A $500 a Month Retirement Budget

Jacob at Early Retirement Extreme recently posted an example $500 a month retirement budget.  It is displayed below.

  • Rent $200-250
  • Health insurance $75 (get the cheapest possible and stay healthy!)
  • Food $50-75
  • Transport $0-$75
  • Utilities $25-100

I found this very interesting because I’ve been making over $500 a month in alternative income lately.  If I could get my budget down to $500 a month I could “retire” and live off my alternative income.   Here is one possible budget.

  • Rent $250
  • Health Insurance $70
  • Food $75
  • Transportation $25
  • Utilities $80

It is possible to rent an apartment for $250 in some areas.  I think there are even some place in KC that rent that cheap but I wouldn’t want to live there.  A better alternative is to move to a small town or live with a roommate. The health insurance is what I actually pay now.  The food budget would require a little more self-discipline on my part.  I used to spend about $100 a month on food and if I were to cut out fast food I could get that down to $75 or lower.  The transportation cost is for an occassional bus or giving a friend gas money for a ride.  Ideally I would live somewhere I could walk to most places I needed to go.  The utilities expense of $80 would include a phone.  This amount would vary somewhat but an average of $80 seems easily achievable.

An alternative would be to live in Guatemala (or any low-cost country) for part of the year.  Or to spend several months hiking.  Both would allow me to live on about $300 a month.  A possible budget would be.

  • Rent $100 (if hiking would be for hostels, hotels, showers, etc.)
  • Food $75 (would probably be more while hiking)
  • Health Insurance $70 (this would be the same although I could consider going without in Guatemala since health care is so cheap there.  I wouldn’t want to take the chance of being uninsurable upon a return to the U.S. though.)
  • Miscellaneous $55 (entertainment, postage, gear replacement, transportation, etc.)

The $300 budget would allow me to spend a little extra when visiting the U.S. or not hiking.  Some of the difference would have to go airfare to get to Guatemala or transportation to and from the trailheads but the savings would more than make up for this amount. These budgets might seem a little extreme but based on my experiences living in Guatemala and hiking long distances I’m confident that they are feasible.  I’m planning on doing a $200 a month hike for several months next year.

For now though these budgets are just musings but after I get out of law school they could very well become reality.

17 thoughts on “A $500 a Month Retirement Budget”

  1. very interesting TFM. But just curious as to how you would repay any law school loans?

    Also would your lady friend be up for the extreme lifestyle that this budget would entail?

  2. Under the repayment plan I’ll be signing up for my law school loan payments would be capped at 15% of my income above 150% of the US poverty level. At $500 a month I wouldn’t have any income above poverty level and my payments would be zero.

    There is about zero chance my GF would go along with these extreme budgets. She is willing to let me go on a long distance hike but I’m not sure she would like me doing that every year and I wouldn’t want to be away from her for that long every year. That makes these budgets just interesting exercises for now but things might change.

  3. Have you considered retiring in one of those quiet missouri university towns. I went to school in such a town and I could definitely guarantee you that you could get an apartment with heating and water included for $250/month there (your only cost would be electricity for $30/month).
    Everything was within walking distance and there is always a lot of cultural activities to do for free. The only issue is that going to Wal Mart requires a car but it was closer than waht it is in KC for you.

  4. Nice budget. I love seeing how little I, and other people can live on. I will be very interested to see how your hiking months turn out next year.

  5. Good post.
    I’m not from the US (UK person here) and I have worked out that $500 is around £280 or so and that sounds pretty brilliant to me.

    How would you include entertainment/going out in the budget?

  6. Try giving up the health insurance. you don’t need it. I live part time in Nicaragua. Recently my wife had to go to the ear,nose,troth specialist $15. I had 128 skin taks removed cost $150.00. a hospital private room is $50.00 per day. Dental is really cheap as well cap removed repaired and replaced theeth cleaned total $16.00
    quit sending HMO exec’s on vacation and you can live fine on $500.00

  7. Darvin- Since I still live here I need the health insurance. I’d consider giving it up if I permanently moved to a foreign country. When I lived in Guatemala I got a filling for $13 so I know health care costs can be much lower in Central America.

  8. You don’t need Medical Insurance. My grandfather lived to be 98 years old, smoked cigars, drank whiskey his entire life, ate fried food and real butter all his life, Never ONCE Went to the doctor for anything.

    In America let’s say you hurt yourself by accident. All you have to do is go to the Emergency Room and they MUST treat you even if you have no insurance. Just sign the papers and they will treat you and send you a bill. When the bill arrives just DONT PAY IT. There is NOTHING they can do. Hospitals write off billions of $$$$ each year in unpaid medical bills. It’s not a big deal, everyone does it.

    If you need something small such as dental or eyecare then fine, pay it in CASH out of your own pocket. It’s a lot cheaper than paying $75 a month to some insurance company that’s NOT going to cover you anyway or that will require a $500 deductible anyway.

  9. I have actually figured out how to live overseas on $400 a month. The key is to find countries that are affordable and than than to live in places out of the toursit path and out of the expansive areas in those countries. I’ve been to Eastern Europe, Asia, Africa, and Latin America. I would highly recommend eliminating Africa from your list because it lacks safety, has momments of uncontrolled inflation, and many diseases. I found places in India that were very cheap but India has many hygeine and sanitary issues. You also have to be selective in Latin America for safety and in Eastern Europe their are pockets of rampt corruption. In Eastern Europe it’s also helpfull to learn the languages. The countries I actually liked In Latin America Belize, Nicaragua, Peru, Venzuela and Suriname. The key in all of these areas is to go to the smaller cities and villages and enjoy the nature hiking and local products. In Europe the places that are the friendliest and cheapest are the villages in Albania, Bosnia, Kosovo, Kazakhistan and Azerbajain also again go to the villages.
    In Asia the best places where the locals were helpful and nice Syria, Pakistan, Laos, Vietnam, China and Indonesia you can find lots of neat little places that also offer nice hiking, cheap medical services and lots of fun. My Budget for living overseas are as following
    Rent $130 this should include utilities
    Health Insurance $0 Just pay for any medical u get done but save $30 a month for it.
    Food $45
    Transportation $25 local and save $60 for airfare and visas each month so in a period of two years you’ll have ($1440)
    Entertainment and extras $10
    Savings or extra needed cash for emergencies or bigger expanses $100

    For living in the USA I have found the best places in small towns or villages and also in mid size poorer cities with a roommate.
    For a small town or village many people will allow you to rent a room in their place or u can rent a room with a shared bathroom in the hall in many midsize cities. Try to walk more and shop at aldis price rite and buy from local farms and try to modify your diet by eating more pastas rice eggs and buy a water filter. Also u can get tons of stuff at the dollar general for cheap as far as health insurance goes don’t worry if u ever have an emergency just go to er they’ll take care of u even if u have no insurance.
    Rent with utilities $350
    Food $75
    Transportation $25
    Extras $50

  10. It’s odd that I found this while figuring out the cheapest amount I can live on is. $500 seems rather extreme to me, but Canada (Toronto) doesn’t have really accommodations. I have been looking at moving to argentina for 4 months of the year and you’re right, it can be done for about $300 a month.

  11. Living on $500 a month is extreme. It isn’t something I’ve ever been able to do on an extended basis but there are those who do manage to do it. Your location does have a big effect on what your total living costs will be.

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