Tuesday, August 13, 2019

What We Spent in Retirement-Year One & Year Two



Hubs retired the end of last June so I went through all our bills for the first full year of his retirement-July 1, 2017-June 30, 2018.

We figured our Annuity Income was going to be $38,077.56 net per year.
But in April of 2018 our tax withholding changed which meant an extra $45.03 per month in that deposit so we received $135.09 more than we were counting on so the base Annuity Income payment was $38,212.65 net.
Going forward into Year #2 the yearly base Annuity Income amount will be $38,617.92 net....unless the taxes change again.

But Hubs got a 1 week paycheck(received mid July 2017 for work performed end of June 2017 as there was a lag in pay vs. when it was earned)so we received an extra $1,382.06 in July 2017.

We also had these other sources of income for that 12 month time frame.......
* Interest income     $3,615.47
* Dividends              $366.03
* Blogging                $512.32
* Rebates/Refunds    $843.49
* Fed. Tax Refund    $5,744.00
These 5 added up to $11,081.31

In addition we took two 401K withdrawal of $6000 each(in Jan. 2018 and Apr. 2018)which netted us $10,303.50.

Adding these 6 sources of income to the Annuity Income gave us income of $60,979.52 net for the first 12 months of retirement.

I added up all our spending and bills for this same 12 month time period and it came to $39,882.33.
This was every penny we spent in that time frame--electric, phone, water, food, insurances, taxes,  internet, gasoline, credit card charges, other store cards, WAM, even a bit of Ex-College Boy's last tuition payment from January 2018.

Income of $60,979.52-$37,799.73 spending=$23,179.79 left over for the first 12 months of retirement.

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Moving onto Year Two which ran from July 1, 2018 to June 30, 2019.

The Annuity in Year Two came to $38,630.16 net.  The first 9 months the payment was $3218.16 and then it went up to $3222.24 for the last 3 months so the total was $12.24 more than anticipated when I figured what it would come to back in Year One.

We also had these other sources of income for that 12 month time frame...........
* Interest income      $5,302.01
* Dividends                 $415.73
* Blogging                   $490.83
* Rebates/Refunds    $1,495.83
* Fed. Tax Refund    $1,465.00
* Online Sales              $233.72
These 6 added up to  $9,169.40

In addition we took one 401K withdrawal of $6000(in July 2018)which netted us $5,147.07.

Adding these 7 sources of income to the Annuity Income gave us income of $52,946.63 net for the second 12 months of retirement.

I added up all our spending and bills for this same 12 month time period and it came to $49,189.94.

This was every penny we spent in that time frame--electric, phone, water, food, insurances, taxes,  internet, gasoline, credit card charges, other store cards, WAM, Long Term Care premiums, Doc/Dentist bills(including high deductibles), Dog costs, cash gifts given, garbage fees, sewage fees, tree removal, and miscellaneous like passport costs and an auction we purchased from.

Income of $52,946.63-$49,189.94 spending=$3,756.69 left over for the second 12 months of retirement.

Comparing Year One & Year Two side by side......

Total Income
2017-2018  $60,979.52     2018-2019  $52,946.63

Total Bills Paid
2017-2018  $37,799.73     2018-2019  $49,189.94

Leftover Funds
2017-2018  $23,179.79    2018-2019    $3,756.69


So let's analyze these numbers.

First Retirement Year Income was much higher compared to Second Year due to........
* a $1382.06 paycheck(earned in June 2017 but received in July 2017)
* 2 401K withdrawals rather than 1 in the Second Retirement Year which added $5,156.43 extra
* a much higher Federal Tax Refund during the First Retirement Year($4279.00 more than in Second Year)
A Total of $8,032.89 MORE received in 7/2017-6/2018 than in 7/2018-6/2019.

A few income categories are worth noting that were bigger/better the Second Retirement Year....
* $652.34 more in Rebates/Refunds received
* $49.70 more in Stock Dividend checks
* $1,686.54 more in non-retirement account interest

These three categories of higher $2,388.58 income categories received in 7/2018-6/2019 do not go far in offsetting the $8,032.89 in more income received in 7/2017-6/2018.

It's obvious we are spending more during this Second Year of Retirement.  There are some areas we really can't change though, like various taxes, long term care premiums, sewage, garbage, phone/internet and medical costs.  There is no flexibility in the first 5 types of costs and medial costs have to be paid.

Credit card charges is were I need to take a closer look as they went up almost $6K in Year Two!!
I need to dissect those bills and see where things are going off the rails.  How much is food spending, gasoline charges, necessary bills put onto the credit card and what are eating out charges, clothing, and other possibly frivolous charges we can cut down on.

It's time to see what's hiding in that c/c bill and take action.  Another post will be further coming on what I find hiding in that little monster. lolz

Final Thoughts--

Overall we are doing alright financially.

* We have the RMSA medical account to pay for Healthcare Premiums. It won't get us to age 65 both but once it's exhausted we can buy Healthcare based on our "income" and qualify for subsidies on the premiums.  Can't qualify for subsides as long as we have the RMSA.

* We still have quite a bit in the HSA for co-pays.  That should last us well into Medicare age if we keep paying our high deductible amount each year OOP.

* We have the annuity funds every month and it continues until we die.  It does reduce once Hubs/I take Social Security but even then, we'll have more cash coming in once SS kicks in.

* We have the 401K of over $500K which we stopped tapping at the end of 2018.  We had calculated that if we tapped it at a rate of $36,000($9K per quarter)we'd still have 3/4 of the amount it started at once we started collecting SS at full retirement age of 67.  We have found that at this point, we don't need to tap the 401K for living expenses so we are leaving the $$ there until either we hit full SS age or 70 years old and then the Required Minimum Distribution(RMD)rules kick in and we have to withdraw from it.  We are still too far away from those events to worry about it now.

We have over $400K in non-401K investments/emergency fund/cash.  This is all liquid or easily made liquid if need be.....hopefully that sort of emergency never happens. ;-)

So that's a financial update on how retirement is going the last 2 years.
I can't believe it's been TWO years already and we've started Year Three.


Sluggy





6 comments:

  1. Thanks for sharing, because it's really interesting to get real world accounting for how someone is spending in retirement. I think you're doing amazing with both the tracking & staying within the income you're "making'/taking in. There's always room to trim, but I'd say at this point, if you're spending falls within your income & you can comfortably save, a few prioritized splurges might be okay. :-)

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  2. I definitely think spending more now makes sense versus 10 years from now as you are travelling/enjoying life more. Later in life you will stay home more which naturally becomes cheaper. I make my annual budget about $4000 less than our estimated income - always room for a bit of up and down that way

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  3. I think you are probably traveling more and that adds up, but wasn't that the plan? I think we plan to spend more traveling once we hit even keel.

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  4. Congrats on two wonderful retirement years. We start our 19th retirement year in 2 weeks. Time flies when you are having a good time!

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  5. Looks like you guys have a pretty good retirement income. Enjoy!

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  6. Hi Sluggy, this is Chris. I wanted to tell you that I appreciate that you have been so transparent with us about how you are faring with a retirement budget. It is helpful to see a real time example. You are so fortunate that your health care premiums are taken care of for now, what a blessing!

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