The Money Mustache Community
Around the Internet => Antimustachian Wall of Shame and Comedy => Topic started by: GuitarStv on July 02, 2013, 08:22:29 AM
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http://www.thestar.com/business/personal_finance/retirement/2013/06/08/monday_makeover_freedom_55_for_this_couple_possible_but_not_advised.html (http://www.thestar.com/business/personal_finance/retirement/2013/06/08/monday_makeover_freedom_55_for_this_couple_possible_but_not_advised.html)
Paying 50 k a year for your adult child's lifestyle seems a little extravagant. Perhaps the time has come for the adult child to get a job? They own their 800k house outright . . . where the hell is all their money going?
Article concludes that they clearly need to work for another 10+ years to generate the 1.6 million they will need to retire at age 65.
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oh the things I could've done in college on 50k a year instead of living on 10 cent chicken pot pies from Meijers or going to club meetings for the free pizza.
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The thing is the financial advisor in the article is correct. The couple wants to have an annual income of $65k, and is being very conservative on any government income (so essential ignored by advisor). So $65k x 25 = $1.625 million.
Of course here in MMM-land everyone sees the opportunity to lower expenses ($50k for a college-aged kid?!?). And living in a paid-off home worth $800k seems ripe to down-size and substantially increase the stash.
Knock those expected expenses down $10k, downsize the house, and this couple is probably only $400k from a comfortable retirement (instead of a million). That could be only 3-4 years from now by doing very minor changes. Count on government income and it's evener quicker.
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http://www.thestar.com/business/personal_finance/retirement/2013/06/08/monday_makeover_freedom_55_for_this_couple_possible_but_not_advised.html (http://www.thestar.com/business/personal_finance/retirement/2013/06/08/monday_makeover_freedom_55_for_this_couple_possible_but_not_advised.html)
They own their 800k house outright . . . where the hell is all their money going?
Probably quite a bit of money goes to the housing money pits: taxes, repairs, utilities, furniture ...
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The article explains where the money is going:
Expenses/savings (2013)
Income taxes $55,000, support for child and second Ontario home $47,500, overseas housing $52,500, retirement and other savings $20,000, meals and entertainment $24,000, church donation $18,500, cost of visits back in Canada $12,000, gifts to parents $4,800, life insurance $3,100, transportation $2,400, clothing and personal care $2,400, communication services $2,200, miscellaneous $2,300. Total: $246,700.
If they had only one home and didn't travel their expenses wouldn't be so bad. If they retired to the Canadian home they would reduce expenses by $64,000 a year. Are they literally spending $12,000 on airfare to and from Canada? Since they have a home there, they can't be spending it on lodging! That would allow them an additional $30,000 of savings I'd bet.
The meals and entertainment at $24,000 are also a big budget suck. Seems like that could be reduced to a measly $1,000 a month and save them another $12,000.
The college kid might be just tuition since the total includes the tuition, support for the child, and an Ontario apartment.
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The single most telling sentence in the whole article is the comment that they seem to have been spending without a plan.