FIRE Spending Habits

[chinaco]

The outcome of this poll may be predictable but I thought I would place it to confirm my suspicions.

The poll is for people who have retired!


The Question is about your expenditures.

Have you changed you spending habits now that you are retired? (on an inflation adjusted basis)

 

[blessed]

We don't eat out as much and not commuting to work every day saves about $1500 a year. My charitable giving as a percentage of income has gone up because my taxes have gone down Lower stress, improved health must have a cost savings too. Most of my spending the same.

 

[OAG]

I voted considerably more since we have been "retired" a long time. If the poll had been something like "do you spend more/less/same on a percentage basis" I think it would be a bit more accurate especially for the "older" folks (long-time retirees).

 

[Rambler]

We are not ERd yet, but because of my job location and some extenuating circumstances, we spend a lot more on international travel (back home to the states) than we will have to do when we are ERd. We also waste a lot by buying all kinds of things we (think we) need and can't get here...but end up either not using at all or not using by the expiration date. Clothes to fit my size are hard to find here, so I am forever buying more, just in case. If I ERd today, I probably wouln't have to buy clothes for at least 4-5 years, I have so much. Also we keep a relatively full wardrobe at both our US and asian homes (won't need that). We have 4 cars and two drivers...the cars don't fit on the plane with us, and we are in both places often enough that owning in both places rather than renting is more economical, but won't need both sets in ER. We pay utils in three homes (will be two in early ER, then one later). I think you get the story...

However, some of the reduced cost of job/location related nessecities will be offset by cost of a few projects at home that have been waiting for me to have time to do them. So overall, cost will probably be significantly less than while I am employed, and I have a pretty conservative plan, but we can't be entirely certain until we pull the trigger and fade away.

R

 

[megacorp-firee]

More now due to extensive travel. We will probably keep this up for the 1st 5 or so years of retirement and then cut back ... or maybe not...

 

[megacorp-firee]

The outcome of this poll may be predictable but I thought I would place it to confirm my suspicions.

The poll is for people who have retired!


The Question is about your expenditures.

Have you changed you spending habits now that you are retired? (on an inflation adjusted basis)

curious ... what was your 'predictable' result?

 

[UncleHoney]

We're spending more, I checked a little more. Only retired 6 months but there is more spendable income in the checkbook each month than preretirement.

Healthcare costs went from $120/month to $325, but we pay no SS taxes and no city income taxes so that was a net gain. Since we don't have the 50% 401K deposits each month there was a gain on that front too.

We're still well within our budget and even saving some. Currently we're only drawing 50% of our potential retirement income, my pension and DW SS. We're letting my SS and the nest egg grow.

Areas of spending growth are based on doing things around the house and hobbies. Our gasoline expenses are about the same, 21 gal. per month or less.

 

[chinaco]

curious ... what was your 'predictable' result?

I was assuming it would skew to the less side with most being about equal.

We are planning on spending more during FIRE... because of travel. Otherwise our spending would probably be about equal.

 

[W2R]

I am not FIRE'd yet, so didn't vote. My spending after ER will be considerably greater than it has been in the past. I have always planned to have more to spend in ER than I have been spending.

 

[plsprius]

I expect my spending to be about the same when ER'ed.

I'm FIREd and on April 1st will be scaling back to a much reduced workload (PT with a new employer). I expect my earned income to be about 33% of my former earned income.

Taxes (Fed, State, Medicare, SS, SDI) were about 38% of earned income in 2007, and were such a large expense that I spent more on those taxes than I spent on myself...Please reminded me, who was I working for?

The only expense line that will increase dramatically is COBRA medical insurance, which will be almost $500 per month post tax, as compared to about $32 per month pre tax. Maybe I'll be with my new employer long enough to qualify for their basic medical, but in any case, ERing is worth paying for my own health care...

One additional "expense" that may go away, depending on circumstances, are contributions for retirement savings. No guarantees on this one, but I'm hoping to increase my IRA's earnings through better investing (something I'm trained in) by more than the $20K contribution (and employer-match) I used to make to my 401(k).

So, taxes and 401(k) contributions were about 50% of earned income for me in 2007. Way more than I spent on myself. Sorry folks, but once ER'ed, I will not be pulling the "ship of state" as much as I used to.

 

[Rambler]

W2R, what percentage more do you anticipate?
R

 

[W2R]

W2R, what percentage more do you anticipate?
R

Before my windfall, my plan/goal was a little over 133% by ER in 2009-2010 and that plan was coming along very nicely, better than I had thought it would. I take LBYM very seriously but in ER, I will have more time to spend money and to enjoy my purchases. So, I think for me, 133% is not an unreasonable level of spending.

Now (since receiving a windfall), if I took a 4% SWR apparently I could spend maybe 400% of my present spending after ER in late 2009. I will probably end up spending somewhere around 150% - 200% of my present spending, though, and plan to move towards that gradually. I am the same person and I need to keep a handle on reality. Once I have become accustomed to that level of spending for a number of years, I suppose I can reassess.

 

[Rambler]

Thanks W2R, I'll be heading out about the same time as you, plus or minus a few months, but as I described, my expenses will be less.

As of about June last year, I was anticipating a windfall (different kind than yours, thankfully...I'm not ready to deal with that) that would have allowed us a similar increase in expense (but I wouldn't know how to spend it)...It vaporized in the market (something like Phantom Stock) so now I don't need to worry about how to use it...

R

 

[W2R]

Sorry to hear that! Don't forget that what the market taketh away, the market sometimes giveth back later.

My expenses might be less, since we are tentatively planning to move to a area with lower cost of living. But right now, when I get home from work the last thing I would want to do is get back in the car and go shopping. I would expect that in ER I will want to get out of the house more, and I will want to pursue some hobbies and such which will probably add some spending to my past bare-bones budget.

You know how Khan watches the squirrels, and gets such a kick out of that? I can really relate to that. So, I am a little leery of letting my new circumstances get in the way. That's why I am planning to slowly ramp up my spending rather than running out and spending money right and left. There is so much more to life than consumerism, and I might miss the squirrels if I did that.

 

[Rambler]

can't wait to watch the squirrels...feed them...and try to coax them from being so destructive, and try to live with them, and other wildlife.

Yes I know the market can give back, but said phantom stock/SARs has an expiry (over now), and therefore the remaining phantom stock with later expiry would have to work twice as hard...but unfortunately still under water. Well, we'll see. Its not over yet...
R

 

[Walt34]

We spend slightly less than before ER. I had virtually no employment-related expenses because my employer issued everything, even the car that I could use when not working. (What's this stuff that I have to buy my own gas and tires?) But after we had the house paid off we were saving about 45% of income so the net went up when we retired. DW of course doesn't have her commuting/clothing costs but she drives around more since there is more free time for visiting.

We eat out less often, which is OK since we have more time anyway. DW is the one who wants to go to a restaurant more than I do. A waste of money to me, but it makes her smile so wth. Overall though she is more "financially conservative" than I am.

One thing we found is that (in our case anyway) that since we have so much more free time there is more time to spend and it is hard not to sometimes. So I look at what is cheap to do after initial acquisition costs, like bicycling or a small (11 foot) boat with a 5 hp outboard. The water is the North Branch of the Potomac River which is narrow and often shallow there anyway. Come on, spring!

Since I'm the one hankering for a travel trailer and more cash for wasteful spending I'm going back to work. But working is forever optional now and the job has the option of going to part time when I feel like it so I believe it will be a lot less stressful than previously. Also it's a lot less intense than my previous job. Boredom there may become an issue, I'll have to wait and see.

 

[Jake46]

We are spending considerably more in our first year of retirement only because of the costs of moving to a new city, buying a home and finishing a basement. If I compare only the normal, monthly expenses, we 're spending slightly less primarily because the cost of living in Fort Collins is much less than Houston (gas is cheaper here -- go figure).

 

[lazygood4nothinbum]

i'm not a we; i'm an i.

 

[Goonie]

I spend about the same now as I did before ER. Although some expenses have dropped considerably, or disappeared altogether, other things have now taken there place.....by choice of course. I don't eat breakfast and/or lunch out anymore....at least not a regular basis....but when I do eat out I go to nicer places, and they're usually a bit longer drive to get there. Oh, and the drive to get there....it's now my own vehicle & gas....not the employer's! But overall, I think it pretty much balances out.

Other than that, most of my spending has remained about the same. Just like I had figured it would while I was laying out my FIRE plans!

 

[rocketdog]

I chose "considerably less". We just FIREd--me at the first of the year, DH March 1st, 2008--and our budget is quite a bit less now than we used to spend. Time will tell if we keep to it, but so far, so good...
We decided to retire earlier than originally planned, and so the cash we have to live on pre-pension, pre 403(b)/401(k) has to stretch further than originally planned. But once we hit 60 years old our income will go back up to what we spent when we were working.
In theory.

 

[whitestick]

Have you changed you spending habits now that you are retired? (on an inflation adjusted basis)

I voted that our spending habits are the same as before. The actual costs are lower, since we payed off long term debts, house, cars, at retirement, but the habits continue on - go out to eat 3-5 times a week, visit friends, places, movies, etc. The payoff was always anticipated and planned for, so those habits really didn't change either. Others seem to have answered the question differently, not sure which question you were looking for.