Expense Poll

[imoldernu]

...ooops... stumbled into the wrong thread...

 

[donheff]

I agree with those who say other peoples' numbers won't help you. A better question to me is, "do your estimated expenses hold up during ER." I think we have covered that ground before but it can't hurt to revisit the question now and then. I am not a dedicated expense tracker. Fore decades we saved a boatload and spent the rest without paying close attention to where or how. For a couple of years before ER, however, I carefully tracked expenses to confirm whether my gut feeling that we could afford ER was correct. I assumed expenses would continue as is with a few changes (no more mortgage, no more college expenses, substantially increased travel budget, substantial figure for unanticipated expenses). Several years after pulling the plug, the expenses have turned out as expected. The extra fudge factor has also worked out well - i.e. we are not spending as much as we prepared for. We use about a 3.5% WR and have returned about 20% of that withdrawal to an emergency fund. The bottom line for us has been that expenses adjusted for things that will clearly change like taxes, mortgages, tuition, etc have stayed remarkably flat.

 

[HighRoller]

am wondering if we are really going to have the same mental approach to spending in retirement.

My mental approach to spending (and lifestyle) really didn't change once I retired but that was my pre-retirement planning basis. I didn't retire until Firecal and my own custom spreadsheets (and my common sense ) said I could retire without a change in "lifestyle spending" and still gave me a "projected"100% success rate out to 100 years old. To be honest, I don't think I'll continue to spend at my current rates (a bit higher than your quotes) for the rest of my life but I've allowed for it. Nor do I think I'll live to see 100.

 

[cinman2000]

I just don't see how one can pay $10,000 on $96,000 of income. Have you put your numbers into tax software? Or do you have zero qualified dividends and zero long-term cap gains and zero carryover losses which would mean that all your planned $96,000 will come from IRA or 401(k) withdrawals or pensions?

I have struggled with this one. We have about 600k in after tax investments. My current plan calls for doing an SEPP that takes us up near the 15% tax bracket and funding the rest of our expenses with capital gains income from the 600k taxed at 0%. The tools I have found don't do a good job of modeling this and appear to me to be overtaxing us. It makes me nervous.

 

[cinman2000]

I didn't retire until Firecal and my own custom spreadsheets (and my common sense ) said I could retire without a change in "lifestyle spending" and still gave me a "projected"100% success rate out to 100 years old.

You must have really enjoyed your job

 

[cinman2000]

Make sure you expect the unexpected.
I set aside a grand a month to cover unexpected expenses.....

Wow, I have $500/month based on a 5 year history, thanks!

 

[cinman2000]

I agree with those who say other peoples' numbers won't help you.

Many have made this point and I think it is a good one. We are tracking expenses against our budget as of Jan 1 and for Jan were 25% under budget. If this continues for 6 months or so, I think I will have my answer Thanks to those willing to share numbers, it does give me some comfort to know that I am not way out on the end of the normal curve.

 

[cinman2000]

I will say the decision to ER and leave the workforce is not an easy one.

Good luck in your decision.

Thanks and agree completely!

 

[bo_knows]

Not retired yet, but since this is turning into an informal poll....

FWIW:

31, married, 1 kid. Been tracking spending for 3 years now. We average $50-60k/yr, which includes $20k in mortgage/property-taxes. So, $30-40k in discretionary funds, in a fairly high COL area.

 

[cinman2000]

My biggest challenge has been getting an accurate read on budgeting for medical. Right now I've got $12-14k plugged in.

I have had a hard time with this also. I'm currently using 14K in today's dollars and indexing at 6% based on advice from my CFP. I think this is high, but still working on proving that.

 

[nun]

51, single, and planning to retire at 55 (maybe sooner). My gross income is $145k ($130k salary, $15k rent) , taxable income is $70k. Tax is $13.5k and other expenses are $30k. No mortgage. When I ER my budget is for $4k taxes and $36k expenses....the extra $6k is for health insurance.

 

[jollystomper]

To the OP, we have similar income and slightly older (55) and are planning for about the same amount We have 15 years of expenses in Quicken that I've been using to forecast (of course "past performance is no guarantee of future results") using various rolling averages to get a ballpark idea of expenses, and they tend to converge between $95-$110K.

I agree with the earlier advice of trying to live on your target expenses before you retire to see what is possible. We did that a couple of months last year and it was a real eye opener (in mostly good ways), and will start again next month (would have started this month but decided to deal with some pre-retirement expenses first).

The big wildcard is going to be health insurance. I get a pension but not health insurance (just a "fund" to help pay for health insurance premiums). Keeping our insurance as is will cost around $16K in premiums, going to a higher deductible reduces it to around $13K. According to the PPACA calculators our premiums might be as low as $8K if we keep income below $93, but if it goes higher it jumps to $19K. We are waiting to see how that truly fleshes out to get a good feel for our expenses.

 

[HighRoller]

You must have really enjoyed your job

Actually yes "for the most part", until I reached my FI goal... Then my perspective seemed to change very fast

 

[devans0]

59 years old and still working. No debt, married, no kids at home.

Gross last year was $115,000.
Savings amount was $52,000.
Taxes were $34,000.

Spending amount was $29,000.

 

[Ed_The_Gypsy]

Our expenses will not exceed our income: Targeting $40k or less before taxes. Income could be about 50% more than that (depending on how things turn out), but planning on $40k.

 

[Live And Learn]

DW = 50 yo (class of 2013 / 2014 ?), DH = 55 yo (class of 2020)
Income = 200k
Current spend = 97k
Retirement budget = 87k (savings from downsizing house)
Very close to your projections but I'd bet the splits by expense type are vastly different:

Home, including food - 23K
6k: groceries / home cooked food / essential paper goods & toiletries
6k: tax, insurance (no mortgage, no debt at all actually)
3k: maintenance / repairs (including reserves for major repairs)
3k: Electric
3k: Internet, Cable, Phones (incl Cell)
2k: pest control, garbage collection, home owners assoc

Medical / Dental / Life Insurance: $29k
19k: HI premium
7k: Medical / Dental / Hearing out of pocket
2k: Medications, vitamins
1k: life insurance

Other Mandatory 13k:
6k: Income Tax
4k: Auto insurance and repairs
3k: Reserve for major repair / replace (roof, car, etc)

The Fun Stuff: 22k
7k: His and Her monthly "allowance"
5k: travel / vacations
3k: Entertainment / Dinners out
2k: Pets
2k: "Stuff" (gizmo's, gadgets, replace things that break)
1k: Donations
1k: Fishing expenses
1k: Clothing and miscellance rounding

The "Allowance" includes gas, lunch out, beer / wine / liquor, any gizmo/gadget that is not a shared joint decision, hobby expenses, etc

 

[tdv2]

49 years old, married, combined income is higher but we plan to spend right around your figure of ~$100k. With current assets if I pull the plug soon withdrawal rate will be <3% w/ $32k pension.

 

[cinman2000]

I'm inspired by Live and Learn so here goes:

30k/5 - Car replacement every 5 years
10k/4 - International vacation every 4 years
6k - Unexpected big expenses
10k - Healthcare (based on Obamacare and indexed at 6%)
8k - At home food
5k - smaller vacations
4k - Property taxes
10k - Fed taxes
4k - Eating out
4k - Auto Repair in Insurance
2k - Clothing
2k - Charity donations
2k - Timeshare dues
7k - Utilities (Internet, TV, Water, Garbage, Electric, Gas)
2k - Gasoline
2k - Unclassified misc spending
2k - Housing repairs (smaller)
2k - Homeowners and Umbrella Insurance
2k - Entertainment
2k - Misc Electronics
1k - Massage Club
1k - Gifts
1k - Pet Care
6k - 19 other categories I won't bore you with

 

[Meadbh]

1K - massage club?

Do pray tell explain......

 

[obgyn65]

Can I join that club too ?

1K - massage club?

Do pray tell explain......

 

[scrinch]

1k: Fishing expenses

You can try getting by like this if you want....but this sounds way low to me! There are some things you just shouldn't skimp on!

 

[sanfanciscotreat]

59 years old and still working. No debt, married, no kids at home.

Gross last year was $115,000.
Savings amount was $52,000.
Taxes were $34,000.

Spending amount was $29,000.

Are you in one of those high income tax states?
I assume that is state plus federal tax; any other taxes added?

 

[l2ridehd]

Live and learn inspired as well. And I like the way you split expenses by category. When I was working I made excellent money. To the point I never even thought about what I spent. If I wanted something I just bought it. Always maxed out all retirement savings plus other savings. But also spent a lot of money on anything and everything. So before I retired last year I tried really hard to calculate what my expense would be once retired and would my income support that. I made detail budgets with an item by item focus. Went back through spending habits and tried to put things in buckets of required, nice, and frivolous. I finally ended up with a budget of 110K. I had to set it 50K higher (160K) for first two years because I am in the process of selling our workplace home and moving to our retirement home and that was the total cost to support that home. Mortgage, taxes, insurance, repairs, utilities, etc.

Am just coming up on first full year. The good news is total spending and total budget were about the same. The bad news is the bucket by bucket analysis was way off. Got another year to sell the home and move to retirement home before I get into any income issues, and even if it takes longer to sell we will still be OK, but would like to start the final phase of living. And based on everything I spent last year I am in the process of adjusting the budget for the next 12 months to better match actuals.

One pleasant surprise was the ability (because of available time) to identify and implement cost savings. Changing phone services, managing cable bill, walking the golf course vs riding, refinance mortgage, where we shop, DIY, and a few others. Was able to manage down expenses about 1K per month with no quality of life impact. Have done the same thing with the revenue side of things by consolidating investment accounts, moving to lower cost funds, manage and rebalanced more closely, better tax management, and a few other things to improve cash flow.

So all in all the first year has been a learning experience and a fun adventure. Ready to start year number two. Priority is selling the house so as to significantly drop all expenses. Goes back on the market end of March.

 

[cinman2000]

1K - massage club?

Do pray tell explain......

Not as interesting as you might think....Massage envy. You may a monthly fee for a massage once a month. Been doing this for years and now have over 40 built up. At some point I hope I'll have time for a weekly one to get caught up and then decide if it's still worth the money

 

[Mulligan]

I2Ride... Your budget cutting of walking golf course instead of riding brought a chuckle to myself, as that is what I did this coming year. I decided if I am going to spend all this time golfing, the least I could do was get additional exercise out of it plus save money.