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Re: Expenses after FIRE - Huh??
Old 07-13-2006, 09:18 AM   #21
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Re: Expenses after FIRE - Huh??

Quote:
Originally Posted by wab
We just hit year 4 of retirement, and our expenses have fluctuated wildly over the years; this year they have dropped significantly (mostly due to selling our second home).
Just curious about why you sold the second house. DW and I have a weekend house on the water. We planned our ER to be able to maintain both but figure we will probably dump the second one unless our kids begin to make good use of it.
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Re: Expenses after FIRE - Huh??
Old 07-13-2006, 10:04 AM   #22
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Re: Expenses after FIRE - Huh??

time is money. without work i've got an extra 8 hours a day to spend so i figure my expenses to increase.
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Re: Expenses after FIRE - Huh??
Old 07-13-2006, 10:18 AM   #23
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Re: Expenses after FIRE - Huh??

I guess in FIRE, two expenses you can count on elimating are Social Security and continued investments. Unless you pick up a part time job, you won't be paying SS, so that's something like a 7.85% expense you won't be paying anymore. And since your focus has now shifted to tapping your investments, rather than adding to them, whatever percentage that you had been investing is an expense you'll no longer have.

Otherwise, I don't see other expenses going down any once I hit FIRE. The mortage will get paid off, but that'll most likely happen before FIRE. I don't have to dress to impress at my job (in fact, any time I dress up too nicely they worry that I'm going on interviews!), so I don't really have a work-clothes expense that will cut. And I don't have a long commute, so it's not like I'm running cars into the ground and replacing them every few years.
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Re: Expenses after FIRE - Huh??
Old 07-13-2006, 11:10 AM   #24
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Re: Expenses after FIRE - Huh??

Our expenses in retirement are roughly the same as when we were working just different areas. And our income in retirement is also roughly the same as when we were working since DH started his part-time job.

We now pay our entire health insurance premium but we don't have anymore college bills so that's a wash.
What we don't spend on job related expenses we now spend on more restaurant meals/entertainment.
Since we spend more time at home we're spending dollars on landscaping, interior painting, new patio, and garage doors. And, of course, there's the big screen TV that hubby wanted last year. It comes in handy, though, since I'm the sports nut in the family.

And we still live on 80% or less of our net just as we did prior to retirement.
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Re: Expenses after FIRE - Huh??
Old 07-13-2006, 02:50 PM   #25
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Re: Expenses after FIRE - Huh??

Quote:
Originally Posted by donheff
Just curious about why you sold the second house.* DW and I have a weekend house on the water.* We planned our ER to be able to maintain both but figure we will probably dump the second one unless our kids begin to make good use of it.
Well, we've had a variety of second homes over the last 10+ years.* * We purchased the last one a few years ago (post-retirement).* *It was a beach house fixer.* * After fixing it up, we camped out for a few weeks.* *Then we went home.* *Then we camped out in the beach house some more.* * But we didn't go home.* *After about two years of camping out and not going home, we decided we really didn't need the "main" house anymore, so that was the one we sold.

In retrospect, a second home never made much sense (except as an investment).* *You end up with twice the furniture, twice the maintenance, twice the utilities, and you feel guilty about vacationing someplace other than the vacation home.* * I think it makes more sense and provides much more flexibility to simply rent a furnished place (or hotel) wherever you want to travel.

The place we sold was very nice, but it really feels like a burden has been shed now we've dumped it on somebody else.* *And our monthly expenses are much lower too.
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Re: Expenses after FIRE - Huh??
Old 07-13-2006, 03:20 PM   #26
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Re: Expenses after FIRE - Huh??

Match spending to expected after tax withdrawals + savings for large purchases and emergencies.
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Re: Expenses after FIRE - Huh??
Old 07-13-2006, 05:41 PM   #27
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Re: Expenses after FIRE - Huh??

HMM
Arent you guys following the 4% rule and then budgeting ?

I would say you guys are unusual :
since you
A. dont carry much debt.
B. have no house debt or try to pay off your homes. Most people might be doing this at retirement or in retirement.
C. tend to lbym's anyway.

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Re: Expenses after FIRE - Huh??
Old 07-13-2006, 08:31 PM   #28
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Re: Expenses after FIRE - Huh??

My parents have vacationed near Durango, Colorado for 20 years and now summer there in their trailer, since they have retired. They've noticed that the private cabins along the scenic drive to the campground slowly turnover, each of them coming up for sale every couple of years. Few seem to have long term owners.
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Re: Expenses after FIRE - Huh??
Old 07-14-2006, 11:59 AM   #29
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Re: Expenses after FIRE - Huh??

Quote:
Originally Posted by unclemick2
Now I have to spend more before I get toooo old to enjoy it. I'm a humper - cheap first ten, higher, plan lower starting when I hit my 70's or whenever I get slower.
Find myself in the humper/dipper category too after 6 years FIREd.* Data I have seen indicates a sharp reduction in spending and, with previously acquired insurance in place, expenses, occur during late retirement years, and for easily understood reasons.* This seems to get scant coverage.* Personally, lost interest in fast cars and more landlubber property to mow maintain.* Also found my 50% of pre-retirement income spending calc near next to useless.* *As have others have pointed out, control of expenses is key.* Not difficult in my situation and with my sweet and frugal DW.* Plan on challenging lybym record while on circumnavigation beginning next Fall before I get toooooo oooold for anything except memories, if can find them.* Perhaps then I will swallow the anchor and have more time to take a shot at the dryer sheet hall of fame.* * But, not yet........
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Re: Expenses after FIRE - Huh??
Old 07-14-2006, 02:45 PM   #30
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Re: Expenses after FIRE - Huh??

Overall, we're shelling out ~50% less than we did when we both worked full time. We spend more on travel--and when DH retires from teaching, we'll have to spend a lot more on health insurance. BUt in semi-retirement we spend a LOT less on...

-- Savings...from ~$50k/year to ~$5k/year (I'm retired, DH is working at a slower-lane job that pays half his former salary).
-- Housing: $25,000/year mortgage payments to ZERO (paid cash for "retirement" house)
-- $8,000/year in property taxes to $2,000/yr
-- Taxes: top bracket to 25% bracket, and will be even lower when DH retires. Also lower state income tax (CA to SC).
-- Restaurants: save close to $10k year on much less eating out & takeout now that I'm not dragging home after dark.
-- Cars: went from driving 40k miles/year on two cars to 12k miles total, spending less on gas, maintenance, and insurance.
-- Used to pay for kids' education and for them to fly home--now as independent working adults, they buy their own plane tix :-)
-- Charleston Symphony season tix are less than half the cost of San Francisco Symphony(!)
-- Replace clothes less often; rarely wear dry cleanables; spend a lot of time in shorts, t-shirts, and bare feet.
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Re: Expenses after FIRE - Huh??
Old 07-14-2006, 04:28 PM   #31
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Re: Expenses after FIRE - Huh??

Quote:
Originally Posted by astromeria
Overall, we're shelling out ~50% less than we did when we both worked full time.
I wasn't including things like down-sizing, kids thru school, and other passages since these hit different people at different ages. Thinking more about how the lifestyle changes affect expenses.

If I recall, you moved from Ca to SC around the time you FIRED. I guess that's one great way to optimize you other life pleasures in retirement and who knows - may end up doing the same some day.
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Re: Expenses after FIRE - Huh??
Old 07-15-2006, 07:25 AM   #32
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Re: Expenses after FIRE - Huh??

Most Americans' biggest expenses are housing, transportation, and taxes. To lower them, one needs to make lifestyle changes, likely by paying off or moving to smaller/cheaper (and perhaps new or already remodeled) housing, replacing vehicles less often or at least less expensively (and maybe owning fewer vehicles), and setting up retirement income (and possibly location) for lower taxes.

Little savings can also add up. From ~$100/month in hair salon for both to practically nil (DH goes to Supercuts 3x/yr at $15 inc tip; I cut my own hair and no longer color it). No more professional manicures. Get the house cleaned every 6 weeks instead of every 1-2 weeks. Have more time and inclination to research purchases and save--e.g., discovered that 2nd class travel on the Italian Intercity (IC) trains is just fine for us, no need to pay 50% more for Eurostar 1st class (and we met interesting people, too, like foreign students and ordinary Italians). More likely to borrow than buy books, CDs, and DVDs now and go to cheap weekday matinees instead of weekend evening movies. Much more likely to invite people over instead of meeting them at a restaurant. Spend a lot less on gifts and charity: I now volunteer time instead of money. But even adding all this up, it doesn't seem like a big lifestyle change to me--only being retired feels like a big change (and entirely for the better!).
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Re: Expenses after FIRE - Huh??
Old 07-15-2006, 09:39 AM   #33
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Re: Expenses after FIRE - Huh??



Two things from retirement news and studies.

First studies have shown that spending declines as retirees age. From one study:

Expenditures at age 45-54 = $48,748
Expenditures at age 55-64 = $44,330
Expenditures at age 65-74 = $32,243
Expenditures at age 75+ = $23,759
all this with some increases in medical costs.
for more about this go to http://www.fpanet.org/journal/articl...p0605-art7.cfm
So this might enable you to model your retirement spending a little differently.

And from the book: Live Long and Prosper by Steve Vernon

He quotes from another book, Authentic Happiness by Martin Seligman that distinguishes between the pleasurable life, the good life and the meaningful life.

Pleasurable life means great vacations, nice clothes, interesting hobbies, good entertainment. His point about this lifestyle is that while these things are not bad, they don't necessarily contribute to happiness and any happiness derived is temporary, often stunningly short compared to amount spent.

Good life consists of identifying and applying our signature strengths to the main realms of our lives: work, love, children, etc. Highest success in living and deepest emotional satisfaction comes from bujilding and using your signature strengths. So, for example, you derive deep satisfaction from raising a family or working in your church.

Meaningful life is beyond the good life, involves an attachment to something larger than your own life, more meaningful. Think about simple living folks, for example.

The pleasurable life dominates current advertising and popular ideas about retirement - golf, hobbies, travel, beach house, etc. Why? Because it involves spending money. While the good life and meaningful life do not involve spending as much or very little. Also it's harder to portray the good life and meaningful life in 30 second screen shots.

so depending on what you truly believe is important to you now and in retirement, you may spend more than now for the pleasurable life, about the same or less for the good life and possibly significantly less for the meaningful life.

I hope I didn't mangle his intent too much. Food for thought, anyway.
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Re: Expenses after FIRE - Huh??
Old 07-15-2006, 09:50 AM   #34
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Re: Expenses after FIRE - Huh??

Quote:
Originally Posted by txdakini

First studies have shown that spending declines as retirees age.* From one study:

Expenditures at age 45-54 = $48,748
Expenditures at age 55-64 = $44,330
Expenditures at age 65-74 = $32,243
Expenditures at age 75+ = $23,759
all this with some increases in medical costs.

Any indication as to whether this decline in spending is by choice or necessity?

You can certainly see expenditures being forced lower as people move from middle-class paying jobs to social security.
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Re: Expenses after FIRE - Huh??
Old 07-15-2006, 09:55 AM   #35
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Re: Expenses after FIRE - Huh??

Quote:
Originally Posted by 3 Yrs to Go
Any indication as to whether this decline in spending is by choice or necessity?

You can certainly see expenditures being forced lower as people move from middle-class paying jobs to social security.
There is a rather lengthy discussion of spending decline vs. age on this thread:

http://early-retirement.org/forums/i...p?topic=3509.0

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Re: Expenses after FIRE - Huh??
Old 07-15-2006, 10:54 AM   #36
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Re: Expenses after FIRE - Huh??

If you read the entire article from which I quoted the numbers, it actually addresses a lot of the typical questions such as the one you mentioned. The decline in spending actually holds true according to the study:

reductions are voluntary (overall assets for all groups actually increased while spending declined)

they accounted for generational differences by comparing same study results from 1984 and 2002. Both declined in a similar way

Read the entire study at http://www.fpanet.org/journal/articl...p0605-art7.cfm
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Re: Expenses after FIRE - Huh??
Old 07-15-2006, 01:17 PM   #37
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Re: Expenses after FIRE - Huh??

Way less.

I stopped paying people to cut my lawn, clean my house, fix my cars and do work on my house. I stopped buying thousands of dollars worth of clothes every year and paying a bundle to dry clean them. I stopped taking expensive vacations to de-stress myself from my job because I wasnt stressed. I moved to an area where I can drive to dozens of vacation hot spots anytime I want to. I started shopping for and cooking my own food instead of eating out 60-70% of the time.

Basically converting my own time and energy into cost savings.

Also was able to slash my tax bill from "oh my god, did I just pay for a B1 Bomber?" to "ha ha, you get nothing from me this year you $#^%'s!". Thats a bit of a savings right there...
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Re: Expenses after FIRE - Huh??
Old 07-15-2006, 05:42 PM   #38
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Re: Expenses after FIRE - Huh??

I have no question we will spend more. Already we are spending more with me part time. (On another trip with that gas hogging MH).

CFB, weren't you spending about $750,000 a year at about the time you retired? I hope you're spending a lot less.
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Re: Expenses after FIRE - Huh??
Old 07-15-2006, 08:17 PM   #39
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Re: Expenses after FIRE - Huh??

I expect we will spend about the same in retirement as we do now. I have closely tracked spend over the last 4 years and estimated what we expect to spend and it is about the same. ie increased travel and health costs will consume money currently spent on children at college (only 6 months to go we hope )
We also expect to sell one of our 2 cars as we live in a small quiet community with great biking paths etc to get us anywhere we need on a regular basis.

These expenses are about 30% of current AGI. I have never subscribed to the idea of 70% of income since we have always been able to live very happily well below our income. While DW was working our spend was only 25% of AGI. (She ER'ed 2 years ago)
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Re: Expenses after FIRE - Huh??
Old 07-15-2006, 10:32 PM   #40
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Re: Expenses after FIRE - Huh??

Quote:
Originally Posted by Martha
I have no question we will spend more. Already we are spending more with me part time.
On what, for example? Is travel the difference, or are your other recreational expenses risking, too?

I'm wondering if I shouldn't plan more for play??
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