I know this is going to be a moving target. We have years to go – and as our lifestyle changes, our ideas and estimates of what we want in retirement will change. I’ve been honing this for most of a year now, and it’s tightened up quite a bit (by $20k). We still have three big unknowns – which could propagate into some large numbers.
Issue #1: Where we live. This is has large implications, primarily in the realm of taxes. Property taxes, state taxes. Right now, we have our eye on Idaho. So, I’ve added Idaho taxes into our budget. This will also affect utilities, and car costs. We hope to get a house in a town that is easily bike-able. But, there will still be car usage – especially in the winter. Moving from the deep South up north – it might take a few years for my blood to thicken, and to become a snow-biking bad ass!
Issue #2: Healthcare. This is tricky for us. The whole family is allergy prone, and Mr. SSC is also accident-prone. Using the ACA’s Healthcare exchange, I’ve estimated Silver-level plans in Idaho for our family, using the expected ages at pretirement. But this is just a first-guess. As time passes and the kids grow, we will have a better idea of what our needs are. Mr. SSC and I also think that there is a possibility of us getting a part-time job in pretirement, and if that happens we may try and get one that helps out with healthcare. But for now, we are planning on footing the whole bill.
Issue #3: Kids. Seriously – how much do kids cost? I have no idea! Right now, I throw massive amounts of money at diapers and milk. In a few years, maybe it will be swim lessons and soccer team fees. Do schools make you pay for fundraisers or supplies? I have no clue. And since the kids are only 1 and 3 right now – I have no concept of what kids will cost as teenagers. So, for now, I’ve budgeted $200/month for all that crap, and I’ve added in an extra $1000/kid during the teenage years.
So here is the monthly proposed budget below:
Mortgage $175 (property tax & insurance only)
Natural gas $52
Credit card $1275
health, pharm $650 (Idaho silver plan)
random cash $50
Most of these numbers are based on what we spend now, and our utilities now. Other asssumptions are that the mortgage will be paid off, we will buy cars with cash, and the kids college savings will be completed before retirement.
I’m guessing you are looking this over thinking there are some obvious missing items like cell phone, car insurance, and FOOD! One of my budgeting strategies is putting everything on a credit card – so those categories are included under credit card:
EXPECTED MONTHLY CREDIT CARD:
Cell phone $75
Car insurance $100
House maintainence $100
Auto/gas maintenance $150
Shopping misc $100 (items like shampoo, school supplies, batteries)
Kids stuff $200 (a complete guess)
Cable TV $0 (I don’t want it – so if Mr. SSC wants it, he can fund it from his allowance!)
So, hopefully by now you have an idea of our expected expenses. I know that we can be more frugal and cut them drastically. But, we are trying to retire at the lifestyle we are accustomed too. When the inevitable bear markets arrive during retirement, this budget gives us lots of wiggle room to tighten up expenses to help outlast non-ideal market conditions.
For our yearly expenditures, I added in a 15% slush to cover vacations, unexpected costs, and just give us more of a buffer. Then, I added in 15% federal taxes and 7% Idaho state taxes, since our investments will have to cover this also. (I haven’t gotten detailed enough to calculate taxes in detail, adding in deductions and all.) This gives us a yearly retirement need of $57,410! But – Mr. SSC is still uncomfortable with these costs – so I’ve been rounding up to $65,000 for all of my planning and retirement simulations. With the extra 15% slush and that rounding up – that gives us a cushion of $13,728. I think Mr. SSC should even be comfortable with that! Just hopefully he doesn’t think budgeting for all that extra means he can buy a new boat every year… my hope is that most of that ‘slush’ will stay invested!