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Retirement: a real life view

By Jennie L. Phipps ·
Tuesday, June 14, 2011
Posted: 2 pm ET

A comment posted by reader John Crowley to yesterday's blog about managing retirement income said he thought the retirement planning estimates of what it takes to live comfortably are too high, so I contacted him and in response to my email, Crowley wrote:

"I feel that many projections of what it takes to live comfortably in retirement are way off. I am a retired postal worker. I get $1,550 in Social Security and about $1,100 in a pension.  That gives me an annual income of $31,000. After paying for medical insurance, we have $25,200 to live on.

"I am 62 and I have been retired for a little less than two years. I own my home, a truck, a car and a small boat, two dogs and two cats. I owe nothing on credit accounts. I am pretty handy for repairs and heat my house with firewood that I get for free.

"My wife and I go out when we want, but we are careful how we spend money. We are in good health.

"I have about $250,000 in savings, most of it in an IRA. I dabble in the stock market and the rest of my money is in CDs. As of today, my net worth in cash is about $2,000 less than when I retired. That's because we took a trip to Ireland that cost me about $3,500.

"As you can see, this is a far cry from the $1 million that Fidelity Investments says I need. I made about $70,000 a year when I was employed and had a mortgage, but I lived on less because I had to save and pay other expenses that I don't have now."

Do you think Crowley is right? Are you living in retirement on less than $50,000 per year and avoiding an all-kibble diet?


  • How much do you think it takes to retire comfortably?
  • If you see $50,000 or less as a reasonable amount today, how will you cope with inflation down the road?
  • If you live on $50,000 or less, do you own your own home and are you otherwise debt-free?
  • Are you concerned about paying for health care?
  • How do you intend to pay for long-term care if you should need it?
  • In what part of the country do you live? Does that make a difference?
  • Do you like the way you're living?
  • What would you change if you could to make life better?
Please post your thoughts to the comments section, and I'll compile and summarize them in upcoming blog posts. Maybe we can inspire each other.
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pat crowley
July 04, 2011 at 7:18 pm

Good for the gentleman who has a free and clear home and a pension from the feds. Fewer and fewer places are offering pensions, and only with the government could you retire at age 60 at any decent pension income. Those of us still with a mortgage and in their 60's, and with housing values tanking every year, our picture is not as bright.

Becoming an ex-pat is the best we can hope for. Many places offer universal healthcare (even many third world countries), but in the USA, our for-profit healthcare is broken and very very expensive. Go Panama or wherever else that treats their seniors better than the USA.

Randy Schaller
June 16, 2011 at 2:59 pm

I think Mr. Crowley's story is great, especially in that it emphasizes the benefit of living at or below your means and eliminating debt. My feeling is that retirement needs estimates like the one he mentioned are important for a number of reasons. If nothing else, having saved more for retirement can provide you with flexibility and not to mention something to fall back on in the event of an unforeseen circumstance. For example, will Mr. Crowley's wife still receive his full pension if something were to happen to him? Often, a spouse may continue to receive a benefit albeit a fraction of the full amount, this could drastically change his situation.

Randy Schaller

June 15, 2011 at 7:00 pm

Healthcare and healthcare expenses are everything. All the rest of the numbers pale in comparison. We are in our mid-50s, are debt-free, have lots of savings (but no defined-benefit pensions for either of us) and live within our means, but our very basic BCBS Health Insurance currently runs nearly $1000/mo. (for a family policy). That premium has nearly tripled in less than a decade, and our total out-of-pocket medical expenses are still very high, as much isn't covered. Yes, healthcare expenses are the leading cause of bankruptcy in America, and that is a crime. No other developed country permits bankruptcies due to healthcare costs. My wife and I have been able to live within our means just fine up to now, but I am concerned that we still may face financial difficulty in the future over healthcare costs, especially if the yahoos currently in Congress ever succeed in their quest to dump the majority of the costs of Medicare onto seniors.

June 15, 2011 at 1:03 pm

If you are accustomed to live a frugal lifestyle, then you can do it with less than 50,000 but you have to have no mortgage, no car payments and no other debts plus you have to have some sort of medical coverage. I live in FL and have always been frugal and will continue to be that way because I am content with my lifestyle. I am worried about medical coverage and expense. I will retire at 60 but since my husband never worked in the US, they say he has to buy into medicare and that will be a lot. I will have medical coverage but because he is over 65, it is mandatory that he has medicare. We do not have any long term care insurance. I am worried about healthcare cost and long term care. I think we can live comfortably with 30,000 because we don't have any debts. It seems like Panama is the place to live.

Lucas Smith
June 15, 2011 at 11:17 am

Well it is no supprise that Fidelity (and the other major retirement account providers) have a highly vested interest in getting you to save more money. They almost always pick a worst case scenario market and spending scenario as their basis for the minimum to save for retirement. Yes, you could argue that this is in the best interests of the masses, but if you are diciplined with your money (mostly on the expense side) you can do far better then they project. They recommend ~%75 percent of your pre retirement income as default, but since we are already living on ~50% of our current income, and we almost have my house paid off i know that is not a accurate projection for my family. With my house paid off i could easily live on less then 50K a year.

June 15, 2011 at 9:53 am

Although we do have a 7 figure portfolio, the only part we touch is my wife's rollover pension & that is her money. After saving frugally for 40 years I find it difficult to break that habit. We live comfortably on our SS & pensions, around $66,000. We've owned our house for 22 years & both cars. We managed to purchase acreage in NC & PA in case NY gets really more stupid & raises our taxes & expenses. I started saving my first week of employment, every raise was split into savings & spending to raise our standard of living, for us it worked perfectly. Of course we were not the ME generation of McMansions & Beemers & all the expensive phone toys. Our goal was to live comfortably, & raise our children sensibly, not IMPRESS our neighbors. This country is changing, in my opinion it will be a Third World country in less than 50 years. Although old age beats the alternative, I'm glad I was born when I was. This Republic is no longer working, our Government ignores us, business leaves in droves to maximize profit, it has no moral obligation to the US & I sincerely believe our children & Grandchildren will not attain our level of financial achievement. I pray to G-D I'm wrong, that someone will come forward & break this pattern of decline, while knowing in my heart that GREED is prevailing over decency & integrity, just my thoughts...........

June 15, 2011 at 8:35 am

Mr. Crowley did something that most of the baby boomers did not do, while he was still working. He lived within his means (actually under) and he continues to do so today. Many baby boomers, did not do this. They have immense debt (they were the generation that started this crazy spending and debt! Their parents did not live that way), they inested very speculatively in their retirment accounts (which now has them coming up quite short) and they want to travel the world using their Social Security. Many also don't have pensions (since many companies terminated those programs in the last 2 years, for the expense and expecting workers to save on their own through 401K's and IRA's). Many also have adult children that cannot get jobs and they are supporting them. Still more are taking care of elderly parents that have lived much longer than expected.

Also, it seems that he and his (thankfully) are in good health, so they may not have large medical bills.

I do not mean to say he is wrong...can it be done on less? Absolutely! AND I PRAY that I will be in such good financial shape in the future! Every single person has to evaluate what their needs will be based on what they expect their expenses to be and what they want to DO during retirement and who they may have to care for. You also have to consider the outrageous growth of medical costs both with and without insurance. Insurance premiums alone have experienced increases of 12-14% year over year and that is something that was not protected under Obabmacare, so they have ZERO accountability to keep those costs low.

June 15, 2011 at 8:26 am

All this is academic. If you're healthy, have low or no debt, have an income stream that gives you a few luxuries, and are very frugal, you can live very well as a retiree in many parts of the country (umm, except for that little issue of state/local taxes). But what happens if you have a catastrophic illness? As far as I understand it, (extaordinary) health bills that go beyond the purview of one's coverage are the primary cause of bankruptcy in the U.S. for employed, non-retired U.S. residents--not sure what happens when one is covered by Medicare or Medicaid (I guess you just lose all your savings and then it kicks in?).

June 14, 2011 at 10:25 pm

I know it can be done. The 2 of us live on 1 s.s. income of about $1500/month. We own our own home, cars, etc. We also have no real estate taxes for another 14 years on our home. We have no insurance, but it isn't required where we live. We are in PANAMA and since we are pensionado we pay the same rates as locals. We have used the medical system here and have no complaints. I spent 10 days including 2 days in Intensive care, 4 John Hopkins surgeons, all medications, etc. and everything came to $410.00 - yes $410 and no insurance. We eat out at least 2 times a week if not more. I even have a maid ($17/day) and a gardner ($15/day) and they work for me 1 time a week. Our $1500/month goes a long way here in PANAMA!