Budgeting Early Retirement Journey Summer 2018

Comparing An Actual Retiree’s Budget to My Proposed Early Retiree Budget

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

 

Auto-withdrawals
GEICO (car insurance) 13th $70.23
Globe Life 9th $14.24
Subtotal1 $84.47
Remainder (Total Income – subtotal 1) $1,340.53
Recurring Bills
Tampa Electric $76.00
Metro PCS 1st $45.00
Rent 1st $433.00
Santander (car loan) 24th $252.61
Spectrum $0.00
Subtotal2 $806.61
Remainder (Total Income – Subtotal 1 – Subtotal 2) $533.92
Living Expenses
Food $200.00
Gas $30.00
Dependent $30.00
Subtotal $260.00
Remainder (Total Income – Subtotals x3) $273.92
Remainder for Miscellany $273.92
Prescriptions
Doctor’s office
Gifts
Other

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
Tampa Electric $0 $76 -$76
Total $500 $509 -$9

 

Expenses Projected Cost Actual Cost Difference
GEICO $70 -$70
Metro PCS $45 -$45
Santander $253 -$253
Spectrum (internet and cable) $80 -$80
Food $200 -$200
Gas $30 -$30
Total $500 $500
Total $500 $678 -$178

 

Other Projected Cost Actual Cost Difference
Globe Life $14 -$14
Dependent $30 -$30
Medical $0
Other/Gifts $0
Total $0 $44 -$44

Now let’s sum these and compare..

Final thoughts.
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!

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4 Comments

  1. Your aunt lives on very little! But it does look like telephone is missing from her budget.

    For you, as a younger retiree, I imagine that healthcare and rent costs would be much higher.
    I am not sure I understand how you can retire early. In addition to paying off the 300k, you would have to save/invest enough to live on for the rest of your life. But in any event, I wish you the best!

    1. My Early Retirement Journey says:

      She makes it work. Her income is pension + social security. No other savings. Phone is metro pcs. It’s on there.

      As for me, on income based repayment for student loan. Checkout my Budget struggles page for my projections.

  2. An unexpected bonus of having to take on Aunty MERJ’s finances is knowing what costs you could incur in later years. Before you qualify for Medicare, I’ve heard the costs of health care can be very expensive unless you opt for one of those special ones which tend to have religion linked in some way – might be worth looking at if you have time on your hands? Am thinking a little more money would make it easier for you to indulge in travel as well.

    1. My Early Retirement Journey says:

      Yes, that is the upside of having a peek at someone else finances, no holds barred. It makes me hopeful. She’s been living on this income for 5 years, but she did use some lump sums to partake in travel.

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