(Updated 7/1/15 – We moved our target date up to 2019 so these figures will have to be adjusted)
Our retirement year of 2023 is a ways off but we had to start somewhere in estimating income and expenses. Estimating the numbers turned out to be a great exercise in order to develop a savings plan.
Here are a couple of actual yearly expenses from two sources I trust:
- RV-Dreams: Averaged $31,635 a year, $20,260 with workamping and $34,456 traveling. They live full-time in a 5th wheel and own an extra vehicle. Based on eight years of data. And they provide their own health insurance!
- Kirk and Pam’s RV Adventure: Averaged $34,588. They did a lot of volunteering to reduce cost and traveled in a motorhome with a toad. Based on five years of data.
Wow – those two overall averages are very close!
Our plan is to travel a lot the first year or so, then settle into workamping or at least volunteering for a spot. I decided to use an average cost based on their numbers and came out with $29,768 yearly or $2,480 a month. Now, I have to add inflation to figure out what the same $2,480 in today’s dollars will be then. I’m using an annual inflation rate of 2.5%. So, the $2,480 in 2023 dollars should be $3,007. Our budget per month for now will be figured at $3,007.
- These numbers are based off conservative estimates from our financial planning.
- We plan to take 4% annually out of our 401K at retirement. Seems like the 4% rule is commonly used in order not to wipe out the principal for a number of years.
- Assumptions we had to make include expecting earnings on our savings to grow at 7% on average until retirement.
- Pensions, earnings from 401K, savings and social security in 2023 is estimated at $3,127 monthly before taxes. Lets assume the amount is subject to state and federal tax. I’ll use 6% for state and 15% for federal for a total of 21% tax. The $3,127 now becomes a net earnings after taxes of $2,470 ($3,127-21%).
Estimated Monthly Expenses for 2023: $3,007
- Expenses include inflation as of 2014.
- We will be debt free.
- So we will be short $537 a month. We could use some accumulated savings to offset the deficit. However, planning to have at least some workamping jobs as paid jobs sounds better. The $537 at $8 an hour requires 67 paid hours each month or 16.75 a week average.
- About two years after going full-time another one of us will qualify for early social security which would more than offset the difference. That’s a decision to be made well in the future.
- It’s likely we will develop a budget by line item well before we retire, then follow the budget month to month. Eventually I would expect we would develop the proper spending habits and hopefully throw out the need to micro-manage our finances. One habit I developed years ago was placing a portion of my income in the back pages of my check book when I was paid. After awhile the total adds up and I move that to some form of investment other than a low interest checking or savings account.
At retirement we plan to sell the house and all the belongings. In our plan the RV, truck or trailer is paid for upon leaving fulltime.
The plan is to save a large portion of what we earn from selling our home to be used when we come off the road for a new home or perhaps to upgrade to a newer RV – our whatever makes since at the time.
That’s our budget plan for now. Most likely will be a different picture before 2023.
I’d appreciate knowing how your budget planning worked out!
Mark from Missouri