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Annual expenses increased or decreased over the retirement years?
Old 12-10-2009, 06:55 PM   #1
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Annual expenses increased or decreased over the retirement years?

I am 42 and trying to plan for an early retirement at 52. Working on some projections that of course require me to estimate my how much I will spend after retired. I spend about $70K per year after taxes. Because I am paying child support and a mortage today that will not be around at age 52 I think my current lifestyle would cost me about $45K per year.

I want to actually travel a lot for the first 5 years so I am forecasting extra money in those years. I believe as I get older (into mid 60's) that my spending is likely to go down as I won't be as active or sitting the sports bars as much.

Question I have for those that have been retired for a while, did you find your spending was relatively flat from year to year? Go up over time? Or decrease over time as I am predicting?
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Old 12-10-2009, 07:13 PM   #2
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Question I have for those that have been retired for a while, did you find your spending was relatively flat from year to year? Go up over time? Or decrease over time as I am predicting?
Although I haven't been retired a long time (a few months shy of 3 years), my spending has been fairly level during that time. I pretty much have a certain amount to blow spend, and I spend it! I don't have certain amounts designated for particular categories (other than my normal recurring expenses: ins, monthly bills, etc), it's all available for whatever. If I don't spend it on hobbies, I spend it on travel, if not that, then I spend it on things I want, or else give a bit more to my chosen charities. My spending stays the same, but what I spend it on changes according to my whims and desires.

And for what it's worth, I spend pretty much the same now as I did when I was employed. However, instead of spending a passel of money on things like eating lunch out everyday, I now spend that extra money on hobbies that I didn't have time for while being a working stiff. I spend roughly the same amount of money, it's just reallocated from necessities, to things I enjoy and that make life more enjoyable!
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Old 12-10-2009, 08:26 PM   #3
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I am 42 and trying to plan for an early retirement at 52. Working on some projections that of course require me to estimate my how much I will spend after retired. I spend about $70K per year after taxes. Because I am paying child support and a mortage today that will not be around at age 52 I think my current lifestyle would cost me about $45K per year.

I want to actually travel a lot for the first 5 years so I am forecasting extra money in those years. I believe as I get older (into mid 60's) that my spending is likely to go down as I won't be as active or sitting the sports bars as much.

Question I have for those that have been retired for a while, did you find your spending was relatively flat from year to year? Go up over time? Or decrease over time as I am predicting?
I would think that how much you spend would depend on your plans, and that that would be true for other individuals as well. Some people really want to travel a lot while they are young, for example, like you. It sounds like your assumption that your spending is likely to go down as you age, might be valid for you.

I am newly retired but I think that after a couple of years of higher expenses (due to a move to a new retirement location), my expenses will level out. But then, travel really doesn't appeal to me.

So far in retirement (one month yesterday) I have been surprised at how little I have wanted to spend. I enjoy sleeping in, going to the gym, and puttering around the house while I decompress after years of w*rk.
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Old 12-10-2009, 08:42 PM   #4
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My spending is like Goonie's . I have so much money and I spend it . I really have not seen a change in my spending in retirement . I thought I would spend more on travel but I really haven't . I have spent more on home stuff since I am home more and the projects just keep adding up . Luckily my SO is a great project doer . My mom is 93 and the only decrease I've noticed in her spending is travel . She used to love to travel but after her late eighties it became too hard . She still loves to shop and go out to eat but that is limited by someone taking her .
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Old 12-10-2009, 10:10 PM   #5
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I want to actually travel a lot for the first 5 years so I am forecasting extra money in those years. I believe as I get older (into mid 60's) that my spending is likely to go down as I won't be as active or sitting the sports bars as much.
I retired at 58 and am now 62. Spending is going up.

Health care, real estate taxes, food, blaah, blaah, blaah and etc,etc, etc..... all up.

Descretionary spending - up. We took a year off watching the recession, but have now ordered an RV, made some travel plans for 2010, completed some home remodeling and so on. Plus I'm finding with the time available, I like to spend more time, not less, at the pub in the afternoon having a Guinness or five with the boys fighting talking politics or watching the Cubs. Your concept that your socializing days are over in your mid-60's is 180 degrees out of phase with reality. It increases.

Don't plan on limiting travel after the first five years. You'll just want to allow more money so that you can avoid any cost reducing rigors or heavy lifting. If you have a reasonable level of health, money and curiosity about the world around you, you can travel well into geezerhood. Why sit on the front porch watching the cars go by when you can be on a geezer friendly cruise or tour?

When you hit that ripe old age of "mid 60's" you'll likely still enjoy spending on the same things as when you were in your mid-50's, only you may require some accomodations that require cash. For example: Mid 50's fly-in fishing trip. DW and I go and stay at a cabin on an isolated lake for a week. Mid 60's fly-in fishing trip. DW and I bring a guide along who not only knows the lake and is a great fishing companion, he does all the cooking and heavy work.

Does that help?
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Old 12-10-2009, 10:22 PM   #6
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My mom is 93 and the only decrease I've noticed in her spending is travel . She used to love to travel but after her late eighties it became too hard . She still loves to shop and go out to eat but that is limited by someone taking her .
I'm confused. Why isn't her driver chauffer taking her?
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Old 12-10-2009, 10:26 PM   #7
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Yes, very much. I also am planning on buying a RV and spending the first year just driving across America and camping, partying and sightseeing.
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Old 12-11-2009, 11:07 AM   #8
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10 years out. Our spending in 2009 is less than 1999 and our quality of life is better. Three children no longer with us and leaving New York make a big difference. We also eat out less - not by design, just that it is so much easier to cook for the two of us than the previous never-satisfied tribe (with friends).

Our budget is very predictable and we plan for large "budget busting" expenses like a new car or major home expenses.
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Old 12-11-2009, 11:18 AM   #9
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10 years out. Our spending in 2009 is less than 1999 and our quality of life is better. Three children no longer with us and leaving New York make a big difference. We also eat out less - not by design, just that it is so much easier to cook for the two of us than the previous never-satisfied tribe (with friends).

Our budget is very predictable and we plan for large "budget busting" expenses like a new car or major home expenses.
"Never-satisfied tribe (with friends)" is so right! Even without the eating at restaurants components, I'm remembering how big those grocery bills were when kids and their friends were coming through the kitchen at all hours inhaling everything in sight and then ordering in when that was gone. Good times, but oh my goodness the $$ for food. Now DH and I see what ingredients we already have on hand and throw something together for dinner, very inexpensively.

We did bust our budget this first year with a new car and windows for our home, but were under budget for the day to day expenses (even including a lot of traveling) so it worked out pretty well.
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Old 12-11-2009, 02:07 PM   #10
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This is my first full year of retirement. As for my expenses, I do find that some expense categories which used to be low are now higher. For example, gas. I used to commute by train but now since I have more time, I spend a lot more time driving that I used to. Some expense categories I make a conscious effort to curtail, such as gifts, without a salary. I do find that having a budget and keep good track of what I spend is a big help as that gives to the comfort to know that I'm not overspending, though some expense categories get larger or smaller.
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Old 12-11-2009, 02:16 PM   #11
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I've been retired a little over 2 years and have found that my expense total has remained flat, even though a couple of components have risen significantly. It seems like it has been fairly easy to spend less in some areas to compensate for increases in other areas, and I've not found that painful to do.

I think I'm going to see a small increase in expenses overall for next year because my health ins. premium is going up almost 40%. I'm entering the next age bracket (turning 50) and that combined with the annual premium increase is big. Hopefully things will level off again for a while after that.
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Old 12-11-2009, 03:26 PM   #12
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Question I have for those that have been retired for a while, did you find your spending was relatively flat from year to year? Go up over time? Or decrease over time as I am predicting?
We will begin our 20th year of retirement this January. We travel the world, live a quality life, and aren’t bored, looking for something to do.

We have averaged our net annual spending under $30k a year, but we have made choices - like, we don’t have a mortgage. Instead, when we are in the States, we live in an Active Adult Community - so our property taxes and house insurance is practically nil. We have very little maintenance expenses.

Since we spend about 70% of our time out of the States, we have recently become ‘Car Free’.

We have health insurance but mostly we pay out of pocket for health services in countries such as Thailand or Mexico where things are more affordable.

What you will spend will depend on what type of lifestyle makes you happy. We realize our style isn’t for everyone, but it serves as a good baseline, or a practical template on which to build your own style.

One thing you might consider if you like to travel, is the financial difference between taking a vacation as compared to having it be a lifestyle. Vacations are much more expensive and will be an addition to your yearly budget. As a lifestyle, it is the way you live, and is far cheaper.

Good luck!
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Old 12-11-2009, 07:48 PM   #13
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7 yrs out seems like expenses are going up but actually right in line with inflation rate.
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Old 12-11-2009, 09:43 PM   #14
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Nearly five years. Expenses about flat (except for car replacement in '07; but there was a fund for that).
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Old 12-11-2009, 10:58 PM   #15
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Expenses went down a bit after the first three years, and then stayed relatively flat for the next seven. Never needed to adjust for inflation.

Expenses went down over time because we did more travel up front (for which we set aside additional funds), and then we learned how to get a lot smarter about travel costs, did a lot on our own (rather than with groups), and also didn't do quite so much exotic travel.

Our expenses will be going back up soon though - we're changing our lifestyle again and will have to spend more the next year or two to setup a new household. Then maybe spending will start to taper off again.

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Old 12-12-2009, 04:26 PM   #16
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I FIREd in July of 07 and found the following:
1) expenses are less than I had planned for, even with extensive traveling
2) they have been flat since then and we are anticipating a drop in 'run rate' due to our mortgage being paid off recently (found money )
3) trying to make up for the 'drop' by treating ourselves a bit more, ... but old habits are hard to break.

bottom line: expenses will be more or less stable for the early years of retirement ... I too anticipate that they will go down later (but I think that will be into our 70's, .... I hope).
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Old 12-13-2009, 01:05 PM   #17
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We are 64/62, retired for 4 years and spending about as much as the year i retired. We would spend more, mostly travel, if it was safe to do so.

Watching friends who are older, the desired spending stays about level (except for inflation) as long as health allows you to be active and to travel. Once health issues start to cut into the fun, then spending goes down. There may be increases in medical expanses but most of the folks I know didn't consistantly spend a lot on medical until the last couple of years.

As my next door neighbor (retired from the same job 4 years before me) says, "Will you really want a new Corvette when you're 80?"
Of course, one of our retired friends bought a new Corvette at 76, so you never know...
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Old 12-13-2009, 07:20 PM   #18
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Our, lifestyle has been pretty much the same since ER 12/02. Here is the expenses per Quicken:

2003 - $68k first ER year
2004 - $64k
2005 - $62k
2006 - $76k
2007 - $70k
2008 - $64k
2009 - $61k so far...

2006 went up on account of taxes for a windfall gain and 2007 on account of gifts to our kids from the windfall in prior year.
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Old 12-13-2009, 08:00 PM   #19
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1993-2009, 12k my all time personal best 'cheap SOB' - she threatened to murdalize me if I 'ever' tryed that again to 89k a remodeling/heavy travel year after Katrina(2006). Generally speaking my expenditures have chased my portfolio performance with a small pension kicking in 98 and taking SS in 2005.

Benchmark 4% SWR with 3%/portfolio SEC yield low end in nervous years and 5% varible in prosperous years cause I'm not getting any younger. Single, no heirs to speak of.

Quite a variation over 16 years - but a lot of fun.

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Old 12-13-2009, 08:26 PM   #20
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We are not retired yet.

Our expenditures will HAVE to go down then. According to FIRECalc, we will HAVE to get by on about 1/3 of what I make now. (Note that we have extraordinary expenses these days as I am working out of the country. We are also paying for 2 kids' college. With luck, these and other debts will be gone by that time.)
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