Has your retirement spending matched your estimates??

[albireo13]

I'm going through budgeting exercises before I retire and see many opportunities for reducing our living expenses and this makes me very optimistic about being FI.

At the same time, these budgets are just estimates and I worry that reality will be another story.

Would love to hear from retirees what their experiences have been.

Did they find their living expenses truly dropped as expected?
What has been the trend?

I'm factoring in some margin in my budget estimates but still, the uncertainty lingers. I'd love to hear some history from others.

 

[frayne]

Retired at 54 and now 66. Living expenses about what they were while I was working which was anticipated and planned for. While employed we lived on about 66% of my salary.

 

[pb4uski]

Retired at 56... now 62. Only major thing that dropped for us was taxes.... but we didn't move and I worked from home so no huge changes in our lifestyle other than much more time. Our health insurance was a little higher.

One the discretionary expenses front, our golf, dining and travel expenses all went up but that was because we chose to do more.

Overall though, no surprises other than taxes dropping to nothing is we don't do any Roth conversions.... that was a surprise but we adjusted.

 

[athena53]

I never really estimated our expenses- is that terrible? I just looked at the potential income given a reasonable withdrawal rate (4% or less) and DH's SS and said, "yeah, we can live on that".

I'm doing better than I would have expected. We downsized in 2015, which had a lot of costs associated with it but is now paying off with lower monthly expenses. Health insurance for me ended up doubling in cost from 2014 when I retired to last year. I'm now on Medicare, thank heaven. DH died in late 2016- we knew this was a likely scenario since he was 15 years older and had health issues. This has had two effects: first, the nightmare scenario in which he developed Alzheimer's and needed LTC is off the table (his mother was displaying symptoms of Alzheimer's before she died). Second, expenses HAVE gone down. I'm traveling more because Business-Class airfare for one person is (surprise!) half of what it is for two. I know that sounds materialistic, but DH and I were avid travelers and when I booked a cruise through the Panama Canal 6 months out, which was 2 months before he died, he was happy for me.

So- short answer is that I didn't project expenses, but things are turning out very well.

 

[Dawg52]

Retired in 2007. Health premiums increased more than expected(last 5 years). But will come down in 2019 when I turn 65 and medicare kicks in. And I didn't project buying a vacation condo, but a modest inheritance made that possible. All other projections have been close.

 

[audreyh1]

Our expenses didn’t drop. They went way up! As expected.

1. We were no longer saving (setting salary aside) - we had been very aggressive savers while working.
2. We had time to spend money - we were too busy to spend much while working.
3. We traveled like crazy which for us was the whole point of ER.

But we anticipated all of this and retired with a generous travel slush fund and the long-term funds needed to support our more spendy lifestyle.

 

[Red Badger]

Like other poster, I was guilty of not budgeting. We were living well with about 50-60% of my gross salary and no debt other than mortgage. Once I was convinced we could survive a 50% cratering of our portfolio, we headed for the exits.

Of course YMMV!

 

[Danmar]

Retired 11 years now. Spending a fair bit more than originally planned. Mostly because we bought two more homes. Our planning for retirement spending was reversed from most, I think. We saved like crazy and once retired simply set the spending levels to our available sources of cash flow (ie divs and pension). This worked fine for us because we knew we could easily live on those amounts.

 

[Golden sunsets]

I find that I underspend my budget in years when there are what I call "lumpy item extras". For example last year we did a lot of interior work on our home and gifted a large chunk of downpayment money to one of our children. I was conscious of those extraordinary expenses, and without any intentional effort underspent budget lines in the discretionary portion of our budget. 2016 was a similar experience. One of our children married and our costs associated with the wedding were large. This year I am calling the year of the outside of the house, where exterior painting, new carriage style garage doors, and a new front door entrance system are planned. My bet is we will underspend the rest of the budget for the year. It is not a planned tightening. It just seems to happen. Having said this, we have never had a WR of more than 1.27%, so we could easily spend more, but our natural frugal instincts seem to kick in and subconsciously I seem to look for ways to partially pay for these big ticket planned items.

 

[VanWinkle]

Retired at 56... now 62. Only major thing that dropped for us was taxes.... but we didn't move and I worked from home so no huge changes in our lifestyle other than much more time. Our health insurance was a little higher.

One the discretionary expenses front, our golf, dining and travel expenses all went up but that was because we chose to do more.

Overall though, no surprises other than taxes dropping to nothing is we don't do any Roth conversions.... that was a surprise but we adjusted.

The cost of golf actually went down as I now can play during the week with a weekday membership. Before, I had to golf on the weekends and the rates were much higher. I pay 275.00 per year and can play 5 days a week walking for no charge- sweet deal for me.

 

[Nemo2]

Stopped working, (did I ever start?), at age 46 - now 75...don't spend much, travel a bit.

 

[scrabbler1]

My living expenses have been roughly the same in my 9 years of retirement as they were before that.

When I was putting together my ER plan in 2007-08 leading up to my eventual ER in late 2008, I saw the elimination of two expenses - FICA taxes and commutation expenses. In return, I saw my health insurance premiums rising by about the same as the drop in the direct work expenses. I was working part-time at the time, so my overall income (and income taxes) was not going to change much. Other expenses were not going to change much, either.

Also in my ER plan, I set my inflation rate at 3% for non-medical expense and 10% for medical expenses.

My non-medical expenses have risen between 2% and 3% a year, on average, in the 9 years I have been retired. There have been small spikes, mostly driven by income taxes, when I had spikes in investment income (2010 and 2017 are the largest of those).

My medical expenses have been the most volatile, though, not following any real pattern. In 2009-2011, I saw big increases in my HI premiums, forcing me to switch to a cheaper, bare-bones, hospital-only plan until the end of 2013 when the ACA's exchanges came in. I then began paying for a regular policy again, albeit cheaper than the pre-ACA policies I bought in 2009-2011. I saw a spike in 2015 when I got sick and maxed out the OOP expenses following a hospital stay. My medical expenses have stabilized in 2016 and 2017, as I have been healthier. But insurance premiums are on the rise (I sometimes qualify for a small ACA subsidy) again, as I am paying about what I paid in 2010 although OOP expenses are pretty low.

 

[pb4uski]

The cost of golf actually went down as I now can play during the week with a weekday membership. Before, I had to golf on the weekends and the rates were much higher. I pay 275.00 per year and can play 5 days a week walking for no charge- sweet deal for me.

Ours went up because I play a lot more (over 100 rounds last year vs perhaps 20 a year while I was working) so we have a membership and DW has taken it up. That $275 is indeed a sweet deal... our club is about $850 for a 6 month season and I think that is pretty good.

Funny thing here in Florida... weekday rates are higher than weekend rates... totally inverse from the way it is in New England.

 

[kcowan]

now 75...don't spend much, travel a bit.

We spend a lot. 10% more last year but still less than the portfolio gain. We travel a lot too but less than Nemo.

 

[bizlady]

Pretty much as planned but a bit less than budgeted. Retired at 55, now 62. Budgeted for 3.5 inflation, 5% ROI, and 12% on Medical insurance. Inflation has been lower, ROI greater, and medical insurance a bit less.

 

[MikeWillRetire]

I am a couple of years out from retiring, and i have been tracking my expenses for years. My mortgage represents 10% of my current expenses, my children cost another 25%, and college now costs another 20%. So with the mortgage paid off, and the children successfully launched, our expenses will drop to about 45% of what they are now. In retirement, we plan to spend more on travel and entertainment, so we are planning on spending about 60% of what we spend now.

 

[Chuckanut]

My spending has remained about the same, maybe a bit less on car expenses since I no longer make a daily 35 mile drive to work. I plan to remedy that problem by upping travel expenses starting in 2018. I ain't getting any younger.

 

[North Texas Cajun]

Our spending went up temporarily, but we had planned for that. We paid off the mortgage - for emotional reasons, not because it was smart financially. We’re traveling much more and spending more on trips. Golf is about the same, as I already had membership. But commuting costs are now zero. Health insurance went up, but not much because of medicare.

All in all, we’re spending what we expected.

 

[Lcountz]

I budgetted to spend....100% of my take home income during retirement!!!!

That is because I lived on my anticipated net pension for three years before I retired, just to make absolutley SURE I could do it, and even then I was nervous. My "take home" was my pension amount.



What better time to live on a pension than when you are still employed? said I.

I banked ALL the rest, and, along with living below my means,now believe I have much more than I will ever need. Retired 5 years, and thanks to market gains, it's even better now. Age 62, and plan to wait til 70 to collect SS, and I don't know what I'll do with that money. No kids, no spouse. Everything paid for. But I planned it that way so knock on wood, things will work out. I have not touched the IRA/401K yet.

Mom lived in her own home til age 95....til the last week of her life, and all her relatives lived waaaaaay long to late 80's and 90's...that's a loonnnng time to fund...BUT...you do a LOT less when you get that old, even if you still have health...

No matter. I will NEVER go back to w**K!!!!!!!!!!!!!!!

 

[Amethyst]

Our spending has been way, way more than before I retired (Mr. A was retired already). We have had to do a lot to our home, are hiring more help than we used to, and are traveling while both of us still want to, and can. We never used to take vacations!

 

[savory]

We are spending within 10% (+/-) what I expected for the last 8 years. My retirement analysis was based keeping fairly close track of our expenses prior to retirement. We still keep track but not as carefully by category. Mostly now concerned with the total expenses. And as others have mentioned, some of the prior expenses have gone into making retirement more enjoyable.

Given the nice market growth, we have actually become a little more aggressive with our spending. For example, this year we are hosting a family vacation with our children and are planning to pay for home improvements that are not really required but will make things a bit nicer.

 

[Teacher Terry]

Some of our expenses went down and some went up like HI. WE are choosing to travel a lot while we can. WE are spending between 10-14k/year on travel. Also we are going out more, eating out more then we used to because we have the time and are not tired all the time. These are things we can cut back on if we want.

 

[HI Bill]

I'm not retired yet. Working, I save ~48% of my total pre-tax income. My budget in retirement assumes the same level of spending for necessities, but has me doubling my spending to allow for extensive travel! The big wildcard is health care, with unknown changes to the ACA and Medicare.

 

[Human]

In my 12 years, expenses have steadily increased but not too much. Health insurance is the biggest factor (self insured, no medicare yet), but I suspect there is a bit of inflation in there too.

My expenses are starting to increase a little more, as I've decided to spend a little more now. If all goes well, I'll do the same as years go by and I feel more comfortable doing so.

 

[SecondCor521]

I thought I would spend about what I spent when I was working except for taxes, health insurance, and gas.

I thought taxes would drop to zero. They did.

I thought health insurance would be manageable with the ACA, and if something happened to the ACA I'd manage somehow, especially since my kids will hopefully drop off my policy at some point in the next decade. So far, so good.

I figured I'd spend less on gas for my car, since I wouldn't be commuting to work. I did stop commuting, but I've been driving around more than when I was working, I guess because I have time to drive places other than work. Also, my parents gave me their car when they stopped driving, and it a better car but gets worse gas mileage than my old car did. Not a big deal in the grand scheme of things, but it has been the only negative surprise on the spending front for me.