Author Topic: Realistic FIRE numbers for families in US  (Read 1454 times)

whywork

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Realistic FIRE numbers for families in US
« on: July 09, 2018, 04:00:46 PM »
What is a realistic number needed for a family of four (two kids) to survive in a low COL city in US? Assume they rent.

I'm thinking of the below numbers.

Decent

Rent:  800
Grocery & Household:   500
Eat out & Entertainment:   100
Utilities (elec + water + gas + cell + internet):   200
Car (insurance + maintenance + registration): 150
Healthcare (premium + OOP): 500
Vacation:   100
Misc. (clothes, amazon items): 250
Kids classes: 100
Total: 2700
Yearly: ~32.4k

Lean

Rent:  800
Grocery & Household:   400
Eat out & Entertainment:   0
Utilities (elec + water + gas + cell + internet):   200
Car (insurance + maintenance + registration): 100
Healthcare (premium + OOP): 400
Vacation:   0
Misc. (clothes, amazon items): 200
Kids classes: 100
Total: 2200
Yearly: ~26.4k

If we add a bucket called "unexpected" expenses of 300$ per month to this; we are looking at 3000$ for decent living and 2500$ for lean living. These will require portfolios of 900k and 750k respectively needed for a family to retire. What do you think of these numbers? What are realistic numbers in your view

MrMoneySaver

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Re: Realistic FIRE numbers for families in US
« Reply #1 on: July 09, 2018, 07:32:44 PM »
I think the budgets as you wrote them kind of work, and kind of don't. Particularly the lean one would be non-recommended, with its complete lack of vacation funds.

With either budget, I'd worry about catastrophes and I'd also be uncomfortable not accounting for college, kids' weddings, helping kids get a car, etc.

ETBen

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Re: Realistic FIRE numbers for families in US
« Reply #2 on: July 09, 2018, 08:40:22 PM »
Your “decent” budget is similar to a lot of my budget lines I hit each month.  My mortgage is a lot more and I have more discretionary budget categories. Your unexpected category is key here.

Also, kid costs really vary by age. Mine are in public school but activities (scouts, sports, etc) add up to at least $150 per month (averaged out across 12 months). And my kids are in cheap sports (swim and cross country, not a lot of gear and trips). Otherwise they don’t actually cost that much beyond food lol

Altons Bobs

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Re: Realistic FIRE numbers for families in US
« Reply #3 on: July 09, 2018, 10:12:49 PM »
I think your healthcare number is too low, unless you're relying on subsidy and believe that subsidy will always be there and no one in the family will grow older, everyone stays at the same age year after year.

FIRE 20/20

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Re: Realistic FIRE numbers for families in US
« Reply #4 on: July 09, 2018, 10:15:40 PM »
I think the budgets as you wrote them kind of work, and kind of don't. Particularly the lean one would be non-recommended, with its complete lack of vacation funds.

With either budget, I'd worry about catastrophes and I'd also be uncomfortable not accounting for college, kids' weddings, helping kids get a car, etc.

+1

It appears to me that the budget works if everything goes well, but might be a problem if anything goes wrong.  $400 in health insurance for a family seems very low to me; it probably is accurate under the ACA but the chips in that seem to be turning into cracks under the current administration.  I am assuming closer to $1k / month for a two-person couple and the OMY money will go into increasing that.  $100-150 / month for car insurance, maintenance, and registration looks low to me, and that doesn't include fuel or funds for a replacement at some point.  Even a $4,000 car every 10 years divides out to something like $25-35 / month depending on how you account for growth & inflation.  It's certainly possible to hit a budget like that if nothing goes wrong, but orthodontics, a car wreck, ER visit, rent increase, ACA cratering, new sport/hobby for the kid, or travel > $100 / month (weddings, funerals, etc.) could lead to a few years of really overshooting.  If that happens at the wrong time with respect to market returns you're in a tough spot. 

With that said, it really depends on how you perceive risk and how you choose to mitigate it.  If you're one of the people who thinks the 4% rule is horribly broken and you're shooting for 3%, then you've just bought yourself your margin back and these budgets are fine.  Or, if you plan on having a side hustle or are ok with going back to work if the budget fails, then again you're probably ok. 

I think there are two questions you need to answer before determining if these are reasonable budgets.  First, track spending for a full year and see if the numbers are accurate.  We found a few areas where we spend more than we thought, and a few where we spend less.  In some cases we plugged leaks, and in other cases we accepted higher spending in areas that were important to us.  The second question is where you have accounted for a way to fix things if things go wrong.  If you have a tight budget but are not accounting for Social Security soon, a pension, a side hustle that really and truly makes money, opportunities to consult, or are planning on a really low withdrawal rate then you're probably fine.  If you have a tight budget and zero fall-back options - and you have small children at home - then I'd work on increasing the buffer in the budget or finding some back-up plans. 

mak1277

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Re: Realistic FIRE numbers for families in US
« Reply #5 on: July 10, 2018, 07:22:10 AM »
Aren't the budgets missing the monthly allocation of infrequent large expenses (e.g., replacing a car)?

Slow&Steady

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Re: Realistic FIRE numbers for families in US
« Reply #6 on: July 10, 2018, 08:07:02 AM »
My family members are not good MMMers but I will take a stab at this.  I live in LCOL midwest town.  We have 4 kids but I am going to break them up to look at 2 different families of 4.  We have 2 teens and 2 not yet in school, I am not sure which would apply better to your family.

2 Teens

Rent:  800 - On par with what we spend currently on our mortgage, rent prices tend to increase every few years
Grocery & Household:   500 - Way below what we spend (they eat alot)
Eat out & Entertainment:   100 - Way below what we spend (they eat alot and don't want to hang out at home all the time)
Utilities (elec + water + gas + cell + internet):   200 - We live in a all electric house, the lowest electric bill we have ever had $75 + water $40 + cell $100 (teens) + internet $60 + trash $20 = $295 lowest month we have ever had.
Car (insurance + maintenance + registration): 150 - Car insurance with 1 teen driver is $150, this leaves no room for maintenance/registration/replacement
Healthcare (premium + OOP): 500 - My corp supported premiums are $300/month and my OOP would equal $250/month for a PPO.  I would plan to set aside at least the premiums + OOP, you probably will not hit it every year but with teens in sports, driving cars, riding bikes, doing anything (they are usually growing and clumsy) it doesn't take too many broken collar bones to hit this.
Vacation:   100 - If I am on vacation I do NOT want to share a small hotel room with 2 stinky teen boys.  If your vacations are camping this probably works if your vacation includes a hotel room, 4 night stay someplace (assuming 2 rooms @ $125/each) this will probably be tight.  Maybe if you do a lot of CC hacking.
Misc. (clothes, amazon items): 250 - Teen sports, growing feet & legs easily blow through this but if you don't limit it they will spend even more, this seems somewhat reasonable.
Kids classes: 100 - Not sure what you include in here

2 Little Kids

Rent:  800 - On par with what we spend currently on our mortgage, rent prices tend to increase every few years
Grocery & Household:   500 - Below what we spend but the young ones have food allergies/sensitivities
Eat out & Entertainment:   100 - We could probably stay within this for now, the little ones don't have friends yet and are easy to entertain.  As they get older this would be a harder number to stay in
Utilities (elec + water + gas + cell + internet):   200 - We live in a all electric house, the lowest electric bill we have ever had $75 + water $35 + cell $50 (until they get older) + internet $60 + trash $20 = 240 lowest month we have ever had.
Car (insurance + maintenance + registration): 150 - This would probably be tight but doable until they start driving.  It doesn't leave any room for replacement though[/i]
Healthcare (premium + OOP): 500 - My corp supported premiums are $300/month and my OOP would equal $250/month for a PPO.  I would plan to set aside at least the premiums + OOP, you probably will not hit it every year but it is nice to have in case something crazy happens (like your completely healthy DH gets dx'd with MS at the age of 30 and now you need complete MRIs every 2 years and blood test every 6 months).
Vacation:   100 - This would work while they are little and easy to entertain, they still like camping and visiting grandma for vacation
Misc. (clothes, amazon items): 250 - Little kids grow FAST, this is on par with what we currently budget for the little ones
Kids classes: 100 - Our daycare cost are extremely low for the US and we are averaging $1100 for 2.  Obviously if you are FIREd you wouldn't need daycare.  The bigger little kid is doing gymnastics right now 1 day a week and it cost us $60/month.  Next year she will be old enough to start doing soccer or t-ball or little kid basketball, those will probably push us over this.  When both littles are big enough to do sports I am sure this will need to be doubled.

Other things I don't see
Life Insurance - probably not completely needed if you are FIREd
Gym - guessing this is not a priority for you
Gas/Fuel for the car
Clothing for adults (I really think kids will eat up what you have under Misc)
Haircuts
Gifts
Holiday
Home Maintenance - looks like the plan is to rent so this is probably not needed.
Season Passes/Memberships - you mentioned Amazon
TV stuff - Netflix/Hulu/Sling/Etc (if this is in your entertainment group I really don't think that is enough)

Slow&Steady

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Re: Realistic FIRE numbers for families in US
« Reply #7 on: July 10, 2018, 08:12:18 AM »
I should add that the "Decent" budget is just above the 2017 US poverty line for a family of 4 and the "Lean" budget is just below the line.  There are obviously people that can make these budgets work, I am just not sure that I would want to do it voluntarily for my retirement.

Schaefer Light

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Re: Realistic FIRE numbers for families in US
« Reply #8 on: July 10, 2018, 08:34:27 AM »
I've never given this much thought, but it occurs to me that there have been a few recent threads about FIRE numbers for families (as opposed to FIRE numbers for individuals or couples).  In most families, the kids have moved out by the time the wage-earning parent(s) retire.  If you're accounting for kid-related spending when calculating your FIRE number, then your FIRE number has a built-in safety net since your spending will in all likelihood go down after the kids move out.  I'm sure you've considered this, but it should make it that much easier to pull the trigger once you hit your number.

whywork

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Re: Realistic FIRE numbers for families in US
« Reply #9 on: July 10, 2018, 09:31:44 AM »
Thanks for your replies. I have put these numbers from two main sources

1) MMM Family spending 2015, 2016 which came to about 17k on the average; If we subtract home owner expenses and add rent it roughly comes to 24k
https://www.mrmoneymustache.com/2017/05/19/2016-spending/

2) Rootofgood's family spending: If we reduce his 10k travel expenses to 1.2k and 9k one time car expenses to expected 2.5k, and then replace Homeowner expenses with rent his expenses come to 28k.
https://rootofgood.com/early-retirement-40000-per-year/

I noticed the below points from your feedback

- As kids grow (teens) the expenses can increase
- Healthcare expenses can be unpredictable
- Someone else pointed that kids eventually leave so there is some leeway there
- Also there is social security buffer

If we add 300 for growing kids and 700 for healthcare a total of 1000, we are looking at 3.5k per month or 4k per month. This is like 40 - 48k per year. Don't forget this also includes a 300$ unexpected expenses fee, so this seems very safe for me.

So a 1 - 1.2M plus if we want to share kids tuition then add 100k per kid. This will leave us with surplus amount once kids move out and more surplus once SS kicks in. The amount thus left out can always be used to give kids as inheritance.

1.2 M (assuming we are helping kids college) seems to be the latest number.

If we are looking at a bare minimum number, then it will be 850k under following assumptions

- Not paying for kids college. If we have excess by the time SS kicks in then can pay some loans
- Yearly expenses of 40k till kids are home and then 36k there after. This will leave us with 650k by the time SS kicks in. If we instead decide to move overseas (mexico, thailand) once kids move out then we will have 800k when SS kicks in

All of this assumes a 4% return from market

honeybbq

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Re: Realistic FIRE numbers for families in US
« Reply #10 on: July 11, 2018, 12:05:36 PM »
Well, I'm sure I'll get shot down. But $100/month for vacation really sucks. You'd never fly anywhere, and even a decent campsite (tent) is $20+/night unless you are backpacking/dispersed camping. If you have a camper, it's more like $35-50/night.

No life insurance

Not a single date night possible ($100 won't buy a babysitter for a night here)

What about a new car someday or if the car breaks down? How will that get fixed? I don't think those numbers are realistic. Not to mention there's no gas...?

Kid class expense is very low in my 'hood. That would get you 1 kid swim lessons for a month here.

Ryancanderson23

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Re: Realistic FIRE numbers for families in US
« Reply #11 on: July 11, 2018, 02:30:23 PM »
Well, I'm sure I'll get shot down. But $100/month for vacation really sucks. You'd never fly anywhere, and even a decent campsite (tent) is $20+/night unless you are backpacking/dispersed camping. If you have a camper, it's more like $35-50/night.

No life insurance

Not a single date night possible ($100 won't buy a babysitter for a night here)

What about a new car someday or if the car breaks down? How will that get fixed? I don't think those numbers are realistic. Not to mention there's no gas...?

Kid class expense is very low in my 'hood. That would get you 1 kid swim lessons for a month here.

I'll bite.  Haha

You only need life insurance if your family is dependent on you for income or babysitting.  In FIRE with two parents, your expenses would probably go down if one parent died. 

And I don't really think you need to pay for expensive kids classes if both parents are there to entertain and bring them to free activities 24/7.

Like you said camping is a possibility or driving to a waterpark for a night or two would not cost much.  I think I flew in a plane only once in my childhood and I can't imagine having a happier childhood.

The date night cost depends on if they have relatives or friends that can watch the kids.

But I agree that gas and car replacement needs to be included.  The lowest I could see that being is $200/mo at the extremely low end.

And this all assumes NOTHING goes wrong, in the lives of 4 people.


Xlar

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Re: Realistic FIRE numbers for families in US
« Reply #12 on: July 11, 2018, 02:37:13 PM »
Well, I'm sure I'll get shot down. But $100/month for vacation really sucks. You'd never fly anywhere, and even a decent campsite (tent) is $20+/night unless you are backpacking/dispersed camping. If you have a camper, it's more like $35-50/night.

No life insurance

Not a single date night possible ($100 won't buy a babysitter for a night here)

What about a new car someday or if the car breaks down? How will that get fixed? I don't think those numbers are realistic. Not to mention there's no gas...?

Kid class expense is very low in my 'hood. That would get you 1 kid swim lessons for a month here.

You don't need life insurance once you're FIRE! If you die your decedents are all ready all set from your stash!

mm1970

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Re: Realistic FIRE numbers for families in US
« Reply #13 on: July 11, 2018, 02:41:40 PM »
Well, I'm sure I'll get shot down. But $100/month for vacation really sucks. You'd never fly anywhere, and even a decent campsite (tent) is $20+/night unless you are backpacking/dispersed camping. If you have a camper, it's more like $35-50/night.

No life insurance

Not a single date night possible ($100 won't buy a babysitter for a night here)

What about a new car someday or if the car breaks down? How will that get fixed? I don't think those numbers are realistic. Not to mention there's no gas...?

Kid class expense is very low in my 'hood. That would get you 1 kid swim lessons for a month here.
you know that millions of people never actually vacation?  I mean, when I was a kid, we went on *one* vacation when I was 7, where we drove two days to NC, spent a few days with my uncle, and drove two days home.  Total cost: 2 nights in a hotel.

Then, about 2-3 times, we "camped" but it really meant we stayed overnight at a beach parking lot.  Prob can't get away with that anymore.

$1200 a year - no, you prob aren't going to fly very far for that, but again, millions of people (esp in rural areas in my experience) don't fly anywhere, ever.

You can camp in a number of National Parks for $10-15 a night, plus a $20 fee to get in.  A week is going to be a $100, $200 if you are looking at a nicer place where they have running water and showers.

Private campgrounds where I live cost more than that, but you can still get a week for $350.

Hirondelle

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Re: Realistic FIRE numbers for families in US
« Reply #14 on: July 12, 2018, 04:53:39 AM »
Well, I'm sure I'll get shot down. But $100/month for vacation really sucks. You'd never fly anywhere, and even a decent campsite (tent) is $20+/night unless you are backpacking/dispersed camping. If you have a camper, it's more like $35-50/night.

No life insurance

Not a single date night possible ($100 won't buy a babysitter for a night here)

What about a new car someday or if the car breaks down? How will that get fixed? I don't think those numbers are realistic. Not to mention there's no gas...?

Kid class expense is very low in my 'hood. That would get you 1 kid swim lessons for a month here.

There's also the option to not go on vacation every single year. You don't need a big trip every year. If you're excited about seeing new places that are too far not to fly, you can visit one every other year, which makes your trip budget for each 2nd year $2400 assuming 0 trips the other year. Actually, I don't even see the problem even on your $50/night camper budget. That's $500 for 10 days. Assume camper-made breakfast and lunches and dinner 50/50 between eating out and cooking you'll still have money for some activities. This is coming from someone who spends >$100/month on travel as a single person so I totally get that it's maybe not what you're aiming for, but it certainly doesn't suck and can be a totally realistic number.

Also I wonder where you are that a babysitter costs as much as $100/night. In my hometown you just asked one of the neighbor kids and they were happy to do it for a night of unlimited movie-watching with some snacks and sodas they usually didn't get at home. On top of that, babysitters are a temporary expense and not necessary after a certain age (my parents left brother and me alone around the age of 10.. our babysitter before that was 12 yo, ofcourse we could always call them if sth happened). If you have multiple kids the oldest one can watch the younger ones.