I recently took over managing my aunt’s finance. It’s just paying her bills really because she “just doesn’t know how.” Not only does this scare me about getting older and losing my ability to care for myself, but it brought up a curious case of, will my FIRE budget really work?.
I recently decided my bare bones budget for both an unexpected loss of income or FIRE is: 500/500/500 (rent/expenses/loan,other, cushion)
The 67-year old Retiree Budget
I copied the above data straight from a spreadsheet I’m using to keep track of her finances. For the sake of comparison, I reorganized the line items into the three main categories in my projected FIRE bare bones budget Housing/ Expenses/ Other. I also added $80 for internet and cable as an estimate. It’s cancelled right now for Aunty MERJ for non-payment, but it’s something I plan to have in one form or another.
|HOUSING||Projected Cost||Actual Cost||Difference|
|Mortgage or rent||$500||$433||$67|
|Expenses||Projected Cost||Actual Cost||Difference|
|Spectrum (internet and cable)||$80||-$80|
|Other||Projected Cost||Actual Cost||Difference|
Now let’s sum these and compare..
Based on this actual retiree’s typical living expenses, it seems I would be able to get by. Some things would be different for me. For example, I likely would not have the car payment ($253/mon) that Aunty MERJ has. However, since I would not be of Medicare age, I would likely have some sort of health insurance premium. I don’t even know what the range of something like that would be. Overall, I think I would be able to live a simple life and get a couple trips or big expenses in now and then. Big expenses would likely not include home repairs. So home ownership is probably unlikely unless I increased my FIRE number or owned the home by the time I retired and thus could re-allocate some of the housing budget for repairs and maintenance. This exercise was good food for thought and a great jumping off point for future projections. Thanks for stopping by!
- Financial Update | June 2018 Income and Expenses
- Financial Update | June 2018 Savings and Investment