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.)

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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.

Our auto maintenance is not $3000 a year or $250 a month. Our fuel is a $25 fill up every two weeks or $50 a month. Again, I tried to estime what “average” Americans might spend on these items.

In this Johnsville, the rent in the budget is for a two bedroom home. If you have a home that you’ll be selling, to move here, you can get a building lot along the coast for $40,000, with excellent views. Because the area has been hit with the recession, plan on spending around $90 per square foot, for a semi custom home.

$90 a square foot will give you plenty of upgrades but is still affordable. Most of the people who live along the coast have a custom built home that is 10,000 square feet or more.

For us, 10,000 square feet of house is about 8,000 square feet more than we need. The 2000 square foot house we live in now is a tract house with some add ons. We bought it back in the mid-eighties with the thought of moving here when we retired, which we did. We rented it out and were absentee landlords. (I’m not sure I would do that again, but we were in our twenties when we came up with this brainstorm.) Our price per square foot when we bought was $60 a square foot, so I am thinking that $90 a square is probably not bad considering we built 25 years ago.

We have a little over 2,000 square feet where we live and have four bedrooms, 2½ baths, a three car garage, on 1/3 acre lot. At $90 per square foot plus $40,000 for the lot, a house comparable to what I have now would cost $220,000.

So if I were to sell my house, which is paid off, and used the proceeds to buy this place, I could still have a home and no house payment. So on the budget above, I can take $1,000 off the budget leaving my monthly budget out of pocket at $1,060. And this is on the high side since we don’t spend what I show for the budget in Johnsville.

Now the question becomes – Do you have $1100 or $1200 a month so you can live here?

If you have $200,000 in an Roth IRA, like one of mine, and you got 7% (half of 15% that you should be getting) it comes to $14000 a year or $1160 a month. It sounds like you could retire here. When you get to be old enough to collect social security, assuming that it is around when you retire, you would be making so much extra that you could afford to hire a maid or a gardener.

There are two questions you might be asking. (1) Where in Johnsville? and (2) Where can you get 7% on your Roth IRA? I’ll tell you more about Johnsville in a future article. If you want to know where to get 7% on your investments, sign up for my newsletter. There is a sign up form on page one of the blog and you only need fill in your first name and your e-mail address and I’ll send you a report showing you how to get 15% on your Roth IRA.

Let’s see, 15% on a Roth IRA with $200,000 would be $30,000 a year (tax free) or $2500 a month.

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For Taking Early Retirement (TER), I hope you are enjoying a great retirement or are close to that day!

Jeremiah John

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