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Retire on $1200 a month? Am I crazy or am I still living in 1957? This is a typical monthly retirement budget for retirees in Johnsville. (For readers outside of the US the amounts shown here are in US Dollars.)
| Rent |
$1000 |
| Electricity |
70 |
| Gas |
20 |
| Water & Garbage Collection |
25 |
| Auto Maintenance & Fuel |
250 |
| Phone land line |
25 |
| Cell phone |
70 |
| Cable television |
50 |
| Internet |
50 |
| Food* |
500 |
| Total |
2060 |
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* Our food bill, for two, averages $97 a week and we go to Sam’s (You might go to Costco.) for bulk buying every two months and spend an average of $250 per trip. That comes out to $97 a week times 52 weeks = $5044 + $250 times 6 = $1500. $5044+$1500= $6544. If you divide that by 12 our monthly food bill would be around $545. We eat salmon twice a week so be sure we get our Omega 3s. Your food bill might be more or less.
The budget numbers are on the high side. My cell phone bill is about $25 for me and $25 for my wife. If you only have one cell, then your cost would be $25. This is a POP – Plain Old Phone. It’s not an I-Phone or the latest whiz bam phone. We can get calls and make calls. Our cable is also around $25. (No HBO, no On Demand, just basic cable television). But I doubled the price for Johnsville because your numbers might be different. Continue reading Retire on $1200 A Month!
When you read My life story – Page 1, you already know that I was a senior manager at the company where I worked for the past two decades. I worked for a director, who was nice enough. But I really felt that the job she had, really should have been mine. She had only been with the firm ten years and did not have the breadth of experience I had. I do not know how she got the job. It really doesn’t matter. She was one of the few old company workers who was not getting a package, since she was not over fifty. She worked for one of the new Vice Presidents at the new firm.
At the time I retired, looking at what I was going to do in retirement, I knew certain things about me. I am not a person who can sit in a lawn chair and watch the grass grow. Even though I was retired, I wanted to do something; to be an active participant in life. I’ve done lots of volunteer work and although it was interesting at the time, it was not fulfilling to me. There are some people who are good at it and then there are folks like me. I’ve done the Habitat for Humanity, volunteered for the Red Cross, donated over 10 gallons of whole blood for the local blood bank, was the company chairperson for the Race for the Cure, and lots of other things. But none of them really lit a fire under me.
When I left the 9 to 5 life and retired, I decided I was going to go down a different road. I wanted to try my hand at different things, I wanted to do different things, I wanted to meet different people. Maybe I would get into sales. I wasn’t really comfortable with sales, but since I was exploring and had a good retirement income behind me, I put that on my list of possibilities.
I had invested in a start-up Internet Service Provider (ISP) in the middle nineties, and have given some thought to doing something internet based, like marketing or something. That went on my list of possibilities. Continue reading My Life Story – Page 2
Two Questions For You
At least once a week, four or five times a month, since I retired in September 2009, I hear the same question, “How can I retire early?” I always respond by asking two questions.
- How old are you?
- How old do you want to be when you retire?
Just Give Me An Age
The answer to question #2 is not, “I can’t afford to retire when I want to.” Tell me an age. Let’s say you are 40 and you want to retire when you are 55. That’s 15 years. But most of the people I talk to are not 40 years old. They are usually 50 and want to retire at 55. If you are 50, can you save $1450 every two weeks to reach your goal of retirement at 55?
Can you Save $35,000 a Year?
If you are 50, you can retire at 55 if you can save enough. Most people can’t save at that rate of $1450 every two weeks. It would take saving about $35,000 a year at a rate of 20% on your investments to get the same amount of money that a 40 year old would have at 55 using only $4,000 a year in a Roth IRA.
But you can only put $4,000 into your Roth until you get to be 55 and when you can put in $5,000, but you want to retire at 55 so that shoots that plan. Also your earnings every year will be taxable, since you are saving $31,000 more each year over what you put in the Roth. So your net result will be less. To offset a 28% tax rate, you’d have to save over $40,000 a year. So the goal of retiring at 55 might be unrealistic. Or maybe not, depending on your savings rate.
Can You Live On Less? Continue reading How Can I Retire Early?
Did you love your job? If so, you may have been happy with your life. That is until your supervisors explained that your company was cutting costs. Due to those cost cutting measures, you are being forced into early retirement.
Most likely, you are over 55 years old. If you are like many other individuals in your shoes, panic may be the first feeling that sets it. Yes, being forced into early retirement may seem like “the end of the world,” but it doesn’t have to be.
Company Grapevine
At most companies, cost cutting is already in the company news or being talked about on the company grapevine. Everyone is talking about what is going on “upstairs” or in the board room. Most likely, your company, if it is of any size, has or will be bringing on a consultant. This way, management has someone to point the finger, when layoffs or early retirements take place. “We have visited with our consultants and it is their recommendation that . . . ”
First, when you get the news, take action. See if you can stay on for an additional two or three months – say 90 days. This will give you time to get your affairs in order. Explain that you understand that cutbacks are necessary, but as a valuable employee, you’d like to get your affairs in order and would like to stay on for three months “or so”.
Transition Teams
This terminology “or so” lets your employer know that you are going to go willingly, but would like some consideration and employment time to get your stuff together. Another term that is used is to ask, “Can I be on the transition team?”. Transition teams are needed to get the company from the size they are now, to the size they will become in six months. Transition teams might be one or two employees or they might be 100 or more. Some people will be asked to be on the team, and why not you?
When being forced into early retirement, you will be required to sign a number of important documents. Never agree to retirement without first learning about your company’s rules, restrictions, and attached strings. Will you receive a severance package? Does that severance package eliminate your pension or eliminate you from receiving any other important employee benefits? If so, talk to a financial advisor right away, particularly before you sign anything. Determine what your best course of action is. Is it better to take the severance pay or receive all of your benefits? Continue reading Forced Into Retirement? Consider These Steps
See Part One Civil Service Early Retirement Here
Background About CSRS and FERS
CSRS Retirement The Civil Service Retirement Act, which became effective on August 1, 1920, established a retirement system for certain Federal employees. It was replaced by the Federal Employees Retirement System (FERS) for Federal employees who first entered covered service on and after January 1, 1987.
The Civil Service Retirement System (CSRS) is a defined benefit, contributory retirement system. Employees share in the expense of the annuities to which they become entitled. CSRS covered employees contribute 7, 7 1/2 or 8 percent of pay to CSRS and, while they generally pay no Social Security retirement, survivor and disability (OASDI) tax, they must pay the Medicare tax (currently 1.45 percent of pay). The employing agency matches the employee’s CSRS contributions.
CSRS employees may increase their earned annuity by contributing up to 10 percent of the basic pay for their creditable service to a voluntary contribution account. Employees may also contribute a portion of pay to the Thrift Savings Plan (TSP). There is no Government contribution, but the employee contributions are tax-deferred. For more information about TSP, see the TSP website.
Unused Sick Leave, Health Insurance Coverage, etc.
- If I take early retirement, what happens to my unused sick leave?
CSRS employees will receive service credit for any unused sick leave in determining their annuity (but they must meet eligibility requirements for retirement before the sick leave is added). Continue reading Civil Service Early Retirement Part II
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