Poll: FireCalc option for "Bernicke's Reality Retirement Plan" Poll for FIRE crowd

[pjigar]

Poll: FireCalc option for "Bernicke's Reality Retirement Plan" Poll for FIRE crowd

The firecalc reduces speding by 2-3% starting at age 56 though 76 based on Bernicke's Reality Retirement Planning paper.

The paper uses data from 2002 and based on data published by U.S. Bureau of Labor's Consumer Expenditure Survey. I suspect that lot of the data in this survey may not apply to the dynamics and mindset of the FIRE crowd. I also suspect that lot of people spend less in the retirement because they have no choice due to poor retirement planning/funding.

I wanted to poll FIRE community and see what their experience has been? Please comment if the poll options are not adequate and/or if you want to provide more detail. I am looking for responses from your own personal experience as well as that of the people you personally know who had no funding constraints in the retirement.

[EDIT] The poll question is referring to increase/decrease of "Real Spending" (after inflation) and not the "nominal spending".

 

[audreyh1]

Please fix it to not be a public poll. Thanks!

 

[pjigar]

Please fix it to not be a public poll. Thanks!

I realized it as soon as I published the poll but I don't know where to edit the poll. Any help will be appreciated.

[EDIT] To Admins: This looks like something only admin can do.

 

[braumeister]

It should be fixed now.

 

[GravitySucks]

I run FireCalc using the Bernicke option as it seems the most true to my observations.
In the Fidelity Planner I make the assumptions that health care costs drop at 65, travel costs drop at 80, and auto cost drop at 80 though transportation costs rise a bit.
This is what I've seen from both parents and great Aunts and Uncles. Their biggest entertainment expenses are cable tv and books. No one eats much and rarely wants to go out. Travel becomes a trial instead of a joy.
I also assume the medical industry will take most everything my final year on the planet.

 

[USGrant1962]

As newly ERed I don't have data for the poll, but a couple of observations.

If respondents are not adjusting spending for inflation, then "no change in spending" virtually matches Bernicke's data.

Whenever I play with that option on FIRECalc I lie about my age. I make it 10 years younger so that the decrease starts at 66 rather than 56. That feels to me more like what I would expect. YMMV.

I also wonder in a macro sense how Bernicke's handles big ticket items that are common for early retirees - mainly college costs and mortgages. I suspect that tailing off college expenses and tailing off mortgages (whether paid off or simply reduced in real terms due to inflation), when averaged across the cohort, might account for a lot of the Bernicke effect in the earlier years.

 

[Independent]

Are the percents nominal or real?

Our nominal spending is up, but our real spending is flat.

 

[pjigar]

Are the percents nominal or real?

Our nominal spending is up, but our real spending is flat.

Real percentages.

 

[Dtail]

I run FireCalc using the Bernicke option as it seems the most true to my observations.
In the Fidelity Planner I make the assumptions that health care costs drop at 65, travel costs drop at 80, and auto cost drop at 80 though transportation costs rise a bit.
This is what I've seen from both parents and great Aunts and Uncles. Their biggest entertainment expenses are cable tv and books. No one eats much and rarely wants to go out. Travel becomes a trial instead of a joy.
I also assume the medical industry will take most everything my final year on the planet.

I am only 58, so not enough data yet.
However it would seem to me that this FIRE crowd would not start reducing expenses at the tender age of 56, but more so in the 70's.
Many folks here in their 50/60's appear to spend a lot on travel and potentially more than they were spending when working.
Thus, I think the Bernicke results are very optimistic. JMHO.

 

[Cobra9777]

When I run FIRECalc, I typically use constant spending just to be conservative. My retirement planning spreadsheet has a tab with a bottoms-up build-up of spending for the next 35 years. It uses 19 categories, each having a separate component for consumption and inflation.

The net result of all that is high spending early on (57-67), increasing 2-3% per year. This is mainly from high travel, home improvements, and living in a huge house. Spending drops 14% at age 68, which is the age we estimate we will downsize the huge house. From 68-78, spending is lower and flatter, increasing only 1-2% per year due to less travel and lower spending on home improvements. It takes almost 10 years for nominal spending to hit the high-water mark prior to downsizing. From 78 onward, spending increases 4-6% per year mainly due to increased consumption of medical and other services (with a high rate of medical inflation assumed). This is moderated by less travel, fewer cars, and little to no home improvement.

I've been retired 5 years, so not a lot of actual data. Spending is essentially right on plan, with high spending on travel, home improvements, and hobbies.

 

[foxfirev5]

I am only 58, so not enough data yet.
However it would seem to me that this FIRE crowd would not start reducing expenses at the tender age of 56, but more so in the 70's.
Many folks here in their 50/60's appear to spend a lot on travel and potentially more than they were spending when working.
Thus, I think the Bernicke results are very optimistic. JMHO.

Good point. After tiptoeing around expenses the first couple of years, DW and I are discovering that we probably should be spending more and not wasting these valuable years. Even more travel, and rather than plow even more into Roth conversions, enjoy ourselves before our 70's .

 

[audreyh1]

Right - I don't expect our spending to drop until both of us are in our 70s. And if we are still able to travel, it might be late 70s, because we'll probably spare no expense while we can still travel, and pay more for upgrades, transportation, etc. to make travel easier.

 

[donheff]

I voted no change but I am only 70 (retired since 56). I still expect expenses to drop in my 80s.

Edit: Any reduction in expenses will be more than made up by taxes when DW’s RMDs kick in four years from now.

 

[PatrickA5]

I retired at 50 and am currently 60. Our expenses have done nothing but go up. We seem to find things to spend money on - grandkids, travel, home improvements, cars, etc.

I think things will level out and decrease starting mid-60's and really decrease in our 70's. My DF was spending next to nothing in his 80's and 90's - less than $15K per year.

 

[audreyh1]

I expect that our expenses will dip once we reach our 80s. However, I also expect that funds we don't use during those years will be quickly used up later as we deal with long-term care and medical expenses.

So, overall, I expect spending to average out more or less.

 

[GravitySucks]

Whenever I play with that option on FIRECalc I lie about my age. I make it 10 years younger so that the decrease starts at 66 rather than 56. That feels to me more like what I would expect. YMMV.
s.

I do that too.