Living on a $500,000 Nest Egg
Simple Pleasures
By Mary Beth Franklin, Senior Editor
From Kiplinger's Personal Finance magazine, February 2009
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Annual income: $70,000
$30,000 from Social Security
$20,000 from a pension
$20,000 from personal savings
Expenses: About $45,000 will go to pay for basics, such as food, housing, health care and taxes, according to the Aon study. But if you don’t have retiree health benefits from your former employer, expect to pay an extra $5,000 a year or so for Medicare premiums and supplemental medigap coverage. The study budgets about $225 a month for entertainment. Skip the weekly Saturday night at the multiplex and join Netflix instead.
Lifestyle: With a cushion of about $20,000 a year, you can put a down payment on a used RV and tour the country. Focus on staying healthy and active because your budget doesn’t include long-term-care insurance premiums. If you need cash in the future, you could take out a reverse mortgage on your home.
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Reader Comments (1)
Posted by: Bob at 01/27/2009 05:48:24 PM
You may want to scale back your numbers a little. Even safe CD rates are dropping rapidly. Most of us lucky enough to have a small pension are closer to $12,000 or less and company retirement health plans are vanishing fast or cost more than the medicare supplement plans. I think that your $70,000 annual income estimate will be more like $50,000 for most people and even less if you have a 401K and no pension. A friend of mine was worth $1.2 million last year and is now at $400K because of stock losses. Worse yet, he is holding tight and still losing. Things are changing so rapidly that you may want to do another study. It may be wise to save part of that $20,000 a year from personal savings to cover future inflation and health uncertainties. Buy a small used RV and tour the country? YES and by all means try at least one short cruise.