
My late MIL was nursing home Medicaid in 2003. NO assets are allowed-not even a >10 y/o car. ALL soc or SSI goes to the home except a VERY small monthly allowance-believe it was about $35/month-not enough for personal care stuff + clothes + decent shoes.

I know of NO other state programs & I have spoken w/private & religous facilities.

[marvholly]

Just thinking to a few other instances w/in the family over the years.

Suspect your granparents situation came under spousal exclusion type rules. My Dad is alone. ALL assets have to be 0 before he gets any aid and he has to give up his soc check. How he pays for his medical Part B, Part D and medigap let alone his drugs I have NO clue.

[tiredturkey]

Dental care is not covered by Medicare so cleanings, x-rays, fillings, crowns, etc. will be on her dime. Ditto vision care and glasses.

[TheOtherMe]

Medicaid paid nursing home patients currently receive $50 per month. It doesn't buy much. They can have up to $2K in cash. Any life insurance has to have a funeral home as the beneficiary or it counts in the assets.

It's probably my future.

[marvholly]

Actually, the rules about asset limits and recipient allowances and so forth vary state to state since Medicaid is a state administered program and (I believe) funded by a combination of state & fed.

[robbase]

all - I appreciate your feedback so far....any other experience on what medicare / medicaid does and does not cover? any other expenses you cna think of?

thanks so much for the info so far

[midjd]

My grandpa was hospitalized briefly last winter and had to be moved to assisted living until he could care for himself. IIRC, Medicare covered 90 days and then he was to be assessed for the room at about $10K/month. (He can squeeze a penny until it screams, so he made sure he was out of there on Day 89!) After that, a home aide came to the house about every 3 days to change his dressing, help him in and out of the shower, etc. He paid for that out-of-pocket, about $500/week.

Health care is truly the wild card in any retirement situation. My grandpa has saved every dollar he's earned (I believe he lives solely off his SS payments) but would have spent down his entire nest egg in about 2 years at the assisted-living facility. After that, Medicare would have kicked in, but he would have been moved from his spacious single room into a double room.

Robbase, I'm sure your mom could retire on her current savings. But that kind of money will limit your choices for the rest of your life. If she values choosing where to live, what to eat, and where to go, she should keep working for a bit longer.

[marvholly]

midwestjd
That is EXACTLY the issue we are now facing w/my 93 y/o dad. His assets will last about 20 months at the current spend rate.

Another consideration:
When we looked into assisted living all the nicer places in our area had spaces for PAYING clients but were WAAAY waitlisted for Medicaid. Each non-profit ONLY has a certain number of spaces for Medicaid. My late MIL was medicaid and I would not have wanted to live in the place she was in.

[cronewitch]

The assisted living my grandmother was in an then my uncle only takes paying customers. Grandma was paying about 3,500 a month and worried she would outlive her money but died with 65K left so could have paid 2 more years. They said they would let her stay if she was on Medicaid but not take people on Medicaid. My uncle was living there now but in the hospital this week and might go home to his wife. His wife can't take care of him, she is 83 and handicapped he is 86 and in a wheel chair, she can't get him to the bathroom. The were depending on my mom to stay with them and help and other people to come clean and things, mom refuses to go back. She is 84 and gave them most of 2 years already, she likes being home and she hurts when she works that hard. They will probably try home again but when the help doesn't work out put him back in assisted living.

The assisted living is on a farm in a mobile home with only about 3-4 residents.

[Deleted]

Do you have children? A lot of grandparents spend money on travel expenses to visit family.

Medicare does not cover certain services like eye glasses or dental work. Dental work can be huge when you are getting older because of the need for implants, bridges, etc.

She will have a lot more free time on her hands while still healthy - what does she plan on doing with her time? A lot of hobbies cost money.

How about housecleaning? Almost everyone I know needs help with certain things once they hit their 70's.

How transit friendly is the place she is planning on moving? She may end up spending quite a bit on taxis and shuttles once she is unable to drive.