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Old 08-09-2016, 07:40 AM   #1
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Fire ?

When you calculate FIRE - do you include all expenses? Travel budget? Charitable? Or just your normal expenses?
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Old 08-09-2016, 07:43 AM   #2
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I'll put it another way: Why would you leave out any expenses for which you expect to need money?

If you want to travel and you like to give to charities, those are part of your yearly expenses, just as food and housing are. So are any income taxes you must pay. And don't forget yearly contributions to your emergency fund.

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Originally Posted by ecowtent View Post
When you calculate FIRE - do you include all expenses? Travel budget? Charitable? Or just your normal expenses?
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Old 08-09-2016, 07:47 AM   #3
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The only expenses you do not need to include are those expenses that are paid for by the money fairy.

If you don't have a money fairy, don't exclude anything. As Amethyst asks, why would you exclude anything? What is your thinking behind that?

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Old 08-09-2016, 07:54 AM   #4
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Include everything, and don't forget "everything" includes taxes.
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Old 08-09-2016, 07:57 AM   #5
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And that car you're going to buy in the next few years. And eventually the new roof, furnace, etc. Best to budget a yearly fund for those things.
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Old 08-09-2016, 08:05 AM   #6
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When I ran FireCALC with my expected usual expenses, I got 100% success. I kept upping the number until I got less than 100% success. That was about $40K over my annual estimate. I think I'll manage to buy a new (gently used) car or roof without worrying too much. I don't want to spend my retirement counting my money.


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Old 08-09-2016, 08:12 AM   #7
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When I ran FireCALC with my expected usual expenses, I got 100% success. I kept upping the number until I got less than 100% success. That was about $40K over my annual estimate. I think I'll manage to buy a new (gently used) car or roof without worrying too much. I don't want to spend my retirement counting my money.


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That's great for you. Do you think everyone on here do that? Or do you think if they're trying to retire as early as they safely can, that being reminded of irregular large expenses might be helpful?
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Old 08-09-2016, 08:22 AM   #8
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Originally Posted by ecowtent View Post
When you calculate FIRE - do you include all expenses? Travel budget? Charitable? Or just your normal expenses?
I read the OP's question to mean "do you include all expenses, or only non-discretionary?". I think it makes sense to do both calculations. Depending on how desperate you are to get out of the workforce, you may be more or less willing to forego discretionary expenses if your portfolio experiences a bad sequence of returns. So it's good to know if you at least have the bare minimum to survive the worst cases.
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Old 08-09-2016, 08:27 AM   #9
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We actually did put together what I called a bare-bones budget very early in the game before making the decision to retire, with every fixed expense. Yes, it left out travel, and gifts, and health club membership. It was reassuring to see that if we lost our jobs, we would have been okay--miserable, but okay (and many people would rather leave their jobs the minute they can afford to, regardless of the future scrimping that might be involved). We both knew that level wasn't what we wanted (I believe DH's actual words were that he would work forever before he would live like that, but I was pretty impressed that we were able to finance even that level of retirement), and we then put together two more scenarios, of current and projected expenses (quite heavy on the travel and gifts). When we did fall off the cliff eight years ago yesterday, we knew we would be fine. So I don't see a problem with setting the baseline--lots of people live at that level, some forced to, some by choice.
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Old 08-09-2016, 08:32 AM   #10
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My first thought was, of course, you have to include them. But the more I think about it you probably don't.

100% Firecalc safe will most likely leave plenty of money for travel and giving.

So just depends on you and how bummed you would be if the worse happens and couldn't travel.
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Old 08-09-2016, 08:57 AM   #11
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Include everything, and don't forget "everything" includes taxes.
...and throw in a little bit more; just in case.
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Old 08-09-2016, 09:06 AM   #12
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I read the OP's question to mean "do you include all expenses, or only non-discretionary?". I think it makes sense to do both calculations. Depending on how desperate you are to get out of the workforce, you may be more or less willing to forego discretionary expenses if your portfolio experiences a bad sequence of returns. So it's good to know if you at least have the bare minimum to survive the worst cases.
This is how I approached it. Did the calculations with a more "bare bones" budget that includes all necessary expenses (including accruals for infrequent costs such as a new car) and then again for a budget that includes more discretionary items and buffer. I'm aiming for the second, but it's nice to know what the first is for planning purposes.
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Old 08-09-2016, 09:37 AM   #13
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Thank you all. I understand the feedback about planning for every bit you can. I will retire earlier than my husband- health issues and I worked while he went back to school (twice). He will continue to earn more than we have projected for retirement for several years which will help to not touch our nest egg.


I want to know that bare bones we can make it even just in case he has to retire earlier than expected. I just want to know that we are FIRE'd! Then we can add on or skimp as much as we want or don't want in the last few years of earning a salary.
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Old 08-09-2016, 09:49 AM   #14
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Include everything, and don't forget "everything" includes taxes.
+1

And any medical expenses.

To me 10k a month means about 6k for housing/fun rest is taxes and medical care.
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Old 08-09-2016, 09:53 AM   #15
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Been spending 50% more than what I thought was our basic but comfortable needs.

Good thing it's still below what FIRECalc says I can spend, but with future SS included in the plan.
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Old 08-09-2016, 11:26 AM   #16
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I would put in everything that you can think of, because there will likely be things you didn't expect.
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Old 08-09-2016, 11:38 AM   #17
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I've calculated expected expenses based on the life we want to live. We can "survive" on less, but I wanted my FI number to be no-kidding the number where I think we could both quit. We will likely work beyond FI, allowing for more buffer for charitable expenses, augmenting travel, other luxuries that maybe we don't enjoy right now. Whenever we feel out-of-balance in terms of need for more ___________ vs. need for more time, that's when we'll RE.

So in short, there are two numbers:

- Bare minimum to get by - some call this FI.
- Bare minimum to live the life you want - I call this FI.


We plan to RE at our FI + something.
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Old 08-09-2016, 01:39 PM   #18
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I included everything I could think of, the added some more just in case! I could not sleep well knowing I was at the bare minimum.
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Old 08-09-2016, 02:14 PM   #19
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Quote:
Originally Posted by ecowtent View Post
When you calculate FIRE - do you include all expenses? Travel budget? Charitable? Or just your normal expenses?
It depends. If you want to just sit around the house and not give anything to charity then exclude them. You need to include the cost of everything that you want to do.
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Old 08-09-2016, 02:46 PM   #20
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Quote:
Originally Posted by EastWest Gal View Post
When I ran FireCALC with my expected usual expenses, I got 100% success. I kept upping the number until I got less than 100% success. That was about $40K over my annual estimate. I think I'll manage to buy a new (gently used) car or roof without worrying too much. I don't want to spend my retirement counting my money.
I think a fair number of people here take this conservative approach, I know I do. In my case, I took the largest spend we had in the 5 years prior to retiring. Since I used the checking account to calculate this, I had to add in HI and income taxes. To be (more) conservative I used only one SS income. I put this into FireCalc and got 100%. Then I used the investigate tab to check spending for 95% success. The graph will also show 100% success. With a 30% cushion, I am not too worried about unusual 1 time expenses, or the purchase of a new car.
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