Real cost of full timing

[mbrower]

I am nearing retirement and would like to RV full time, traveling the country stopping no longer than 30 days in any one area. I'm not frugal but I'm not extravagant either. I don't want to spend my retirement squeezing every nickel until my DNA is permanently ingrained into Lincoln's head. I have crunched the numbers and I feel I would have around 7K dollars/month to start and 3% increase per year for the remainder of my life. These are before tax figures. I think that sounds adequate for a couple with no debt but I know things can add up quickly. I have no interest in working or hosting post retirement at this time so I'm not considering those options. I think I would just work another couple of years if needed. Looking for some real world guidance from people who live the life every single day. Any advice would really be appreciated!

I only want to retire once.

[tjfogelberg]

Clarification on the example I gave of a retired couple with $48,000 of net income...

Husband SS 18,000
Wife SS 9,000
Other Inc 21,000
Total Incom48,000

Federal and State tax will be very close to ZERO! Obviously everyone's
numbers will vary depending on the exact figures, but the tax is small if you go a bit over these figures. (Many retirees have income well below these numbers and don't have to file.)

I see folks jumping through all these hoops to get domicile in a no tax state, but the irony of the situation is that they don't have a tax problem to begin with.

The longer you plan to live, the better off you will be if you wait until Age 65+ to draw social security. Retiring before 65? Try to use other income and retirement funds to live on rather than draw SS at 62. You take about a 25% cut on SS when you start it at 62.

Getting all of this straight in your own situation can make the difference between a low tax stress free existence and a financial nightmare.

(For singles, the same principles apply but the total amount of income tax free is different. ( Roughly SS + $12,000 of other income and that will result in no tax for most folks).

[BarbaraOK]

tjfogelberg wrote:
A retired couple can both draw SS and approximately 20K of other income and pay no (or little) income tax. For the average couple, that translates into about $48,000 of net annual income with no income tax. To the extent you need more than that to fund your retirement, taxes kick in albeit at low rates initially. At some point SS becomes partially taxable.

Uh, we do just about that and pay income tax on both the pension income and also a portion of the SS. I think it is closer to $32K where there is no income tax for two people.

It is advisable to wait until 65+ to draw Social Security if at all possible. (Your benefit amount will be severely cut at 62).

Depends upon how long you think you will live and how much you want to get out and enjoy life while you are physically able to. Much rather do it now while we can than wait until we can't. And you can't transfer your SS to your children like you can an IRA, so keeping the IRA intact longer might be batter all the way around.

[Old-Biscuit]

mbrower wrote:
I just wanted to thank everyone for their input. It's a relief for me to know that there are other RVers going full time with similar budgets or less. Thanks for setting me straight on Medicare. I have a high deductable plan with a HSA that I contribute about 10k a year. My wife and I are fairly healthy and I have been paying most all medical expenses out of pocket. My plan now has a max out of pocket of 8.5K before paying 100%. I figure I can meet max out of pocket about 4 years before I get too concern on similar health plans. Right now I pay about 150/month for my coverage. I need to go about 7 years before Medicare will help. I was really hoping it was 62 🙂

Once again, I really appreciate you guys taking the time to school me on pros and cons of RV living.

What are you going to use as 'domicile' state?
SD,TX,FL are typical for full timers ---- taxes/registration/vehicle ins.
BUT with ACA there are real issues with MED Ins./Coverage when out of state.

Research available coverage so you don't get caught with no coverage cause you are out-of-network

And YES.......debt free and way under 7K while we FTd for 7 yrs.

[Ro_n_Joe]

Thanks to everyone for sharing your information and for the comments! Great info!!! Our target date to full time is in 4yrs.

[mbrower]

I just wanted to thank everyone for their input. It's a relief for me to know that there are other RVers going full time with similar budgets or less. Thanks for setting me straight on Medicare. I have a high deductable plan with a HSA that I contribute about 10k a year. My wife and I are fairly healthy and I have been paying most all medical expenses out of pocket. My plan now has a max out of pocket of 8.5K before paying 100%. I figure I can meet max out of pocket about 4 years before I get too concern on similar health plans. Right now I pay about 150/month for my coverage. I need to go about 7 years before Medicare will help. I was really hoping it was 62 🙂

Once again, I really appreciate you guys taking the time to school me on pros and cons of RV living.

[John___Angela]

We do it on under 4000 per month plus we travel overseas. So yah, 7000 a month would be no problem for the vast majority of people.

[tjfogelberg]

A retired couple can both draw SS and approximately 20K of other income and pay no (or little) income tax. For the average couple, that translates into about $48,000 of net annual income with no income tax. To the extent you need more than that to fund your retirement, taxes kick in albeit at low rates initially. At some point SS becomes partially taxable.

It is advisable to wait until 65+ to draw Social Security if at all possible. (Your benefit amount will be severely cut at 62).

We don't find life on the road that expensive. We budget and find savings at places we can camp free or inexpensively. Food is the same. The RV is paid for. We are not retired, but are "practicing".

The one good thing about the ACA is that folks like you who want to retire pre-65, can be assured of buying coverage regardless of your pre-existing conditions. Depending on your income, you may even qualify for a subsidy. Health insurance is the wild card when you retire pre-65.

Look for a tax guy who can help you crunch the numbers and keep you on track. A little planning goes a long way. Check out naea.org. We are all licensed and dedicated to our profession.

[jmtandem]

Buying a replacement RV or new truck or a future house, is not $350 a month offset by future income, its a $50,000 or $100,000 lump sum deduction from your remaining net worth, never to be replaced. Be sure that your $7k/mon x 12 mon x 25 yrs, has allowed for that.

This is the thinking of so many full time RVers and when the time comes for a new truck or RV the money is not there so they have to purchase with a loan, make payments, and pay interest. Or worse, take a huge chunk from the retirement account that often leads to less monthly money. Had they set aside in their budget the money to replace the unit, then when it's needed to be replaced the money would be there. This is no different than any smart person planning for the future and knowing that someday that future will come and the money will be there for the needed costs. If an RVer wants to call it quits after a certain time period and does not anticipate ever replacing a truck or RV, then banking that replacement cost into the budget might be unnecessary. The OP did not state how long he plans to be on the road but if he is RVing full time for twenty years (since he is in his early 60's twenty years is certainly plausable) there needs to be future costs anticipated and planned for without touching the principal, only using the $7000 monthly interest off the account. Typically, for retired folks RVs and pickup trucks are not depreciating assets, they are depreciating liabilities. They don't gain value. And if you quit before needing to spend that money, you have it for other things or to agument your retirement if that works.

[jrp]

mbrower, I agree that your $7k/mon (pretax) should allow for very comfortable & flexible fulltiming. The major factors that could impact you are your taxes & medical costs. Depending on the sources of your retirement income, your $7k could result in only $5k after taxes. If most of your savings/investments have already been taxed, then taxes wont be as big an issue as they are on tax deferred savings.
If you plan on self insuring for medical before Medicare kicks in at 65, that can be a risk depending on your retirement age, health and lifestyle. I was self insured for 5 yrs, from retirement at 60, until 65.
I fulltimed for 4 yrs and my avg after tax costs were $5,000 per month. I pretty much did what I wanted, went where ever I wanted and bought what ever I wanted. I'm single, so I was only buying for one. Now that I've transitioned to extended time RV'er and snowbird with summer & winter homes, I still spend around $5k/mon.
Like you I had no interest in workcamping. If I couldn't afford to retire, I would have stayed in business making $250k.

PS: depreciation does not belong in your monthly budget costs. its a reduction in your asset values(net worth) and is handled just like market/investment fluctuations and the capital cost of your next house after fulltiming ends (most fulltime for only a few years). Those should all be factored into the top line, before you calculate whether your total savings/investment nest egg allows for $7000 or $5000 per month spending for the next 25-30 yrs. It somewhat depends on your mix of pension/SS payments vs withdraws from your own savings/investment nest egg, but When you transition to primarily living off say $1.5 million in savings that's only going to decrease every year, you've got nothing coming in to refill that pot, your budgeting outlook needs to change and put more focus on your remaining net worth, rather than your short term costs. Buying a replacement RV or new truck or a future house, is not $350 a month offset by future income, its a $50,000 or $100,000 lump sum deduction from your remaining net worth, never to be replaced. Be sure that your $7k/mon x 12 mon x 25 yrs, has allowed for that.

[jmtandem]

I guess full time vacation would be a more accurate description of what I'm seeking. I love my home and plan on keeping it so when my "vacation" finally ends, I plan on returning home and living out my days happily ever after.

One of the bigger expenses is where you stay every night. If you like RV parks then try to get the monthly rate as it can be significantly lower than weekly or daily rates, or as others have suggested the state/federal campsites or in the west there are lots of opportunities to boondock. However, that comes typically with the costs of more amenities like solar, lots of battery capacity, better generator, larger tanks, etc. The full time vacation typically costs more than those that have decided that living in an RV is their thing and do so as they would if they were in a stick and brick; eat in the RV, stay in one place a long time, etc. Trips to Alaska, for example, can add to the budget. You only live once, go for it!!! If it costs too much trim some expenses. Starting out with a new truck that is reliable and also under warranty should financially cover you in that area for the first five or so years. You won't be looking at any major expenses in that area.

[Ivylog]

OP, keeping the house is going to use up a fair amount of the $5500 after tax dollars unless you rent it out... Likely a area of new problems. Unless you are willing to get rid of the majority of your stuff, including the home... maybe you should start out as half timers. At home Spring and Fall in NC, Winter South and Summer West. This is what we do as there is no way I could get rid of all of my stuff plus the grandkids are here... Happy wife.....

Does not sound like you have a Roth IRA so cashing in your retirement will be expensive increasing the real cost of a new truck and trailer. I would suggest keeping what you have and start out as half timers and see how it goes. After a couple years you will have a better idea of what will work for you and the DW.

* OP, In reading your posts I get the feeling that like me you are hands on. Without a home base of operations it will be hard to fix things yourself. Being at the mercy of someone else fixing things would drive me up the wall.

[tragusa3]

We live in a larger/nicer than average home on acreage, have two vehicles, a TT, raising two boys, vacations, saving for retirement, insurances, and on and on...and we do it all on about $7k per month with no debt. I would sure hope that I could make it just the two of us in an RV with the same money!

FWIW, I am 12 years out from retirement and planning to do it with about $3500/mo. plus some work camping. Not sure if it will work, but everything else that I've not been sure of has figured itself out along the way. A large part of making things work is how "adjustable" you are. We're very adjustable...there's been years that we've put a complete lockdown on finances in order to get back to our safe area. Some/most people can't do that.

[gbopp]

rv2go wrote:
I don't think that I could spend $7,000 a month if I wanted too.

Call my DW, she will teach you. 🙂

[dahkota]

We full-time on less than 7K per month, including insurance and taxes.
We have a fixed budget, about $2500/month, which includes taxes, health and rig insurance, phone, satellite, rig mortgage, etc.
We have a fluid budget, about $3500/month: food, campgrounds, fuel, maintenance, and entertainment.
We have a savings budget, about $500 per month. This goes towards major expenses if they should arise: major medical, major repair, etc.

The fluid budget changes but we have a general outline for spending. When one category gets high for the month, we cut back on another. For example, gas was very expensive through Canada on our way to and from Alaska, but we made up for it with boondocking and cooking at home. In Florida this winter, our campground costs will be high but we will use less fuel.

So far, it has worked for us, even after our first year victory lap (seems everyone has one) and our second year trip to Alaska. Starting into our third year, we are finally slowing down which will cut down a lot on our fuel; the current gas prices don't hurt either. Since we prefer state and federal parks, our campground fees won't go down. We have months where we go over budget (Alaska) but we also have months we are under budget; over the course of a year, it all balances out.

Before we went full time, we fully expected spending a lot less than we do. Campground prices have gone up consistently but gas prices have gone down. Food varies by region as does dining out but both have been rising. Since we have some measure of control on our expenses in all these categories, it is pretty easy to control the budget. We eat lunch out instead of dinner. We get movies from redbox instead of going to the theatre. We spend time in smaller towns rather than big cities and take day trips into high priced cities.

We expect to finally 'settle in' now that the newness is wearing off and we no longer feel compelled to 'see everything.' That is the hardest part of the first year and why I think many people fail; it is so new and novel, it is treated like an endless vacation. From experience I can say that a never ending vacation is exhausting, both mentally and physically (and exhausting on the budget, too). But, allow yourself the victory lap - save up extra for it. It will allow you to learn your likes and dislikes on the road and to prepare for the next few years of full timing.

We have two years under our belt and it is has gone entirely too fast. Occasionally we discuss when we will stop but the idea always depresses us, so we stop discussing it. We are 49 now and currently expect to full time until we are bored. We don't anticipate getting bored for the next few years.

Advice: Enjoy and don't over plan. Be flexible, open, and positive. Know how to use duct tape to repair anything. Carry lots of duct tape.

[mds1]

For our type of travel we are planning on $36,000 a year after taxes (in present dollars). Earned income is taxed in retirement. I'm no tax expert but what I understand is if you did not contribute the money that is in your retirement plan, earn income while retired from paying jobs or take from an IRA/401K then it's taxed by at least the federal government. States vary on this.

Our planned style of travel includes earning $6,000 a year or working for a camping spot to meet a budget deficit. We plan to make use of monthly camping discounts. The $6,000 is part of the $36,000 a year budget.

I used the budgets from two other longtime fulltimers to come up with our budget. However, one of the major unknowns is what health insurance is going to cost.

I am also under the impression Medicare does not kick in until age 65. At least that's the case for me (I'm 52 now) and my wife who is 60 years of age.

We are not retiring until 2019 so I added some inflation to our budget. We are also keeping some of our money to buy another house or ungrade our RV if we stay on the road longterm (more than 6 years). I did not budget for the RV's depreciation which is a cost if you think about it.

You may also be aware social security benefits are reduced if your earned income is higher than around $15,000 each year. I'd have to check on what the current limit is.