How can people afford expensive cruises?

[pcur]

You have to work with a worst case scenario, which would be about a 5% annual return--or potentially less requiring you to draw from principal. On a million, that's only $50K a year, with taxes to be paid on some of that. The nut just to pay the utilities, insurance, HOA, property taxes, lawn care, pest control, and basic maintenance (not including the biggies like repainting the house every 8-10 years) runs us about $1500 a month. That doesn't include the mortgage, which will be paid off before we retire.

 

Add in the cost of insurance and maintenance on the cars (assuming no new car purchase or major repair is required), medical care and supplemental policies (assuming we remain healthy), food and sundries, the occasional clothing purchase, and a bit for entertainment, and there is not much left for travel or charitable donations. This is in today's dollars, and we anticipate that in our lifetime we'll see those expense multiply by four, if not more. This is why many who think they will be fine in retirement are in for a rude awakening. They are not planning for inflation or market crashes.

Autocorrect responsible for most typos...

 

We are in retirement, and our expenses aren't that high. We live in a fairly new home in an upscale neighborhood. Our average monthly cost of the items you list above (excluding HOA) and INCLUDING mortgage is about the same, maybe a little higher. We might sell and buy a smaller place for cash, but that's not for several more years.

 

Our car insurance on 3 cars is $115 a month, and my husband does all our car maintenance, bless him, and just replaced the brakes and shocks on our 2006 Acura TL. Our health insurance in addition to Medicare Part B deductions from SS is $50 a month (great coverage, too).

 

I have estimated some of our expenses will increase, but have found that several have DECREASED since we retired. Car and house insurance have both gone down after age 55 and with no claims. Our health insurance costs alone have gone down so dramatically with Medicare that the savings alone will pay for a cruise each year!

 

Some expenses stay stagnant in retirement: house payments, for instance.

 

It is entirely possible to live on a middle income and still travel several times a year.

[ducklite]

We are in retirement, and our expenses aren't that high. We live in a fairly new home in an upscale neighborhood. Our average monthly cost of the items you list above (excluding HOA) and INCLUDING mortgage is about the same, maybe a little higher. We might sell and buy a smaller place for cash, but that's not for several more years.

 

Unfortunately ours is what I said it is. Our insurance is over $200 a month alone.

 

Our car insurance on 3 cars is $115 a month, and my husband does all our car maintenance, bless him, and just replaced the brakes and shocks on our 2006 Acura TL. Our health insurance in addition to Medicare Part B deductions from SS is $50 a month (great coverage, too).

 

I have estimated some of our expenses will increase, but have found that several have DECREASED since we retired. Car and house insurance have both gone down after age 55 and with no claims. Our health insurance costs alone have gone down so dramatically with Medicare that the savings alone will pay for a cruise each year!

 

Some expenses stay stagnant in retirement: house payments, for instance.

 

It is entirely possible to live on a middle income and still travel several times a year.

 

Our car insurance runs us $200 a month for our three cars--this was after our broker shopped around and found us a better deal. One is a sports car that we may or may not keep into retirement, depending on if we can get in and out of it--it rides very low to the ground ;)

 

Even with a "Cadillac" health care plan, we've had a lot of medical expenses this year. I've had two sports injuries and my husband had to have a root canal. There is just so much that insurance covers, and our out of pocket has been in the thousands.

 

We will have our house paid off before we retire.

 

The only payment we currently have that we should see go down after we retire is possibly our cell phone bill, as we will most likely drop to a lower minute plan.

[pcur]

Unfortunately ours is what I said it is. Our insurance is over $200 a month alone.

 

 

 

Our car insurance runs us $200 a month for our three cars--this was after our broker shopped around and found us a better deal. One is a sports car that we may or may not keep into retirement, depending on if we can get in and out of it--it rides very low to the ground ;)

 

Even with a "Cadillac" health care plan, we've had a lot of medical expenses this year. I've had two sports injuries and my husband had to have a root canal. There is just so much that insurance covers, and our out of pocket has been in the thousands.

 

We will have our house paid off before we retire.

 

The only payment we currently have that we should see go down after we retire is possibly our cell phone bill, as we will most likely drop to a lower minute plan.

 

We also have a sports car, and since it's open-top it only gets driven a few thousand miles a year. That reduces the insurance. I found all of our insurance (with State Farm) started to drop the older we got.

 

I forgot about dental insurance! We have Delta Dental and have had it for about 15 years. We pay about $150 a year for the two of us, just went to the dentist yesterday for our check-ups for $40 total, and what I really like about it is it doesn't have a maximum benefit per year. I know what you mean about dental: seems our teeth starting falling apart around 55 - 60. Maybe it's nature's wake-up call, but it was a shock. We had to shell out thousands also in a 2 year span, but all is good now with battery operated toothbrushes!!

 

We have Kaiser Senior Advantage health insurance. There are others available for the same price: around $50 or less per month per person.

 

Speaking of cell phones, I switched to Consumer Cellular with an AARP discount. We aren't huge users, and our bill with data, text, and voice minutes is around $48 a month.

 

What I'm trying to point out, and not just to you, is that with homework and planning, the regular expenses can be reduced in retirement without lessening the quality of life. Those savings can be diverted to travel.

 

I am a hound dog about airfare, too. I have used new credit cards with bonus points (paying the balances off every month; we never carry a balance) to get our airfare in the last year and next year for thousands in savings.

Edited November 15, 2013 by pcur

[kelmac]

--Live in a Condo that is paid for.

--Have three cars, all paid for (2010 Smart Car, 2004 Elantra, 1998 Nissan Truck.)

--No children

--No pets

--No house plants

--We collect experiences, but not "stuff"

--We travel 10 -- 12 weeks of the year (2 -- 4 cruises in the mix)

--We embrace inside cabins and stay close to $100 pp/pd

--We use Hotwire, Priceline and many free flights w/Southwest Airlines

--We have a yearly evacuation Insurance plan, and skip Cruise/Travel insurance

--We don't have expensive habits; No church

--We bargin shop

--We have Cable, Highspeed Internet, cellphones.

--We eat out 70% of the time

--I play golf 2 or 3 times a week

--I'm retired w/pension + small P/T job. My wife is a High School Teacher

--We spend 50% of our income on travel

 

Priorities, I guess?

 

Enjoy!

Kel:)

 

--

[pcur]

--Live in a Condo that is paid for.

--Have three cars, all paid for (2010 Smart Car, 2004 Elantra, 1998 Nissan Truck.)

--No children

--No pets

--No house plants

--We collect experiences, but not "stuff"

--We travel 10 -- 12 weeks of the year (2 -- 4 cruises in the mix)

--We embrace inside cabins and stay close to $100 pp/pd

--We use Hotwire, Priceline and many free flights w/Southwest Airlines

--We have a yearly evacuation Insurance plan, and skip Cruise/Travel insurance

--We don't have expensive habits; No church

--We bargin shop

--We have Cable, Highspeed Internet, cellphones.

--We eat out 70% of the time

--I play golf 2 or 3 times a week

--I'm retired w/pension + small P/T job. My wife is a High School Teacher

--We spend 50% of our income on travel

 

Priorities, I guess?

 

Enjoy!

Kel:)

 

--

 

Looks good to me!!

[ducklite]

We also have a sports car, and since it's open-top it only gets driven a few thousand miles a year. That reduces the insurance. I found all of our insurance (with State Farm) started to drop the older we got.

 

Same with ours, less than 1500 miles a year, but it's still the most expensive car on our policy.

 

I forgot about dental insurance! We have Delta Dental and have had it for about 15 years. We pay about $150 a year for the two of us, just went to the dentist yesterday for our check-ups for $40 total, and what I really like about it is it doesn't have a maximum benefit per year. I know what you mean about dental: seems our teeth starting falling apart around 55 - 60. Maybe it's nature's wake-up call, but it was a shock. We had to shell out thousands also in a 2 year span, but all is good now with battery operated toothbrushes!!

 

We have Kaiser Senior Advantage health insurance. There are others available for the same price: around $50 or less per month per person.

 

Speaking of cell phones, I switched to Consumer Cellular with an AARP discount. We aren't huge users, and our bill with data, text, and voice minutes is around $48 a month.

 

We have our in-laws in our family plan, plus our son, plus we both need the phone for work, plus I have an iPad with cellular, you would choke to,learn what our bill is, but like I said, I would expect that it will be chopped to about 1/3 after we retire. We are very happy with Verizon and will probably stay with them as they have great international coverage and rates.

 

 

What I'm trying to point out, and not just to you, is that with homework and planning, the regular expenses can be reduced in retirement without lessening the quality of life. Those savings can be diverted to travel.

 

I am a hound dog about airfare, too. I have used new credit cards with bonus points (paying the balances off every month; we never carry a balance) to get our airfare in the last year and next year for thousands in savings.

 

The biggest expenses are related to our home, and they simply aren't going to drop. If anything they will rise as we will need to hire people to take care of things we are able to do on our own now. Frankly I'm not worried about it as we are on track to have well over $2M liquid when we retire. I am not worried about us, but I would sure be worried if I were the average American with only about $200K in savings at retirement. That isn't going to fund the basics, let alone pay for travel. Anyone who thinks it will is living a fool's parade.

 

PS--I am loyal pretty much to one carrier as I have the highest status level with them and get a lot of perks along with that, including long haul upgrades to first class plus unlimited domestic upgrades to first. Sure I could save a few bucks flying some cut rate carrier with no guarantee of the seat I want, sitting next to my husband, nothing. I'd rather spend the extra and get the premium seats where we want to sit and arrive fresh,a well rested, and not feeling like I've been twisted into a pretzel for 10 hours. I am currently sitting on about a million miles which I am saving for Australia and perhaps South America.

 

 

Autocorrect responsible for most typos...

[ducklite]

Some work for entities that provide a lifetime pension. In my situation, I'll receive 3 pensions plus my 401K plus an IRA that I have squirreled away. Not everyone has to have millions in an account to retire well. You sound as if your situation is the best one. This is not the case. It all depends on what you have left after all the expenses are paid. You have champagne taste and must have a champagne budget to support it. I have Asti Spumanti taste and we budget for it. Please don't assume "average" Americans have $200K in a retirement fund and that's it. You really don't know anyone's retirement needs except for your own.

 

Many pensions have either gone belly up or have significantly reduced expected/promised benefits. Just like SS, they should not be counted on down the road. I didn't pull the number the average American has in retirement savings out of thin air. Here is an article worth reading: http://www.mybudget360.com/epic-crisis-retirement-median-retirement-amount-americans-average-savings/

 

Just do a Google search and you will quickly learn that the majority of retires in this country will be facing a critical financial crisis over the next decade or two because they depending on revenue streams that will not keep up with inflation or that have disappeared.

 

It has nothing to do with "Champagne tastes" and everything to do with the grim reality that many retirees will face. They will run out of money. Period.

 

 

Autocorrect responsible for most typos...

[Sailor_Sally]

Many pensions have either gone belly up or have significantly reduced expected/promised benefits. Just like SS, they should not be counted on down the road.

.

 

 

The Two million in liquid cannot be counted on either. I retired in 2008 and my very large stash shrunk during the meltdown by 32% . The only thing that saved my sanity was cutting back and my federal pension which stayed strong .

[pcur]

Many pensions have either gone belly up or have significantly reduced expected/promised benefits. Just like SS, they should not be counted on down the road. I didn't pull the number the average American has in retirement savings out of thin air. Here is an article worth reading: http://www.mybudget360.com/epic-crisis-retirement-median-retirement-amount-americans-average-savings/

 

Just do a Google search and you will quickly learn that the majority of retires in this country will be facing a critical financial crisis over the next decade or two because they depending on revenue streams that will not keep up with inflation or that have disappeared.

 

It has nothing to do with "Champagne tastes" and everything to do with the grim reality that many retirees will face. They will run out of money. Period.

 

 

Autocorrect responsible for most typos...

 

Following retirement related articles has been an interest of mine ever since I started getting serious about it 20 years ago. I have found that while most of what is written makes a lot of sense, the statistics are skewed in favor of leaving large amounts of money to heirs. I'd love to do this for my two sons, but there are no guarantees it will happen.

 

Husband and I have one small pension each, both of which will be covered by the Pension Benefit Guaranty Corporation (PBGC). The PBGC now guarantees up to $57,000 a year for a single employer pension if it goes bankrupt.

 

I have been reading about what's happening to the SS fund for about 20 years, too. I expect those of us collecting now will not have benefits affected, except our annual COLA will be miniscule. Making up the difference will come out of our retirement savings. We have a reasonable amount there.

 

When one of us passes before the other, then liquidating our assets (house, extra cars, etc.) will beef up the retirement savings, and the survivor will live off that to supplement the loss of the deceased spouse's income. Downsizing will be required, but neither of us wants to live in a 2,400 sq ft home alone. We'd rather move close to one of our sons.

 

I have all these scenarios in my planning spreadsheet. We laughingly refer to it as the "MSS": Magic SpreadSheet. :D

 

Meanwhile, senior discounts, bogo coupons, airline miles, etc. is the way we go, not because we have to, but because money saved now is money for travel and for later. If it ends up giving our sons a helping hand later, then that's just gravy!

[ducklite]

The Two million in liquid cannot be counted on either. I retired in 2008 and my very large stash shrunk during the meltdown by 32% . The only thing that saved my sanity was cutting back and my federal pension which stayed strong .

 

Which is why we are over estimating the amount we will need and have our money in diversified investments that range from FDIC protected IRA CD's to stocks to bonds to cash.

 

 

Autocorrect responsible for most typos...

[momofmeg]

The Two million in liquid cannot be counted on either. I retired in 2008 and my very large stash shrunk during the meltdown by 32% . The only thing that saved my sanity was cutting back and my federal pension which stayed strong .

 

Ours went way down in 2001 and some in 2008. We also cut back on our spending a good bit. (we were bad to nickel and dime money away on useless junk, now we plan purchases) We have made the money back and then some, but as you said we can't really count on our retirement; it could happen again.

 

But getting back to what this thread is about-I am thinking for many people whom are middle income-these world cruises could be a once in a lifetime type trip that they know they cannot repeat. I hope so anyway and that no one is foolish enough to blow their retirement.

 

However, as I mentioned earlier I would love to just once stay in Europe for several months and take several trips while there from a main base somewhere in England. Why? because flying is really rough on me-it would be nice not to take a long flight but once getting there and again coming home. But while there, I could do a Baltic, do trips to Ireland and Scotland and maybe even go back to the Med.

 

I would love to go to Australia too, but the long flight stops me. Even if I took a few days break in Hawaii or Japan, it would be too hard I feel on me, and I know doing all that would be major $$$-so it will never happen.

Edited November 16, 2013 by momofmeg

[ducklite]

Following retirement related articles has been an interest of mine ever since I started getting serious about it 20 years ago. I have found that while most of what is written makes a lot of sense, the statistics are skewed in favor of leaving large amounts of money to heirs. I'd love to do this for my two sons, but there are no guarantees it will happen.

 

Husband and I have one small pension each, both of which will be covered by the Pension Benefit Guaranty Corporation (PBGC). The PBGC now guarantees up to $57,000 a year for a single employer pension if it goes bankrupt.

 

I have been reading about what's happening to the SS fund for about 20 years, too. I expect those of us collecting now will not have benefits affected, except our annual COLA will be miniscule. Making up the difference will come out of our retirement savings. We have a reasonable amount there.

 

When one of us passes before the other, then liquidating our assets (house, extra cars, etc.) will beef up the retirement savings, and the survivor will live off that to supplement the loss of the deceased spouse's income. Downsizing will be required, but neither of us wants to live in a 2,400 sq ft home alone. We'd rather move close to one of our sons.

 

I have all these scenarios in my planning spreadsheet. We laughingly refer to it as the "MSS": Magic SpreadSheet. :D

 

Meanwhile, senior discounts, bogo coupons, airline miles, etc. is the way we go, not because we have to, but because money saved now is money for travel and for later. If it ends up giving our sons a helping hand later, then that's just gravy!

 

We are 15 years from SS and expect it will become means tested so thee who bothered to save for retirement will get nothing while those who lived large will get a small monthly check. If it is there for us, it will mean more play money. If not, we will have other means to support ourselves.

 

Also, as many retirees have seen, while pensions themselves might not be cut, the other benefits that had been promised could be compromised, such as health care and other insurances.

 

As you pointed out, pensions will likely not have COLA that they once enjoyed, and what might be a nice $1800 a month pension now will not begin to cover expenses as a $1900 pension in 2025.

 

 

Autocorrect responsible for most typos...

[ducklite]

It really does depend from where the pension originates. I would agree with private sector pensions, but not with military and federal service pensions.

 

Also, 2 million bucks may be peanuts in 20 years. One just never knows. It used to be a million dollars really was a fortune. Now it's a modest house in Orange County, California.

 

Don't be so sure that they are untouchable. Look at Detroit as an example, and one of the NY pension funds changed police pensions a few years back so they will pay out far less than what was expected.

 

If $2M is peanuts, what of those with $50K? They will be living in boxes.

 

 

Autocorrect responsible for most typos...

[pcur]

I would love to go to Australia too, but the long flight stops me. Even if I took a few days break in Hawaii or Japan, it would be too hard I feel on me, and I know doing all that would be major $$$-so it will never happen.

 

It's really not that bad. We booked a cruise a few years ago that went from Hawaii to Sydney, then stayed on the ship for a circumnavigation of Australia. Now that was indeed a trip of a lifetime, but it just gave us a taste for longer and more interesting cruises.

 

We flew to Hawaii from the mainland, stayed there a few days pre-cruise, and then flew JetStar business class back to Hawaii from Perth. Virgin Australia has reasonable business / first class to Hawaii, too.

 

This year we drove to Los Angeles and got on the Star Princess. We went 28 days to the South Pacific. Princess does a lot of long cruises from Florida or CA through the Panama Canal, South America, Mexico, all over the Pacific, to Australia. They are good about customizing cruise itineraries so you take partial transits.

 

You don't have to fly long distances to get a great long cruise, if that's what you want.

 

We like this. Our Australia cruise was 33 nights, and Princess was 28. The best way to find them is to sign up for emails from all your favorite cruise lines (if you haven't already).

[Sailor_Sally]

Which is why we are over estimating the amount we will need and have our money in diversified investments that range from FDIC protected IRA CD's to stocks to bonds to cash.

 

 

Autocorrect responsible for most typos...

 

I was well diversified and still lost 33% . The only people that were safe then were 100% cash .

[pris993]

We don't take the most expensive cruises - took 1 Crystal cruise years ago and did not feel the extra expensive was worth it to us. Even so we still spend as much as $8K or $12K on one trip for the two of us, including cruise, air and other expenses. We consider this a lot of money.

 

We are debt free, don't own a house, pay rent. We decided to travel vs invest in property because we decided we could not do both living in California. Our kids are doing well, and own their own homes.

 

We are retired. When we worked my DH was a skilled carpenter and I worked as a Staff Specialist for the govt. We have been retired now over 15 years. We generally take 2 cruises a year. We do Mediterreanan, TAs, Mexico, and Carribean cruises generally. The European trips are the ones that cost us the most. We balance expenses by doing a European trip and a Mexican trip in the same year. We can do Mexico with no air and not hotels. TAs are a bargin too. We use air line points when we can for air on TAs.

 

We book ahead and save. Presently we are booked on HAL for a TA in April, then Celebrity for a cruise out of Rome in October and then a Mexican cruise in 2015 on Princess.

 

We do like balcony or mini suite cabins. For those who are satisfied with a inside it is possible to cruise for less.

 

We cruise a variety of lines: Princess (22 cruies), HAL (6), Celebrity (10), Cunard (2), NCL (3). So we shop around for the best itinerary for us and costs.

 

I also work part time making about $10K that goes to our travel budget. Fun money.

 

We live simply, we don't eat out and run around a lot. Cruising/travel is our priority.

 

Suspect folks who do cruise on the more expensive cruises are rich, we aren't obviously. We are grateful that we can do what we do and we have been cruising since l980s.

[ducklite]

I'm going to start calling you Eeyore! :D

 

I'd rather be Eeyore with a roof over my head and food in my belly than ever an optimist in a box.

 

 

Autocorrect responsible for most typos...

[ducklite]

I was well diversified and still lost 33% . The only people that were safe then were 100% cash .

 

I was 85% cash and 15% bonds. I read the market and pulled out a couple months before the crash. I lost nothing.

 

 

Autocorrect responsible for most typos...

[ducklite]

 

Suspect folks who do cruise on the more expensive cruises are rich, we aren't obviously. We are grateful that we can do what we do and we have been cruising since l980s.

 

In many cases far from rich, just different priorities. The truly rich people I know don't cruise, or do so on their own boats.

 

 

Autocorrect responsible for most typos...

[Gloria Mundi]

I'm going to start calling you Eeyore! :D

 

Well, put me in the Eeyore Club, too. We've passed the $2 million mark and I still worry that I won't have enough money when I'm 95 and I'm still working full time. I worry about the people who retire with $50K and SS and they are legion.

[bltrn]

You don't have to be rich. My DH and I have been working stiffs all of our lives. Being frugal, our home is paid off as well as our vehicles....AND we put our son thru college. Now it's our turn We will be leaving in less that 2 weeks on our 16th cruise!

[paul929207]

You don't have to be rich. My DH and I have been working stiffs all of our lives. Being frugal, our home is paid off as well as our vehicles....AND we put our son thru college. Now it's our turn We will be leaving in less that 2 weeks on our 16th cruise!

 

We also saved while we were working, paid off our house early, and pay cash for what we buy.

[kelmac]

As others have mentioned it's a matter of setting priorities and I'll add good investing.

 

We are not planning on having Social Security when we retire, and are saving accordingly. Should it still exist, we'll easily be able to afford a longer cruise (~30 nights) every year or so just by using that non-taxable income alone.

 

dl,

 

I can assure you that people pay Federal and State taxes on Social Security benefits. In addition, very few people in the US think we should allows SS to diminish. Social Security will be around for many years to come, in some form or another. I pay taxes on my retirement + social security + my part time job.

 

Enjoy!

Kel:)

[pcur]

Well, put me in the Eeyore Club, too. We've passed the $2 million mark and I still worry that I won't have enough money when I'm 95 and I'm still working full time. I worry about the people who retire with $50K and SS and they are legion.

 

I am seeing firsthand what life is like at 94.5, and it ain't pretty. This is a man who was EXTREMELY healthy his entire life, and still has his original teeth! I've watched one "fail to thrive", and now watching one with Parkinson's and another recuperating from lung cancer at 90.

 

When life is no fun I don't want to be here. Enjoy life and your 2M!!!

[pris993]

I am seeing firsthand what life is like at 94.5, and it ain't pretty. This is a man who was EXTREMELY healthy his entire life, and still has his original teeth! I've watched one "fail to thrive", and now watching one with Parkinson's and another recuperating from lung cancer at 90.

 

When life is no fun I don't want to be here. Enjoy life and your 2M!!!

 

Good point, can't take it with you. Enjoy it while you can.