Wednesday, March 30, 2011

How can a senior couple retire in Florida on $1500 a month?

More viewer Mail...

A reader asks:

"How can a senior couple retire in Florida on $1500 a month?"

How, indeed!

$1500 a month is not a lot of money.  We're talking an annual income of  $18,000 a year, which is not far above what the Federal Government considers the "Poverty Line" for two people.

The problem is, just finding a place to live on that much money could be hard.  Even the lot rent on a Park Model home would be around $450 in most places, leaving only about $1000 a month to cover all food costs, utilities, transportation expenses, clothing, etc.

While such a bare-bones budget might be possible, it leaves little room for error - for example, a car repair or other unexpected expense.  And you have to hope that you have no medical needs that are not covered by Medicare.

Florida, of course, has no income tax, but makes up for this deficit in terms of property taxes (which are part of any rent payment cost structure) and sales taxes.  Since someone in such a low income bracket pays little or no Federal or State income taxes anyway, I am not sure that Florida is such a great choice, at least based on the Income tax issue alone.

I would investigate other, less popular States that are also attracting retirees with lower costs of living, before making a decision.
Retirement overseas might be one other option, although this is not for everyone, as I have noted.

This query reflects the poor planning on the part of a lot of Americans these days.  Many saved little or nothing in our 401(k) plans or IRAs, or mismanaged such savings (trying to time the market, panicking and selling out everything, or worse yet, buying Gold) so that they have little or nothing to fall back on.

Social Security benefits are pretty paltry, even if you were a high wage earner in your life.

I hope the folks who made that query end up doing OK, but frankly, it seems like a frightening scenario - to spend your "Senior Years" with barely enough money to get by - and not enough to do anything with your time other than watch TeeVee and play cards.

If nothing else, such queries should be a wake-up call to us all...

1 comment:

  1. A reader asks, "Can I retire on $1500 a month if my car and house are paid for?"

    Answer: Maybe. Property taxes and homeowner's insurance - as well as utility bills and home repairs are the real killer. A nice house in New York or New Jersey could easily have a $6000 a year property tax bill - that's 1/3 of your income.

    However, many jurisdictions have "tax relief" for Seniors and I would investigate that, or move to a State with lower property taxes for Seniors.

    Similarly, homeowners insurance could be as little as $500 a year or as much as $4000 (for example, in Florida) if you want to live on a barrier island.

    If your home is a Condo, condo fees and "special assessments" could creep up over time and present real problems.

    A paid-for car is fine and all, but all cars go to the junkyard, eventually - or need repairs down the road. This can add up to a lot of unexpected expenses, over time.

    Could it be done? It is done, by a lot of people, who don't have a choice in the matter. You may qualify for food stamps, a free Obamaphone, and other government subsidies, if your income is that low. I would suggest investigating them.

    Getting a roommate and charging them rent might be another way to save - and there are plenty of broke Seniors out there who might be looking for a place to live.

    Be creative and think about your options. Selling the "paid for" house and downsizing to a park model or apartment might save money in the long run, and you can use the money from the sale of the house to live on, or to buy an annuity or whatever.

    You do have options. Be creative.


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