Interesting article on the way expenses normally dip for a while in retirement

[kcowan]

I find that, as I work my way through the bucket list, I am not adding items at the same rate. Decline of spending has not kicked in yet. Loss of animals and relatives has freed us for the moment to travel so spike is continuing for a few years.

[Danmar]

Actually this thread got me thinking a bit more. I looked at my spending excluding capital items (home purchases) and alimony since retirement. The results surprised me a bit as follows , indexed to 2007 my first full year of retirement:
2007- 100%
2008- 80%
2009- 54%
2010- 74%
2011- 65%
2012- 55%
2013- 84%
2014- 75%
2015- 92%
2016- 65%

Doesn't seem to be any pattern other than looks like I went crazy in the first year, cut back in 2009 (financial crises), and spent more in 2015 ( daughter's wedding). I was thinking my spending was more constant than this. Interesting, at least to me.

[MichaelB]

Quote:

Originally Posted by Danmar Actually this thread got me thinking a bit more. I looked at my spending excluding capital items (home purchases) and alimony since retirement. The results surprised me a bit as follows , indexed to 2007 my first full year of retirement: 2007- 100 2008- 80 2009- 54 2010- 74 2011- 65 2012- 55 2013- 84 2014- 75 2015- 92 2016- 65 Doesn't seem to be any pattern other than looks like I went crazy in the first year, cut back in 2009 (financial crises), and spent more in 2015 ( daughter's wedding). I was thinking my spending was more constant than this. Interesting, at least to me.

Just to clarify, these are percentages, with 2007 as the base year, so 2016 is 65% of the amount spent in the year 2007?

[Danmar]

Quote:

Originally Posted by MichaelB Just to clarify, these are percentages, with 2007 as the base year, so 2016 is 65% of the amount spent in the year 2007?

Correct, should have made that clearer. Will amend post.

[REWahoo]

First ten years, with year 1 (2006) = 100.

Other than the very cautious spending in the first year of retirement, our numbers do resemble a smile.

Thankfully the uptick in spending starting in 2013 isn't due to healthcare.

[jkern]

Through the first 7 years of retirement (age 51 to 58) my spending has not reduced at all and will increase over the several years. I don't plan on any reduced spending until at least mid 70s.

[Teacher Terry]

We are traveling more because we have the time and eating out more, etc. We have been semi-retired for 4 years now at ages 62 and 57. My Mom's spending really dropped at about age 80 as her traveling went way down. Also since we work p.t. from home for ourselves we have a lot more energy then when we worked f.t. So this translates into wanting to go out more.

[N02L84ER]

Here are our percentages for the first 10 years. This year will probably be below 100% but next year (new shingles on roof) will probably exceed 100%.

100%
96%
97%
91%
94%
94%
94%
101%
85%
91%

Instead of a smile, we will be waving.

[Looking4Ward]

Interesting.

I'm spending more than I did while I was working. And so far this year I've spent more than I had at the same time last year.

It's still only about half as much as I've planned to spend every year until I'm no longer able to do so, but it's trending upwards as I no doubt become more comfortable with the concept.

[akck]

While my projections have expenses and income in the 6 figure range, I just can't see us spending that amount in our late 70's and 80's. I think our travel will be reduced and our medical should be well covered. We could house repairs in 20-30 years, but we'll hopefully have moved or downsized by then.

[RobbieB]

I'm spending a lot more than when I was working. I have all this time now to surf and buy stuff off the internet -

[Options]

The decline in spending is voluntary. From Wade Pfau's site:

The_Relationship_Between_Spending__Aging (1).pdf

[RobbieB]

Cool, good to know. I'm not gonna be a volunteer -

[Hermit]

My spending has gone down every year if I do not include DS' education expenses and home construction. At the rate I am going, I may get down to my projected retirement spending maybe in 2017. DD is getting married next month, so that blows all annual spending comparisons for this year!

[bmcgonig]

If we are covered by a medigap plan F for instance, is there any reason why our medical expenses should increase as we age? Aside from LTC.

Sent from my Nexus 6P using Early Retirement Forum mobile app

[mathjak107]

just premium jumps,dental ,hearing aids , vision ,modifying ones home to remain in it if need be and long term care costs . .

medicare is introducing lower income brackets in 2018 where your premiums will jump if you hit the levels . this years income will be the benchmark for your 2018 premium . the new range is 133,500 to 160k will be added and increased as well as increases in the 160-214k range

[mpeirce]

Quote:

Originally Posted by RobbieB I'm spending a lot more than when I was working. I have all this time now to surf and buy stuff off the internet -

Well, actually, me too.

When I was working I didn't have much time to spend money, I was busy working.

[kcowan]

Quote:

Originally Posted by Danmar Actually this thread got me thinking a bit more. I looked at my spending excluding capital items (home purchases) and alimony since retirement. The results surprised me a bit as follows , indexed to 2007 my first full year of retirement: I have added my column and based it on 2006: 2007- 100% 100 2008- 80% 95 2009- 54% 97 2010- 74% 99 2011- 65% 81 2012- 55% 81 2013- 84% 83 2014- 75% 68 2015- 92% 70 2016- 65% 71 Doesn't seem to be any pattern other than looks like I went crazy in the first year, cut back in 2009 (financial crises), and spent more in 2015 ( daughter's wedding). I was thinking my spending was more constant than this. Interesting, at least to me.

We did not have a wedding to cover. We bought our snowbird home in 2007 and have excluded the capital cost but not the remodelling/refurnishing so I think that has contributed to the higher initial years.

I expect this year and next to be slightly higher because we replaced the carpet throughout with hardwood so have been upgrading furnishings in our northern place.

The general decline below budget is because of the cheaper cost of living for 6 months in Mexico.

[akck]

Quote:

Originally Posted by mathjak107 just premium jumps,dental ,hearing aids , vision ,modifying ones home to remain in it if need be and long term care costs . . medicare is introducing lower income brackets in 2018 where your premiums will jump if you hit the levels . this years income will be the benchmark for your 2018 premium . the new range is 133,500 to 160k will be added and increased as well as increases in the 160-214k range

This had me worried, but it's for singles. Here's a chart that shows married filing jointly too:

[martyp]

I ER'd 5.5 years ago. I noticed pretty soon that my spending was below what I expected it to be. The decrease was entirely voluntary. The decrease wasn't just associated with lower w*rk related or commuting expenses. It is just that a lot of my previous spending became unimportant to me once I ER'd. Lately I've chosen to start spending that "windfall" on travel.

Of course everyone has individual circumstances to consider but this pattern of retirement spending seems reasonable to me. Or . . . it seems to apply in my case.