How close to estimating Retirement $ needed

[rockyj]

Interesting stuff here...
Long time lurker, with a question.
I don't believe I've ever seen a discussion of how costs go down, over time, during retirement.
Cheers!

Firecalc has an option under the Spendiing Models tab for Bernicke's Reality Retirement Plan, with a link to the article on which that is based. It assumes declining expenses due to lifestyle changes up to a point after which things level out and then need to keep pace with inflation.

But in another sense, depending on lifestyle choices and also depending on what point in life you are using for comparison, I think there are a number of places where spending can go down over time. The accumulation phase for some of us hasn't only been about money, but also about stuff we buy once and will continue to use for the rest of our lives. How many times do you need to buy a good socket wrench set, cookware, china, furniture, piano, etc. Many of these can be bought once and then you're pretty much set for life. Sure there may be additions and upgrades for some - electronics being the perfect example - but durable things acquired with an eye for quality may only need to be in your budget once in a lifetime.

 

[growing_older]

So now I am thinking that maybe my expenses when I am over 85 will be the same as they are now at age 62. Sure, I will be able to do fewer of the things that I presently do. Still, if I live to be as old as I hope, then eventually I will need things like a nice walker, handicapped modifications to my shower so I don't slip, and visual aids (maybe a wall sized computer monitor will be common by that time, who knows, but it might be pricey). I might want to hire more help around the house or someone to shop for me once I am too old to do that.

In my limited sample of older relatives, those who could afford to do so spent as much or more are they aged. They traveled less, but more slowly and luxuriously if they did. They hired help to do chores they used to do themselves. They used in home care when they could and graduated to progressively more expensive levels of assistance as needed. They found generous ways to indulge grandchildren or encourage people to visit them by subsidizing trips. Those with limited means did spend less as they aged, but I don't think they would have chosen to do so if they had had the ability to do otherwise.

 

[W2R]

In my limited sample of older relatives, those who could afford to do so spent as much or more are they aged. They traveled less, but more slowly and luxuriously if they did. They hired help to do chores they used to do themselves. They used in home care when they could and graduated to progressively more expensive levels of assistance as needed. They found generous ways to indulge grandchildren or encourage people to visit them by subsidizing trips. Those with limited means did spend less as they aged, but I don't think they would have chosen to do so if they had had the ability to do otherwise.

My observations (also from a limited sample) have been the same.

 

[rescueme]

My observations (also from a limited sample) have been the same.

DW/I agree. We planned for "quality" over "quantity" as we age ...

 

[youbet]

In my limited sample of older relatives, those who could afford to do so spent as much or more are they aged. They traveled less, but more slowly and luxuriously if they did. They hired help to do chores they used to do themselves. They used in home care when they could and graduated to progressively more expensive levels of assistance as needed. They found generous ways to indulge grandchildren or encourage people to visit them by subsidizing trips. Those with limited means did spend less as they aged, but I don't think they would have chosen to do so if they had had the ability to do otherwise.

It's started with us already at 63 yo. We always considered household chores and light remodeling/maintenance as part time jobs in RE. But we've started to throw in the towel on that and now have a landscaping service for routine yard work and even brought in some help to tear out some overgrown bushes we wanted to replace. We did plant the replacements ourselves, but that was fairly easy. Last winter I paid to have the LR and DR painted, something I would have never done before. We recently hired a guide while on a fishing trip, mainly to do the heavy lifting. It's a treat that we can afford this kind of help as the aches and pains acquired while doing these things ourselves are getting harder to schrug off.

I really think that as long as we can bring in some outside help, we'll be able to stay in the house and continue outdoorsy activities for many years. But that help costs money and I'm glad we planned for it.

 

[Katsmeow]

In my limited sample of older relatives, those who could afford to do so spent as much or more are they aged. They traveled less, but more slowly and luxuriously if they did. They hired help to do chores they used to do themselves. They used in home care when they could and graduated to progressively more expensive levels of assistance as needed. They found generous ways to indulge grandchildren or encourage people to visit them by subsidizing trips. Those with limited means did spend less as they aged, but I don't think they would have chosen to do so if they had had the ability to do otherwise.

And, yet, that hasn't been my experience with my older relatives or DH with his. My parents slowed down a lot. From mid-60s to mid-70s it was a gradual slowing but they drove less, went on fewer trips, and so on. Perhaps it was that they were always frugal but the didn't do anything more luxuriously, except possibly gifts to my son (their first grandchild) when they were both 70.

Unfortunately my dad died in his mid-70s and since then it has just been my mom who is now in her late 80s. Yes, some expenses have gone up. She now pays someone to do her yard which she never did before. But, she drives much less now, gets tired very easily and just isn't interested in trips and such.

There is just a big difference between someone in their 60s and someone in their 80s. We've offered for her to go on vacations with us a number of times and she went once about 10 years ago and has refused every other time. It isn't a financial issue -- we would have brought her with us at our cost -- but she simply says it is too tiring for her. When she visits us or we visit her, she will go out to dinner maybe once because it is tiring to her to go out.

My parents were always very frugal and she still is but really she just doesn't have the desire or need to spend a lot of money at this time.

 

[growing_older]

I have seen some academic studies that suggest people do spend less as they age, particularly among the older old (except for end of life medical care). So I think there are plenty of people who agree with you. All I have is my anecdotal evidence, but I'm making my plan based on that. If I'm right, I'll be glad to have the means to do the things I want. If I'm wrong, I'll leave a larger than expected inheritance and potentially could have retired sooner. I can live with that as the cost of additional safety in my plans.

 

[W2R]

I want that deluxe walker! Well, I will want it when I am old enough to use a walker,that is.

 

[traineeinvestor]

And, yet, that hasn't been my experience with my older relatives or DH with his. My parents slowed down a lot. From mid-60s to mid-70s it was a gradual slowing but they drove less, went on fewer trips, and so on.

My parents (75 and 70) seem to be doing the opposite. They've always done a reasonable amount of travel but over the last few years they have been doing noticably more than usual.

 

[Katsmeow]

I have seen some academic studies that suggest people do spend less as they age, particularly among the older old (except for end of life medical care). So I think there are plenty of people who agree with you. All I have is my anecdotal evidence, but I'm making my plan based on that. If I'm right, I'll be glad to have the means to do the things I want. If I'm wrong, I'll leave a larger than expected inheritance and potentially could have retired sooner. I can live with that as the cost of additional safety in my plans.

What I am trying to do personally for myself is imagine my life later and get some idea of what I think I will want to do and how I expect to feel. For example, I probably will still want a high end computer when I'm 80 but I don't expect I will want to do a lot of travel.

 

[Katsmeow]

My parents (75 and 70) seem to be doing the opposite. They've always done a reasonable amount of travel but over the last few years they have been doing noticably more than usual.

I think that sometimes people that age do see that they will be slowing down soon and think it is the last chance to get all those trips done that they wanted to do. Even my parents did some of that in their early 70s. But there is a huge, huge difference between my mom, say, at 70 or 75 and her at 87. I personally think that most of the huge slow down is in the 80s and beyond (from what I've seen of relatives) as opposed to those younger.

 

[growing_older]

For example, I probably will still want a high end computer when I'm 80 but I don't expect I will want to do a lot of travel.

Maybe, but that's a lot of guesswork when you start predicting so far into the future. We'll all probably want new whatsits that won't even be invented for another 10 years.

 

[Katsmeow]

Maybe, but that's a lot of guesswork when you start predicting so far into the future. We'll all probably want new whatsits that won't even be invented for another 10 years.

To an extent, but I don't think I will change my basic personality. That is, I'm sure I'll love whatever new technology there is 20 years from now. But I'm probably not going to suddenly decide to take up extensive travel.

Regardless, I am pretty firmly convinced that most people in old age do spend less money than when they were younger. I know there are exceptions but I think the general rule holds true. What is important though is to look at yourself and figure out if you think you are one of the exceptions or not.

 

[Moemg]

. But there is a huge, huge difference between my mom, say, at 70 or 75 and her at 87. I personally think that most of the huge slow down is in the 80s and beyond (from what I've seen of relatives) as opposed to those younger.

I have to agree . My Mom who is 95 started really slowing down in her late eighties and especially after 90 . She still thinks about traveling and will even start planning a trip and then realizes she is not able to do it . It's sad but she still is very active and enjoys dining out ,the movies and shopping .

 

[megacorp-firee]

It all depends. I was sitting in Vegas at a poker table about 10 years ago. An elderly gentleman was helped by his grandson (I found out though talking with the man) out of a wheel chair into his seat. Some of the 'young guys' started to try to isolate the older guy in pots, thinking they would take advantage of an old 'slow thinking' guy. He proceeded to take their money. I found out that he was in his 90's and his grandson worked for the airlines and sent him a ticket (from Hawaii) every month, so he could come and play poker. I turned to him and told him that when I grow up I want to be him. He smirked and told me 'good luck'.
I think it's good to be me, ... but I hope I get to be like him.

 

[RetirementColdHardTruth]

For me I am 38. I started tracking every expense at the end of the month by pulling my checking account. My checking account is the only place where money comes in and goes out. From there I take the income total and the expense total and put it in a spreadsheet. I also track additional details but these two relate to what you are asking about.

From the spreadsheet I generate a average monthly expenditure Then I plot those three lines on a graph. I have been doing this for about 6 months now.

As I am 38 I plan on having a running average that will show me many years of history. It will include car purchases, vacations, unexpected costs, house maintenance etc.

This trend line will let me know my exact living cost on average and I can plan for that moving forward. The nice thing is over many years I can also see what my Personal Consumer Price Index actually is so I can use that to project costs into the future.

On this chart I also track one more line. It is all my investment Account Totals. I take that total and times it by 0.04 and plot that line on the chart. From there I can actually see where my net worth needs to be for it to stay above my expenses. I call that Line My Financial Independence Line. Or Freedom Line.

Once I hit that FI line on the chart, I can look at building another few years of buffer money and then kiss the job goodbye.

It is a simple process takes me all of 10 minutes each month. I print off the chart and add it to my binder.

Good luck.