How to Live on $1400 per month
What is so magical about $1400 per month? Why did I choose that number?
Well, this is the average social security benefit that Americans will receive in retirement in 2018.
And given that 40 million households have ZERO savings for retirement right now, including 30% of households where the main breadwinner is 55 or over,
…this could be the only source of money many people will have to live on in their retirement years.
…but can a person live on just $1400 per month?
The answer…is YES and
…In the next 3 minutes, I am going to tell you how.
In many parts of the world, people would jump with joy if they could get their hands on a steady $1400 per month.
…you could almost live like a king in countries like Panama, Philippines, Nicaragua, Armenia, and Grenada on that income.
Many American Expats do live in these countries happily.
But living in these countries, you may give up some things that you take for granted here in America
Things like great healthcare, 1st amendment freedoms, corruption, language, and American culture.
So, I am going to presume that you have a strong desire to remain in the United States.
I am also going to presume that you are retired, but under the age of 65, so you do NOT qualify for Medicare yet
…so you have to buy your own medical insurance. The good news about that is that you can get very good low cost medical insurance through the Obamacare or ACA marketplace.
I am also going to presume you are single, and are a family of one.
The first thing you should do is move to a low costarea of the country. This can save you significant money.
For example, someone in Atlanta, Georgia can have almost the same lifestyle on half the income as someone living in San Francisco, California.
Your income at $1400 per month, will be $16,800 per year,
At this level, you will owe no federal tax.
And in addition, in most states, you will not pay any state income tax either, so you don’t need to move to a state that has 0 income tax.
You should just move to a state with really low cost of living.
Here are the 5 statesthat have the lowest overall cost of living as of 2018.
And these have not only low housing and food costs, but also low services cost, so things like car repair, plumbers, are also cheaper:
1) Ohio
2) Indiana
3) Iowa
4) Michigan
5) Nebraska
The first 4 states will not tax your social security benefits, so let’s eliminate Nebraska from the list, because they will tax you.
So first things first, move to one of these states.
Now let me propose a budget for you, based on moving to a low cost city in Ohio – like Youngstown:
• ($500) Housing
• ($300) Food (at home and away)
• ($250) Utilities, internet, phone
• ($200) Transportation (car loan and gas)
• ($100) Car insurance and renter’s insurance
• ($50) Medical Insurance (with ACA subsidy)
• ($0) TV – use digital antenna
These are real costs based on the available information for 2018,
You will notice that this doesn’t leave you with a whole lot for other things like entertainment and travel.
But if you can save money on any of these budget items, that will just leave you with extra money to spend.
For example, if your car is paid off, you can save a big portion of that $200/month expense.
If you can buddy up with someone and share housing expenses, that could be a significant savings from $500/mo.
If you are like the average household in America that has $40,000 saved for retirement, you can invest this money and use the dividends and interest for extra income.
If I had $40,000, I would put it in a really safe mutual with a history of low volatility and great return – like Vanguard Wellesley Income fund.
If you are invested in this fund for example, you can safely take out an average of about 4% per year for the rest of your life without ever touching the principal.
So this would add about $1600 per year, or about $130/month to your income, which you can spend for entertainment or use any other way.
So there you have it.
If You have been dreading the thought relying solely on your Social Security budget for retirement, know that it can be done.
And I wish you great retirement. You’ve worked hard all your life – and you deserve it!
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