Life On A Fixed Income

We've been retired for a little over four years. We also retired early. Not that we wanted to quit working, but we were tired of living separate lives. We lived and worked 300 miles away from each other.

Working in different parts of the state meant we could earn more than the average Joe, but it also meant we were alone a lot. Greg worked many, many hours of overtime, socking it away in our nest egg, while I scoured the area and made a shortlist of the best places for us to retire. It took nearly a year before we found this place.

In the end, it all worked out. If we had it to do over again, I guess with hindsight we would've stayed at our jobs just a little longer, though mine was on its deathbed anyway. Within a year, they would dissolve that entire department.

Our financial planner says we're doing okay, though a part of me wished we could've saved just a little bit more. It's scary living on a fixed income. Any number of things can derail you in an instant.

Health care is taking the biggest bite thanks to the Affordable Care Act. We've talked to several health insurers and they all said the same thing. Once that goes away our rates should go down. Somehow I doubt that. No matter what happens, it's the insured that gets screwed.

We spend 30% of our monthly stipend on healthcare insurance. 30%, people. That's a lot on a fixed income!

Health care is the choke hold on our monthly stipend. And please don't lecture me on how other countries do it or how we have to help each other. Government intervention makes me nervous. I've seen their results here and abroad. No thank you.

When we were working, it was no big deal. We had disposable income to spare. Now, we watch every penny because there is no more coming in.

Aside from health care, there are taxes, house and car insurance, utilities, and food. We've pared down our expenses a lot. We've never been frivolous with money, but now we protect it to a high science.

Are we living close to the bone? I'd say we were comfortable, but not extravagant. All of which comes from forty years of garage sales, clearances, and shrewd negotiating. We buy nothing at full price. At this point in our lives we also need very little except to replace things as they wear out.

We also have to watch for inflation.

Taxes: Once Greg reaches 65, our real estate tax gets locked in, so that's a blessing. As for federal taxes, we used to itemize, but it's hardly worth it anymore. We don't make enough to deduct.

Other Insurance: We can renegotiate our house and car insurance, but Greg would rather pay a little extra and not have to worry about replacements if anything happens to those two things.

Cell Phone: We can and will renegotiate our cell phone service when Greg turns 65 because we'll get an additional discount.

Utilities: There's not much we can do about utilities, except be careful with our usage. I don't leave a room without shutting off the lights. We wear sweaters during the winters and try to limit the use of our air conditioner in the summer.

Internet: That's a killer for us. My internet is slow, unreliable, and expensive. We have very few options out in the boonies. But if Verizon ever moves into our area, we will drop our internet provider in a heartbeat.

Food: The last few months have shown me that food prices are higher than the last time I paid attention so it's time to reassess our needs. There are foods like corn that's not cost effective to grow at home. Instead I'll concentrate on growing high dollar produce like blueberries, blackberries, squashes, and assorted greens. I'm also going to concentrate on more herbs.

Meat is a trade off. We sell our goats which buys other assorted meat and seafood. When I hatch chicks, I raise the roosters for the freezer. We'll also go back to raising quail. They were easy to raise and dress out.

Savings: Believe it or not, we still save a little from the stipend we get every month. Technically, we should have quite a bit more saved up but I've been lax on where those savings were going. Some of it went to emergencies with dogs, vehicles, and home needs, which were substantial for the last two years, but some of it may have been frittered away with tiny inconsequential purchases. Still, we save. My goal this year is to do a better job of it.

When you live on a fixed income you have to be aware of three things.
  • How much do you bring in?
  • What are your expenses?
  • What are your needs?

It doesn't matter if you have a fixed income due to retirement or because your work income is set in stone. It's all the same on a spreadsheet. The trick is learning how to use what you have without living on borrowed money.

Sometimes that means going without. If that seems unfair then check the disclaimer given to you on the day you were born. Life is unfair. There's no point in whining because the other guy has more. That's like looking into someone else's trick or treat bag and discovering he got the better candy. He got lucky. Big deal. Hope he gets a mouthful of cavities and move on.

If I wanted to cut expenses to the bone, I'd move to a smaller house, close to a city so I could get reliable (and cheaper) internet. That would lower expenses on several different fronts. My taxes, insurance, and commutes to the store would be substantially lower. I'd also make money on the deal by selling my much bigger house and trading it for a small one.

So far the idea of living that close to another human being has prevented us from doing anything that drastic. :D I like people, but I don't want to hear or see them outside my door.

It's about choices. We all make them. If things got dire, we'd get jobs. And if that wasn't enough, we'd sacrifice the privacy we covet so much and move back into the city.

There are people who live hand to mouth. That's normal, especially when you're starting out. The thing is, it shouldn't be a permanent lifestyle. If you're still living that same kind of life after forty years in the workforce, then you did something wrong.

Even my father, who worked his whole life as a waiter improved our lifestyle during his productive years. Waiting tables is a hard life and a rickety one because you never know if you're going to have a good day or a bad one. Yet before he died, my parents were able to buy a two story brick home in a Chicago suburb. Let me repeat, he was a waiter. His whole life.

It can be done.

As for me and mine, we worked all our lives with this one goal in mind: to retire while we were still healthy and enjoy the fruits of our labor.

Some things I didn't expect, like the exorbitant cost of health care insurance. For now we're absorbing the cost and hoping it won't go any higher. It would be an idyllic life if not for that, but so far we're managing.

Fixed incomes are nothing to be feared. This is what we do.
  1. Save more than you think you'll need.
  2. Have backup plans if the cost of living spirals out of control.
  3. Start a garden and learn to preserve your food.
  4. Grow your own meat or buy shares in a cow.
  5. Cook at home.
  6. Learn to fix things.
  7. Find ways to entertain yourself that don't require a lot of money.
  8. Budget. That's a given, especially in the early years of a fixed income. You have to know where every dollar goes.
  9. Expect to replace cars, appliances, tools, and even the roof on your house at some point during your retirement years. With luck, these replacements will be few and far between.
  10. Live below your means.
  11. Downsize. We haven't moved to a smaller home, but we have downsized the amount we own. It's liberating. We'll eventually move to a smaller home once we're too old to handle this place, but not yet.
  12. Have good health insurance in place before you leave your place of employment.

In the end, planning is everything. While we can never know what the future brings, we can at least make the transition less bumpy when we have most of our needs covered.

What do you expect from your retirement? Do you think you will retire?


jacabur1 said…
Personally retired from the work force outside of home in 2000 when we moved into the area of Central Texas we currently live. I did however work at home inside and out taking care of my little family and continue to do so inside to the best of my ability even though in a motorized wheelchair.

Now since my MS diagnosis in 2012 and it's progression, which has taken away my ability to drive in the past few years, working outside the home is no longer an option for me and because of the overwhelming fatigue and other by products of the chronic illness working for someone out of our home is an iffy option.

Maria our Hughes Net Satellite Internet has been replaced by an ATT wireless internet that consists of a little box plugged into the house electrical outlet and it works off cell phone towers. Not sure if you could use one or not but it is fast, reliable and at $40 a month for 100 gbs, plus the cost of buying the box, much cheaper than the Satellite we used since 2011.
Lisa Lombardo said…
When hubby retired we went through and cancelled anything we didn't need...including our direct tv. That alone saves us $80 a month. Health care insurance is too high...can't argue that. I tried to find a less expensive alternative without going without insurance and couldn't find anything better.

I'm on a mission to reduce our grocery bills further this year too. Best wishes, Maria.
Maria Zannini said…
Jackie: Thanks, Jackie. I'll see if ATT is available around here. It wasn't the last time we checked, but things change.

You've got a much tougher challenge than the average person. Your only job is staying well. The rest will fall into place on its own.
Maria Zannini said…
Lisa: We sat down with various agents, including one that had a 'health share insurance' for people of faith. In the end, the one we had was the best option. I often think about going back to work and getting insurance that way, but both Greg and our financial planner thinks I should start taking SS. Financially, it makes sense, but it still rubs me the wrong way.

re: groceries
That's my mission this year too. I'm starting with a full pantry and freezer purge.
Rebekah Loper said…
With your home/car insurance, even if you don't switch companies, do call and have your own company do a quote every few years as if you were a new customer. Sometimes how they calculate the rates changes, and just going over everything and your current coverages can find you some extra savings.

I've also noticed food costs starting to skyrocket. I'm determined to get to the point this year or next where we can grow most of our own produce, and hopefully at least some of our meat.
Stacy McKitrick said…
We're lucky in the health insurance department and I'm so glad Hubby stuck it out with the military for 20 years. It has been a life-saver! Once Hubby was forced to take Medicare (at 65), though, it caused our expense to go up (for most people it would go down, so you might have that to look forward to). Now that he's getting SS, it's coming out of there, so we don't "see" it anymore.

I plan on taking SS this year (when I turn 62). If I wait until I was 66-1/2, it still wouldn't be as much as Hubby's survivor benefits are. That was the decision maker for me. I'll take what they'll give me as soon as I can.

Hubby will retire once the house is paid off. We're getting it re-financed at a lower interest rate and expect to pay it off in about 3 years (using our SS and his military retirement checks). Having him retire is still kind of scary for me, but he says we're fine. The financial guy says we're MORE than fine. So I guess I just have to trust them.
Maria Zannini said…
Rebekah: That's a good point about insurance agents. We just started with this guy but I wouldn't mind seeing if someone else could do better. Thanks!

re: produce
If I time it right I'm hoping to be better at succession planting since we prefer to eat fresh over preserved produce. We have to do something to bring down those food costs. They really have skyrocketed.
Rebekah Loper said…
I used to be able to feed me and hubby on less than $200 a month (right after we got married, which HAS been over ten years ago). Now it's a feat to do it on $300. I also hate the forced insurance thing. I'll have to do some investigating to see if we *have* to stay on health insurance for some of the extra coverages we have (critical illness, etc), but even a friend with an autoimmune condition has dropped her health insurance because it's cheaper to pay for her stuff upfront than pay for insurance.
Maria Zannini said…
Stacy: My friends who were in the military have the best health insurance, hands down. I envy them, but then they deserve it. They worked for that.

Had I thought ahead that would've been a great plan for the future, but you never think about being old when you're in your 20s. Back then we had phenomenal health insurance for very little money. It's only in the last 15 years that they've hiked us to death.

re: savings
According to the charts we're in great shape, but I'm paranoid. LOL! I'm afraid I'll live to 120 and not have enough.
Maria Zannini said…
Rebekah: I hear ya! Historically, it would've been far cheaper for us to pay out of pocket than use insurance, but it's that one time when we get some horrible disease that keeps us from taking the plunge.

re: food
I know! I didn't even snap to the higher food prices until we did that No Spend Month in January. I'm keeping all my receipts for a year to see what we're spending. Every month I do a tally. In February, we spent $354. That's insane. I've never spent that much.

The colder months are harder to diagnose because all produce is more expensive, but I'll be interested to see how those same items sell in the summer when they're sourced locally.
Because I'm still a worker bee and won't be looking at retirement for a few more decades *shivers* I haven't had a chance to really understand how the ACA impacts rates. Maybe it will be gone before I have to consider it.

I'm trying to balance saving for retirement, saving for a small pool of funds for college, and living everyday on one income. It's an interesting juggling act, but I'm slowly making progress.

Living on a fixed income can be very scary at times.
Maria Zannini said…
Angela: Because the government has to offset the cost for healthcare, they make it mandatory for everyone to be on some sort of health care or face penalties. The reasons why premiums went up after ACA is multi-level. Every corporation and institution scrambled to get back whatever they had to give to the government until they all ended up in the consumer's pocket. All I know for sure is that since ACA's inception, our premiums jumped from affordable to ouch.

re: college
My sisters became pros at researching scholarship programs for their kids. There are hundreds of them. Piece them together and it made university pretty affordable for their kids. Each of them graduated and found jobs right away.