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Old 11-21-2015, 06:18 PM   #61
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We retired three years ago and our net spending is about the same as our last couple of years of work. The wife and I were putting 25% of our income into tax deferred and spending most of what was left.
Now we happily spend the 75% we always spent.
Our withdrawal rate is under 3% and we have plenty of room to cut if the markets tank.
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Old 11-21-2015, 07:10 PM   #62
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Originally Posted by Jerry1 View Post
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?
Yes. Look at Post 35 in this thread (my post). To be clear, we are currently spending a bit more than half of what we spent when we were working full-time and that is kids in college. Once we no longer have that expense and related kid expenses I forecast our spending will be less than a third of what we spent before (to be clear I am talking about gross spending originally which did includes taxes, savings, etc.). However, it isn't just reductions in taxes or not having to save. We spend less than we used to spend on eating out. We spend less on travel as we no longer take a big annual vacation. It might be different if we wanted to do a lot of travel now, but we don't.
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Old 11-22-2015, 07:17 AM   #63
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As others have mentioned, it isn't always clear if people plan their spending in retirement ahead of time or whether they simply "play the cards they have been dealt" and spend what is available. Whether this is what they want to spend or not...
Last time we revised our wills, the lawyer said "take your net worth and divide by 25. If that number is enough, stop worrying" and we have taken that advice to heart. We come nowhere near that number any year.

(My actual retirement spreadsheet is much more comprehensive, but the message remains the same.)
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Old 11-22-2015, 09:25 AM   #64
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Are you counting income taxes in current spend?

You certainly need to account for income taxes, but seems better to treat these as a reduction in income. The sources of income will change in retirement vs working and the tax treatment of this income will be different. To say your expenses went down because you now have cap gains (or divs) instead of employment income seems erroneous to me. If you sold a big stock position and consequently had to pay more tax, would you say your expenses went up? I wouldn't. Obviously, property taxes are different and represent a true expense.

I analyse everything on an after tax basis, ie after tax income changed by x% while after tax expenses (almost all expenses would be after tax) changed by y%.
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Old 11-22-2015, 09:35 AM   #65
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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.
Well said. If you enjoy travel do it as soon as you can. When we first retired 9 years ago we travelled extensively. Took friends and family with us. It was great. Now that I am 65 (dw is 58) we find we need to be closer to home to help care for our parents. Have had to cancel some recent trips as health issues pop up for them. Still have a handful of destinations in our list that will probably have to wait until these health issues resolve themselves. In the meantime we are satisfied using our own vacation properties and going on short biking trips. Travel expense still manages to eat up about 15% of our total spend though.
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Old 11-22-2015, 09:41 AM   #66
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Last time we revised our wills, the lawyer said "take your net worth and divide by 25. If that number is enough, stop worrying" and we have taken that advice to heart. We come nowhere near that number any year.

(My actual retirement spreadsheet is much more comprehensive, but the message remains the same.)
Right, Keith, you would be a somewhat unusual case though. Perhaps a third type? If I may summarize, you adopted a lifestyle in retirement that easily falls within your available funds. But I don't believe you had necessarily planned it this way before you retired? Anyway, all is well that ends well and flexibility is key.
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Old 11-22-2015, 03:00 PM   #67
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I have been retired 22 months and spending more than ever before in my life including giving fantastic gifts. Tomorrow I am getting a new roof and I already got a new furnace and hot water tank and did some remodeling. I am gifting people huge gifts probably spent 70K on gifts. 30K for boyfriend a new boat as his retirement gift, 16K for college student great nephew, 27K to nieces and nephew. But I am about done, as soon as I sell my house and buy a new one and some furniture I am done with maybe 10K more for the college student. I am doing huge spending but I hadn't had time before and once I am settled in I will spend less.
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Old 11-24-2015, 01:26 AM   #68
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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?

I don't think you are missing anything.

other than perhaps taxes , I don't see why spending would go down substantially for most people. If it was me , I would be pessimistic about cutting my expenses by 25% at retirement. I'd want to "live that budget" before pulling the trigger.

A couple years prior to my planned FIRE date, I lived on my projected retirement budget To make sure I estimated things reasonably. My personal estimate was not much below my pre fire spending.

I'm not sure 2 years was necessary. The first year was definitely worth doing though.




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Old 11-24-2015, 07:50 AM   #69
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Right, Keith, you would be a somewhat unusual case though. Perhaps a third type? If I may summarize, you adopted a lifestyle in retirement that easily falls within your available funds. But I don't believe you had necessarily planned it this way before you retired? Anyway, all is well that ends well and flexibility is key.
Well, first of all our budget was wildly wrong in detail but pretty accurate in total, secondly, our portfolio performance exceeded our targets for two years by taking an active approach, then there was the 2008 meltdown which happened to coincided with our purchase of a snowbird condo, then there was the pleasant surprise that 6 months under the sun cost much less than life in the harsh north.

Then there is the fact that buying stuff costs much less because we are completely flexible on when and where to buy. So none of this would have been planned, but everything seems to break in favour of ER.
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