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Old 11-20-2015, 01:35 PM   #41
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We downsized a year after I retired and had bigger-than-expected expenses related to that, both fixing up the old house and the one we bought, plus a few expensive, unexpected repairs.

Other than that: health insurance premiums definitely up. Clothing down- the tailor who made me a few items of business clothing every year definitely lost out. Travel way up, but we had two family weddings this year (both road trips with overnight stays, one we brought DS, DDIL and the Munchkin and rented an SUV because babies have lots of Stuff) and a wonderful trip to Iceland. Investments were doing well and our other expenses were modest; travel and family are big priorities for us.

Post-downsizing: mortgage and utilities down, groceries and alcohol down (we're using Costco for meat and alcohol now), gasoline up (new place is further away from many things). Overall, definitely less, and it would be significantly less were it not for travel, and that's an item we can adjust if necessary.
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Old 11-20-2015, 02:27 PM   #42
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We're tracking 100% of pre-retirement spending - including taxes. But that also includes the big "once in a lifetime" trip (plus some in-budget smaller vacations) and the higher than expected medical bills. And it also includes what is likely, an overpayment of taxes based on my test run of taxes using last years TT. (I'm still getting an idea of how things like HSA contributions, etc have a big impact on taxes.)

I was surprised that we weren't higher in spending given the 9 week Europe trip for a family of 4.
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Old 11-20-2015, 03:12 PM   #43
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+1

(After two longer posts written and lost in response to this, due to not being cautious, I think the above will cover it.)

Oh - - one of the posts was in my cache. Here it is:
Well said, I agree. In our case spending is determined by funds available. Turned out that prior to retirement, things worked out better than expected. This provided more funds than we strictly needed. Simple solution was to spend and give more in retirement.

After a while though you tend to fall into a bit of a "spending groove" and extra funds would probably be given away.
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Old 11-20-2015, 04:06 PM   #44
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I EXPECT to spend more but won't worry about it much. What I do worry about is HAVING to spend more than I can .

From tracking my own expenses over the years it can fluctuate for many reasons but the primary driver of spending change is income change.

When I first got my current job I was making quite a bit less than I am now. DW and I saved over 50% post tax... Closer to 60% now, but that's nearly a doubling of actual spending. Almost all of that is going from 1650/mo in rent to 4250/mo in mortgage.

I suspect that's true for most people... What I use more in planning is flexibility.

We can cut spending 20% pretty easily (can also add 20% ). If we need to cut more, we'll move. Since we're in a high cost area it's not hard to cut mortgage by 50%. So if I have a plan that allows me to cut my monthly expenses by 50% ish, and I plan a 3% SWR... Even at 40 with 2 kids I'm not that worried... Though it's taken a lot of planning and somewhat useless over thinking to get to that not worried state

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Old 11-20-2015, 04:49 PM   #45
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When DW stopped working 6 months ago, our spending went way, way down. Taxes, including income and payroll taxes, represented more than half of our expenses when she was working. Taxes fell nearly down to zero after she retired. Instant 60% spending cut. After we move back to a lower cost of living area in a couple of years, our remaining expenses will be further cut in half - though our spending might not (more money for fun stuff).
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Old 11-20-2015, 05:09 PM   #46
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Likely true for the folks extending most of their working lifestyle into retirement. But for folks who RE and change their lifestyle, their personal historical spending data may not be as useful and accurate in predicting retirement spending as you say.
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This board is full of folks who made or plan to make significant lifestyle changes in retirement. Probably much more so than the overall population of retirees.
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+1

Most years we've been spending more than our last few years working too. For the reasons you mentioned above plus we've now got the time to travel, expand hobby interests and just plain ole have fun. So that's what we're doing.

Folks actively posting on this board often seem to run counter to the overall population of retirees or upcoming retirees. This frequently shows up in pre-retirement saving patterns (LBYM or not) and the desire to cease working. I'm starting to think we might also be a different population in terms of post-retirement spending patterns.
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We spend a ton more money, all on discretionary things. Time is so much greater than money right now for us at mid-60s so we say yes to any suggestions that appeal to us. We could easily cut back and know we will when the things we are spending on stop being fun for us. Life is good.
The above posts cover my thoughts and experiences as well.

We retired 3 years after the last child graduated from college and came off the household payroll. We are now about to enter our 7th year of retirement and our annual spending continues to be much higher than those last 3 years of working, mostly all due to discretionary spending. I don't see the spending levels coming down anytime soon, while we can afford our lifestyle we will keep on at this level.

Taxes are down, but not as much as they might have been since I've been doing Roth conversions each year, and this last 3 years health costs are way up due to a combination of premium increases and health issues.

It's all good
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Old 11-20-2015, 06:23 PM   #47
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You all are making me nervous. I expect that I will spend significantly less in retirement than I do now while working. I don't plan on going all mustachian but I expected that spending less in retirement was a way to get to retire early. I've done a lot of planning and I think all the things I've cut out of the working budget to get to a retirement budget are reasonable, doable and worth giving up in order to retire. However, if I somehow get a bug to do things that I've never done before (like travel for example), my current plan will be busted pretty quick.

Don't get me wrong, I've budgeted for entertainment, eating out and some other discretionary items, but it sounds like I'm in trouble because, I plan on spending about 25% less in retirement than I do now working. Note that I wouldn't say I'm living large, but I don't think much about my spending either. I always figured as long as I met my savings goal, that spending was the benefit of working.

I'm I completely missing something? Is there no one here who cut their spending significantly in retirement?
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Old 11-20-2015, 07:21 PM   #48
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I'm I completely missing something? Is there no one here who cut their spending significantly in retirement?

Me! It's not as low as I planned, but no where near what it used to be.


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Old 11-20-2015, 07:23 PM   #49
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This is the way I see it:

A: 40 - something couple with jobs, kids at home, and a mortgage.
B: 58-61 year old empty-nesters with paid off mortgage.

How much should they expect to spend in retirement?

A: Quite a bit less than their current gross income. Their taxes will be lower, their kids will be gone, the mortgage will be gone, and they don't need to contribute to retirement saving.

B: Something pretty similar to their current, after-tax spending. They should look at details like health care, commuting costs, retirement fun, ... to be sure.

I see the article in the OP addressing couple B.
The answer for couple A is a lot different.
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Old 11-20-2015, 08:09 PM   #50
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Additional points from the EBRI report were seen as follows:
  • In the first two years of retirement, 2 in 5 households (39.3 percent) spent "less" than 80 percent of their preretirement spending. By the sixth year of retirement, a majority (53.1 percent) of households did so.
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You all are making me nervous. I expect that I will spend significantly less in retirement than I do now while working. I don't plan on going all mustachian but I expected that spending less in retirement was a way to get to retire early. I've done a lot of planning and I think all the things I've cut out of the working budget to get to a retirement budget are reasonable, doable and worth giving up in order to retire. However, if I somehow get a bug to do things that I've never done before (like travel for example), my current plan will be busted pretty quick.

Don't get me wrong, I've budgeted for entertainment, eating out and some other discretionary items, but it sounds like I'm in trouble because, I plan on spending about 25% less in retirement than I do now working. Note that I wouldn't say I'm living large, but I don't think much about my spending either. I always figured as long as I met my savings goal, that spending was the benefit of working.

I'm I completely missing something? Is there no one here who cut their spending significantly in retirement?
W2R pulled info from the EBRI report (above) that stated almost 40% of retirees spent less than 80% of preretirement spending in the first 2 years and it grew to over 50% by the 6th year in retirement. You won't be the Lone Ranger with your +/-25% spending reduction..

Our preretirement spending was very LBYMs (heavy savings scenario - more than half of our incomes). We did reduce spending in the first 2 years of early retirement (retired @ 58/57, six years now), but we have been ratcheting up spending during the following 4 years. That ratcheting up can be eliminated as it is optional discretionary spending (as others have stated).
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Old 11-20-2015, 08:23 PM   #51
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I'm I completely missing something? Is there no one here who cut their spending significantly in retirement?
Huge changes for us. Income taxes are way down, college costs will be ending, the kids cost close to $10K each a year not including college costs and they will be off the payroll before too long, job related expenses were $9K, we had a tax firm do our taxes for over $2K a year and now DH has had time to learn to do those, we cut the annual energy bill by over $2K, got rid of the landline for $600, lowered the cable bill by $620 a year and a bunch more.

I keep a list and it has 121 cuts or group of cuts so far and we still have a long list of action items we just have not had time to get to yet. If you have optimized spending now maybe your list will be a lot less. But we had a lot of fat we could cut from our working years budget now that we have more free time to review and optimize every expense.
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Old 11-20-2015, 11:53 PM   #52
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I'm I completely missing something? Is there no one here who cut their spending significantly in retirement?
Are you counting income taxes in current spend?

We are in our 8th year of ER and are spending less in nominal terms than we did before we retired. (Current spending includes income taxes. Pre-ER spending does NOT include income taxes.) We did move to a lower CoL city 4 years ago, but even before that, we spent less than pre-ER.

We do however have the flexibility to spend more if we need to and I think that flexibility is important.
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Old 11-21-2015, 09:32 AM   #53
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Are you counting income taxes in current spend?

We do however have the flexibility to spend more if we need to and I think that flexibility is important.
Yes, I'm considering income taxes in my planning. I'm primarily using the Fidelity planning tool and our multiple years of data in Quicken.

I agree, having some flexibility is important. I thought by using the assumptions I've been using that I'd have that flexibility, but if the natural forces are to spend more, I'm not so sure I will be successful swimming upstream. It does seem like travel is the big new expense in retirement and I have little to no interest in traveling except for road trips in the continental U.S.
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Old 11-21-2015, 10:05 AM   #54
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Yes, I'm considering income taxes in my planning. I'm primarily using the Fidelity planning tool and our multiple years of data in Quicken.

I agree, having some flexibility is important. I thought by using the assumptions I've been using that I'd have that flexibility, but if the natural forces are to spend more, I'm not so sure I will be successful swimming upstream. It does seem like travel is the big new expense in retirement and I have little to no interest in traveling except for road trips in the continental U.S.
Almost all of our overspending as it were is for travel so you are good there . Seriously, you are probably fine.

We always LBOM'ed before retirement, and we could cut our current spending way back tomorrow, but we thought about what we wanted to do in retirement and how much that might cost. It sounds like you have done the same.
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Old 11-21-2015, 11:23 AM   #55
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You all are making me nervous. I expect that I will spend significantly less in retirement than I do now while working. I don't plan on going all mustachian but I expected that spending less in retirement was a way to get to retire early. [...]I'm I completely missing something? Is there no one here who cut their spending significantly in retirement?
In my case, due to a variety of unexpected occurrences I ended up with more money than needed to continue my pre-retirement lifestyle. I can't take it with me, so that is why I am spending more.

I think the best way to figure out what you will need in retirement, is to start with your present budget. Eliminate expenses that will no longer apply after you retire, such as work clothes and commuting costs. Add any new expenses that you expect to arise in retirement, such as travel (if you have that planned), [EDITED TO ADD: increased medical costs], or additional recreational costs.

So, if you plan to live the same way as you presently do, and don't plan to travel or need any extra leisure time costs (or "good for me" presents like a new car/boat/RV), and [edited to add: if you can manage the medical costs as you age], then I suspect that you may be easily able to live on less than before retirement. In retirement, taxes are usually much lower and also there is no longer any need to save for retirement.
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Old 11-21-2015, 12:14 PM   #56
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I have been ER'd for 12+ years. Always followed a LBYM philosophy (which enabled the ER at 52) but I've found over the last 12 years that it's really hard to fight the LBYM approach so we have continued to expend about the same as pre ER. Lately I have begun to think as W2R and we are consciously trying to spend more where we think it will bring satisfaction ( My wife getting some horses definitely helps in the expenditure department). The fact that our liquid NW has more than doubled since ER in 2002 also pushes in that direction.
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Old 11-21-2015, 01:43 PM   #57
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WE are spending more mainly due to lots of traveling. At 61 we want to do this while we can. WE took a month RV trip that was expensive because we traveled over 4,000 miles & didn't get cheap rates because we didn't stay in one spot for a month. Then we took a 3 week vacation & 2 weeks were a cruise. So we have spent a total of $14,000 in travel this year which is something that we never did while working. Also our healthcare premiums/costs have skyrocketed. Our insurance premiums went from $2400/year to $10,000. Our first year of retirement we spent less then we ever did. The last 2 years have been the travel years. WE did all our remodeling/downsizing, etc before we retired & shortly after. WE can cut our travel costs substantially by taking our RV & staying in 1 spot for a month, not driving it so far, etc. Right now we want to enjoy because you never know when that will end.
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Old 11-21-2015, 02:05 PM   #58
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One thing about spending a lot on travel: it will taper off when you get to your 70s. Despite people talking about seeing octogenarians who are globetrotters, the truth is that many more are in nursing homes, hence out of view. Many others are just, well, gone.

So, for people who love to travel, do it while we still can. No regrets later when we are confined to a wheelchair.
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Old 11-21-2015, 02:35 PM   #59
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You all are making me nervous. I expect that I will spend significantly less in retirement than I do now while working. I don't plan on going all mustachian but I expected that spending less in retirement was a way to get to retire early. I've done a lot of planning and I think all the things I've cut out of the working budget to get to a retirement budget are reasonable, doable and worth giving up in order to retire. However, if I somehow get a bug to do things that I've never done before (like travel for example), my current plan will be busted pretty quick.

Don't get me wrong, I've budgeted for entertainment, eating out and some other discretionary items, but it sounds like I'm in trouble because, I plan on spending about 25% less in retirement than I do now working. Note that I wouldn't say I'm living large, but I don't think much about my spending either. I always figured as long as I met my savings goal, that spending was the benefit of working.

I'm I completely missing something? Is there no one here who cut their spending significantly in retirement?
Does your current spending include payroll taxes, 401k contributions, etc...

I was contributing 20% to 401k - that stopped when I retired... so did the SS and medicare taxes...

Some folks here look at spending as NET spending... Others look at spending more from a gross income POV... So it all depends.

As I mentioned above - I'm pretty happy our first calendar year where we're both retired our net spending is similar to our pre-retirement net spending. But the big shifts are - no more mortgage payment...and spending almost 30K on a once in a lifetime 9 week trip to Europe for 4 people... If you exclude the trip, our spending is lower than I planned for the year, despite higher medical bills than expected and lots of materials for a high end master bath remodel. Once our home fix-ups are done, I expect our spending to drop even more.
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Old 11-21-2015, 02:52 PM   #60
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My Mom liked to travel a lot more then I do so she traveled through her 70's & even to Europe in her early 80's. By her late 70's she wanted to stay in 1 spot when she traveled-no more moving her suitcase every night. Her later years she just traveled locally. I do think she was highly unusual. WE have a few friends that are too sick/disabled by early 60's to travel so you just never know. If you put it off too long the opportunity is gone forever. WE noticed on our cruise that many of the people were in their 70's-80's & I think the main reason is that you can be as active or as lazy as you want. Their were lots of people with walkers. Plus everything is provided for you so it relieves you of decision making & having to get to where you want to go.
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