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63 and looking forward to retirement
Old 06-15-2015, 11:33 PM   #1
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63 and looking forward to retirement

in the next year or two. But, as I imagine most do, we'll be living on a fraction of the budget we now enjoy. Is it true what I've heard, that your expenses somehow are less in retirement? How does that work for you?
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Old 06-15-2015, 11:45 PM   #2
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It varies from person to person.

Some expenses that often go down:

Saving for retirement (you've done that and don't need to do it any more)

FICA and other withholdings from your pay check for expenses that don't continue

Commuting Expenses (DH and I drive a lot less miles now that we don't commute(

Work clothes (I was in a field where I had to dress well. Now -- I still do a little part-time work but from home -- I most wear jeans and T shirts)

Income tax (With less income, our taxes are less)

Housing expenses (some people downsize -- we did and the home related costs are less)

Child related expenses (we still have some but they are almost gone with our last 2 in college - once they are done our expenses will go down even more)

Obviously this is individual as to how much (or if) spending goes down. Some people increase travel expenses, for example (we didn't). We are currently spending about half of what we used to spend (including savings). Once the kids are out of school, we will be spending about 1/3.
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Old 06-15-2015, 11:51 PM   #3
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in the next year or two. But, as I imagine most do, we'll be living on a fraction of the budget we now enjoy. Is it true what I've heard, that your expenses somehow are less in retirement? How does that work for you?
Welcome to the forum!

Actually, no, most people on the forum are living on a generous budget that meets their needs. Many spend less in retirement, but some people spend more, because they travel more and take up activities they have always wanted to do. How? By budgeting carefully prior to retirement, and living below our means. There are members here who save up to 80% of their after tax income.

I suggest you check out the FAQ.
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Old 06-16-2015, 07:09 AM   #4
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I've been retired for one year and DW left work 3 years ago. We track our spending on Quicken and when I reviewed our spending for the last 12 months excluding income tax was 10% less than the prior year. The two main categories that were higher than the prior year were travel and medical due to major dental expense that I've incurred in the last 6 months.

Since we budgeted for the increased travel and had a miscellaneous category to cover unforeseen expenses we are on budget. So having a detailed budget for your retirement years is important to determine the categories you expect to increase and the one that would decrease and you should plan on a miscellaneous category to cover non budgeted spending.
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Old 06-16-2015, 08:17 AM   #5
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I've not experienced any decrease in spending in our 6 year retirement. We've spent exactly the same year after year that we did when working.

We've had a car, a boat and a camper age to the point where they just had to be replaced--all expensive. We also have an inherited lake house, and I had to buyout my sister's interests.

Like so many others, we have a rather needy daughter with two kids that we assist in supporting. She came to spend the night, and was there 11 months later. To get our lives back and have a good night sleep, I bought her a house. All parties are much happier in life.

After traveling extensively the last 20 years, we simply cannot get the travel bug out of us. We plan on taking 2 big trips per year--living frugally the rest of the year in order to afford trips to look forward to.
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Old 06-16-2015, 08:20 AM   #6
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in the next year or two. But, as I imagine most do, we'll be living on a fraction of the budget we now enjoy.
True. In our case the fraction is somewhere in the neighborhood of 110%.
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Old 06-16-2015, 09:09 AM   #7
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My DH retired 10 years ago, and I retired 1.5 year ago. We downsized, and adjusted our spending as soon as my husband retiried. We had few big expenses since then: house renovation, my son wedding, and two new cars. ( Acura and class B RV). We paid for all those extra expenses from my earnings. We also saved all my left over earnings during the time when I was working. Currently we have no loans or mortgages. We have the same annual spending budget for the past 11.5 years ( excluding those additional expenses mentioned). Our incoming pensions and rental income covers all our expenses. We have $18,000 annually left over, which we continue to invest in Vanguard. Cost of living in retirement is about the same as if you were working, you just won't be able to save as much if any.


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Old 06-16-2015, 10:16 AM   #8
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One thing I've noticed on this forum is that people's budgets and lifestyles vary greatly. Many people tracked expenses for a long time and made adjustments in order to help achieve financial independence.

If you're going to retire in a few years and are concerned about decreases in lifestyle, carefully monitor your expenses now if you're not already doing so. Analyze which ones are likely to vary after you stop work and see if there are any changes you can make now to reduce your monthly expenses. You may see that even a reduced income will cover your costs, or you can decide to work longer (either at your current job or part time job) if there is a gap.

Some forums, such as Early Retirement Extreme, really focus on reducing costs to enable financial independence. You might find some useful tips there as well if it's necessary to reduce expenses. Some expenses increase after retirement, potentially travel or entertainment. But other people find that with more time they can do things for themselves that they used to pay others to do, or that they don't spend as much carelessly to compensate for a stressful, unpleasant job. Some people downsize or make other adjustments if necessary.

But having detailed information about your expenses will help give you the information you need to plan.
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Old 06-16-2015, 11:47 AM   #9
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Cost of living in retirement is about the same as if you were working, you just won't be able to save as much if any.
You can't generalize like that. It is true for you. It isn't true for me. Our cost of living now is half what it was when DH and I were working full time. And, right now we have 2 kids in college. Once they are out our expenses will go down to 1/3. Now, I know that isn't true for everyone. But it is true for us. But, it is certainly not true that everyone's cost of living is the same in retirement. It is very individual. I think someone contemplating retirement should look at each individual category for expense and think about how it will change during retirement.
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Old 06-16-2015, 12:10 PM   #10
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... But, it is certainly not true that everyone's cost of living is the same in retirement. It is very individual. I think someone contemplating retirement should look at each individual category for expense and think about how it will change during retirement.
This is a good answer. Definitely a YMWV area.

For us, if things go as planned, our spending will be higher in, at least, the early years of retirement than now--BUT, it will be mainly discretionary spending. If we were to cut out the traveling, with a much smaller taxable income and a paid off house, as well as no expenses from working, it would be considerably less than now.
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Old 06-16-2015, 12:36 PM   #11
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For me, I telecommuted the last two+ years before I retired so I didn't have a lot of the expenses of going into the office every day. Overall I'd say my living expenses have stayed about the same. The only noticeable things that have really gone up are medical cost/insurance and my gasoline bills (I travel a lot more since retiring).
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Old 06-16-2015, 11:32 PM   #12
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Thanks for all the great answers.

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Old 06-17-2015, 12:49 PM   #13
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Not retired YET but I am working hard to get house paid off. Should make a big difference in my budget. Currently pay double working that up
And hitting it with quarterly sums of cash.


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Old 06-18-2015, 07:49 PM   #14
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in the next year or two. But, as I imagine most do, we'll be living on a fraction of the budget we now enjoy. Is it true what I've heard, that your expenses somehow are less in retirement? How does that work for you?
Most posters here will tell you that one of the first steps in a happy retirement is to figure out your expenses before you stop the regular paycheck.
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63 and looking forward to retirement
Old 06-18-2015, 09:18 PM   #15
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63 and looking forward to retirement

We spend much less. Gone are commuting costs and work clothes. Cost of living is much lower in Florida than either of our last two states: NJ and Maine. There are no state income taxes here. We went to one car and a golf cart from two cars. Our activities are mostly covered by our amenities fees. We never need the driveway shoveled. And since we live in a resort state and feel like we are always on vacation, we have not felt the desire to travel. Our clothes are T-shirts and shorts. We have an electric co-op, so we spend less on a/c and electric than we did in NJ. And we needed heat for four days last winter.
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Old 06-19-2015, 08:12 AM   #16
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Most posters here will tell you that one of the first steps in a happy retirement is to figure out your expenses before you stop the regular paycheck.
+1

Couldn't agree more. We've tracked our expenses forever since I'm a Quicken junkie and have found that, although our spending will change significantly by category, the total will be about the same. You really have to look at each area of spending to determine how yours will change.

We're planning a lot more for travel and healthcare, much less for others that were work-related.

Welcome and good luck!
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Old 06-19-2015, 12:22 PM   #17
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From the above posters you can that there is no 1 answer. In our case our expense level decreased only because we paid off the mortgage and since healthcare and commuting costs were fully covered by my employer, those costs added to our expenses but were less than the amount we were previously paying on the mortgage. So, unless you are changing your lifestyle somehow you might live on a lower budget or you might increase your budget -
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