bill_g wrote: ↑Sun Sep 11, 2022 9:16 am
So, what in your mind is your cost of living?
Every penny you spend is your cost of living. Some expenses are necessary, some are discretionary. Maybe that's what your wife is considering.
My husband retired in 2016 at age 62. Ten years before he retired I created a spreadsheet to track income and expenses so that I would have a handle on what retirement might look like. Think about doing one yourself.
For income, I only included my husband's salary and any other money coming into a taxable account, i.e., money for living on and for investing.
I used Quicken to track expenses, but I was not fanatical about minutiae. I don't know how you can ignore expenses on credit cards. I enter each charge into Quicken so there are charges for grocery stores and streaming video sources, etc. The bank account debited to pay the CC bill offsets the credit to the credit card, so they zero out in Quicken and I'm left with a list of payees.
Because they are large and easily identifiable, I would create a report separating out federal and state income taxes and all the other stuff taken from a paycheck. I also tracked real estate taxes, all insurance payments - house, car, medical, medical expenses, charitable donations, and utilities. I also separated out large purchases for the year, such as automobiles. But all the money spent at Target, Costco, grocery stores, etc? They got lumped into Other. In a sense, they are more discretionary. I have to pay insurance. I have to pay taxes. But clothes, restaurants, etc.? There's more flexibility there.
That summary spreadsheet helped my plan for retirement. I knew some things like retirement contributions and FICA taxes would go away, but I could also see how paying for our own medical insurance would impact the bottom line.
(It shows that I'm a former accountant, doesn't it?)