Just a 47-year-old mom of 2 in Northern California. My kids are Monkey Monkey(MM) and Drama Llama (DL). I am married to Monkey Hubby (MH). **It's Official. Our health insurance is more than our mortgage.
(I am surprised it took this long...).
7% increase this year. Which is probably one of the smallest increases we have had in the last decade. But still enough to bump it up to more than our mortgage.
So, the budget is rejiggered. I will start with the new budget January 1.
Using a "no raise" assumption I am happy with the rejiggering. I am lowering our monthly (long-term) savings rate from 21% to 17.5%. (Which also factors bigger budget increases: property taxes and grocery spending). BUT, if you factor our new income tax savings, this will keep our long-term savings rate at 21%. We will just commit that tax savings to long-term investments. I could certainly change our withholding to get our monthly savings back to 21%, but since it will depend on how the year goes, we will just keep that as a tax refund every year (if we contribute to Traditional IRAs instead of ROTHs). Our taxes are still low enough I could see choosing the ROTHs in a year flush with cash.
I will finish rejiggering when I get my salary figure for 2015. Not sure what I will do exactly with my various monthly savings figures and how I will re-allocate.
I've had a LONG time to wrap my brain around this. So today my feelings are pretty "meh". Some days I am frustrated by how hard we have worked to significantly cut our housing costs, including picking up and moving solely for the cost of living, just to be slammed by the cost of health insurance. Most days though I am just grateful that we have managed our housing (and other) costs so well so that we can handle it. In addition, with my dh's brain tumor, there is no doubt that keeping the best insurance possible was the right choice for us. Having exceptional insurance is priceless, and there is no doubt that we are getting more out of the insurance than we pay in. If not, we would have switched to something cheap and crappy a long time ago.
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Yesterday I took a retirement planning class for my continuing education. As it is with these investing classes, I tend to walk away feeling like I already knew everything. Which is a GOOD thing.
But I did enjoy the class from a "reality check" standpoint.
Lord knows we are very unique, but it is interesting how much of our personal retirement plans and our parents' retirement experiences are actually pretty universal.
I think this is also why I enjoy Money Mustache so much. He touches on most of this. Which can translate to a very unique and different retirement and worldview. But if you don't adopt 100% of what he says (lord knows we haven't) you can still learn a lot from him. I think he comes across as on the "fringes" but the reality is that his financial take is very sound.
Points of note?
--Start saving younger (in your 20s) and you don't have to save nearly as much as otherwise.
--About 50% of people retire before they plan to retire, due to health and job loss. Is true for both our parents. (Compounded with the current economy, this is happening at MUCH younger ages; both our dads ended up giving up finding work and retiring in their 50s. I think historically this is more people plan to work into their 60s and 70s but can't).
--Consumption and spending goes down in retirement. This is true across the board. This is not just a "frugal folk" phenomenon. (That this is fairly universal, I found that interesting).
--Most retirement calculators are focused on "replacing income" and are not particularly useful. Instructor used an example of a mid 30s person making $100,000 per year and needing to save $4.5 million for retirement. Which is crazy ridiculous. Especially in a time when the average retirement savings rate is like 4%. I mean, we are in BIG trouble here, right?
So the instructor did talk a lot about "replacing expenses" as a more useful metric for retirement planning.
--The topic of conversation did come up about how no one is saving anything and how that is panning out. My personal experience is that we have a lot of long-term family friends who have saved nothing for retirement, or who have significantly under-saved. None of them have ended up on the street or are lacking the basic necessities. But, what is obvious is that they lack choice in their life. Many will rely on family or government assistance. The instructor echoed this sentiment. Most are getting by, but it's not the retirement that they envisioned.
It's Official + Some Retirement Ponderings
November 7th, 2014 at 01:23 pm
November 7th, 2014 at 03:47 pm 1415375250
And those retirement calculators that ask for current income as input are my pet peeve. My current income has NO relation to what my retirement expenses will be! Maybe to my current savings rate, but not to my retirement.
November 7th, 2014 at 04:25 pm 1415377553
November 7th, 2014 at 06:56 pm 1415386601
November 7th, 2014 at 08:12 pm 1415391175
November 7th, 2014 at 08:34 pm 1415392471
There is some truth to the above (that our insurance is more because our mortgage payment is lower than average regionally), but it's also a slippery slope.
November 7th, 2014 at 08:40 pm 1415392843
November 8th, 2014 at 01:05 am 1415408745
November 8th, 2014 at 02:15 am 1415412918
You also make an important point, widely reported in the media, that many people wind up being forced into retirement by health issues, family issues or simply not being able to find work. This is always in the back of my mind, so even as i continue to count my blessings in my new job, I am trying to save as much as possible, just in case the job ends before I'm ready for it to end.
November 8th, 2014 at 01:52 pm 1415454777
Which is more in line with our own experiences and that of anyone I know. & certainly what MMM talks about. But I am surprised how true that tends to be across the board. The general assumption is that one would tend to spend more in early retirement. Certainly most people on SA talk about traveling more, etc.
November 8th, 2014 at 02:19 pm 1415456387
November 11th, 2014 at 01:58 pm 1415714328
November 11th, 2014 at 02:02 pm 1415714552
November 11th, 2014 at 10:18 pm 1415744305
November 12th, 2014 at 09:05 pm 1415826357
Puts health insurance costs in the realm of reason for early retires, and for the unemployed or disabled.
November 12th, 2014 at 09:15 pm 1415826910