Living on a lot less

[modhatter]

I am wondering if there are many of you who have successfully cut spending dramatically after retirement. I ask because I am hopeful of doing just that in order to preserve my assests for a"special need child" I have for many years had income in excess of $100,000 a year. I want to be able to scale that back to living on only $40,000 a year after retirement. I am doing all the necessary things, selling big house, moving to cheaper area, no debt, but I still wonder if I can make the adjustment as I hope to.

I spend freely now, but I am starting to try and spend more carefully. Kinda like PRACTICING for the big day.

Have many of you been successful in making a BIG change in spending in retirement?

 

[laurence]

What do you mean, you want them to inherit your fortune when you pass on? What is the disability?

 

[unclemick]

Hmmm

From the variety of posters to this forum - I suspect a wide spectrum of responses. Here's mine:

I was a semi cheap SOB via established habit patterns while working; layed off at 49 - went thru several years of 'panic frugal' - an even cheaper SOB - then settled down and have been drifting up over the last eleven years based on ER portfolio, passage of time (small pension kicking in at 55 and next year early SS at 62). So I'm a fan of establishing habit patterns and the numbers will follow. Dory36's old thread '33% That's my story.' - got me hooked on this forum.

P.S. History was kind in the 90's - portfolio wise.

 

[brewer12345]

Modhatter: You may have had income over 100k, but how much did you actually spend?  When you figure taxes, housing and other costs related to working that go away or get dramatically reduced when you are living in a lower cost area on a smallish portfolio draw, you may end up with about the same disposable income.

 

[Mr._johngalt]

25% of peak, pre-ER income. No sweat! Coukl go even lower,
easily. I repeat, we (couple) could still live on Terhorst's
$50/day (circa 1980s). Dont plan to. Don't want to. Could do it.

JG

 

[Spanky]

Have many of you been successful in making a BIG change in spending in retirement?

We have no plan of scaling down our spending since it is already manageable. Our current expense is $48K per year.

 

[Dawg52]

My annual budget is already lower than most on here. I would even compete with JG. If anything, mine will increase when I retire as I plan to take a couple of nice trips per year. Having said that, I should easily live on a 3% annual withdrawal rate during retirement. 

 

[Sheryl]

The one thing we don't want to do is scale back, so I can't offer any help.

We live frugally now because there isn't enough time to spend money on travel - when we are FIREd we plan to do a lot more diving and other active travel that will cost $$.

We live on (spend after taxes) about $45,000 now, planning for $70,000 in ER - the other big increase will be home remodeling projects.

 

[TromboneAl]

We started on cutting back in June/July of this year. I'd say we're on track to go from $60,000 per year to under $40,000.

Main savings: Fewer toy purchases, less going out, smarter grocery shopping (second chart is groceries).

 

[justin]

T-Al,

It is strange how your reduction in food expenditures seems to coincide with the departure of your daughter to college. And it went down by one third too. How peculiar...

 

[TromboneAl]

Yes, you're right about the timing, Justin. But she didn't leave until September, and before she left, she almost always ate at her boyfriend's house. Only about one dinner at home per week.

I see the decrease as from about $750/month to $350 per month.

But you're right that I don't really know how much of the decrease is due to her leaving.

 

[dunc0029]

Brewer makes the key point.  If you were making 100k+, after taxes, savings, commuting costs, how much were you actually spending?  Even small things like dry cleaning costs may decrease when you don't have to wear a suit every day.  If you aren't doing so, track your expenses for a month or 3, then eliminate anything that is solely related to work ( lunches out, gasoline, etc. )  If you have a smaller home, your heating bill should be cheaper.  Your auto insurance could get cheaper with no commute.  Then, add in any new costs ( like additional recreational travel ).  That should give you an idea of a realistic post-retirement budget for yourself.

I currently make under 70k (before tax) and figure I could live on 20k/yr after tax (single + no kids) without changing anything, but I'm targeting 40k/yr for my retirement income.

 

[sgeeeee]

I am wondering if there are many of you who have successfully cut spending dramatically after retirement.  . .

We dramatically reduced costs in a number of areas. We became better, more focused, more devoted shoppers. So, we found a better deal on insurance, we dramatically reduced grocery costs and at the same time minimized eating out (we cook a lot more). We learned to clump our errands together and drive less. We live about 3/4 mile from a grocery store and a Walgreen's drug store, so we now walk to and from there if we only need one small item. Clothing costs have dropped to nearly zero (at least till all our present clothes become threadbear and fall off). Most of our entertainment time is spent camping, hiking, etc. so there is not a lot of cost there. But the few times we've gone to a movie, we chose cheaper matinees, and we don't pass up other low cost entertainment options. When you can do things during the day in the middle of the week, you often get better deals.

Altogether, we cut spending from our pre-retirement budgets by more than 25%. But we simply poored the windfall into more travel -- keeping our overall budget about the same or even higher.

 

[RockMiner]

I've also been wrestling with this issue. We plan a period of pre-retirement during which we force ourselves to adapt to lower spending, but with the backup of earnings coming in. On paper, a budget of 50k looks fine but we will definitely need to un-learn a few sloppy spending habits
I'm sure 40k is doable, but it would require giving up a lot.

Our dry run starts in January...I think tracking every dollar for 3-6 months is the only way to prove it will work. Should be interesting.

 

[sgeeeee]

I've also been wrestling with this issue.  We plan a period of pre-retirement during which we force ourselves to adapt to lower spending, but with the backup of earnings coming in.  On paper, a budget of 50k looks fine but we will definitely need to un-learn a few sloppy spending habits   
I'm sure 40k is doable, but it would require giving up a lot.

Our dry run starts in January...I think tracking every dollar for 3-6 months is the only way to prove it will work.  Should be interesting.

Rok,

One warning about your plan. Being a better shopper takes more time. If you are still working full-time, you may find it difficult to cut spending as much as if you were really retired.

Good luck.

 

[peteyperson]

I am wondering if there are many of you who have successfully cut spending dramatically after retirement.  I ask because I am hopeful of doing just that in order to preserve my assests for a"special need child"  I have for many years had income in excess of $100,000 a year.  I want to be able to scale that back to living on only $40,000 a year after retirement.  I am doing all the necessary things, selling big house, moving to cheaper area, no debt, but I still wonder if I can make the adjustment as I hope to.

I spend freely now, but I am starting to try and spend more carefully.  Kinda like PRACTICING for the big day.

Have many of you been successful in making a BIG change in spending in retirement?

Hi there,

The only thing I have heard about this was from Gillette Edmunds book, "How to retire on less than a million dollars." In it, he pointed out that he had never met anyone who had successfully retired and then cut back. He said it let to both unhappiness and eventually going back to work.

Petey

 

[Ginger]

DH retired in mid-October and we haven't really cut back on any living expenses. Possibly because I am still working full-time. Taxes will be higher next year since there was an extra cash payment when he retired and we received a whopper extra check. Not complaining.
DH is extremely happy being home and it is nice to see a smile on his face each day instead of stressing about work situations. Home Depot seems to be a favorite hangout store lately.

 

[BUM]

We are living on less. The downsizing process helps. As others have hinted at; alot of expenses are directly linked to working.

On thing about being ER'ed is that You Have Time To Save Money.

 

[haha]

On thing about being ER'ed is that You Have Time To Save Money.

True, but is this more fun than working? Maybe if you are a coalminer, otherwise it isn't clear to me.

Ha

 

[haha]

T-Al- this is an enormous drop in grocery costs. No teenage girl could acount for all this. You must have radically changed your eating and shopping habits.

Ha

 

[justin]

On thing about being ER'ed is that You Have Time To Save Money.

And spend money! I find that right now my wife and I have no time to shop. Between our two jobs, my night classes, and chasing around our 8 month old daughter, we find it hard to squeeze in the weekly 1 hour Super Walmart shopping spree. We are currently putting some home improvement projects on hold due to not having enough time to complete them. When we have free time, we'll spend more money.

 

[markplus4]

We started off doing OK....but backsliding has crept in. 8-9% portfolio returns over the last 4 years has helped mask our profligate ways. I guess we've started subscribing to the theory of spending more if returns are good....I'm sure we'll get our comeuppance one of these years.

We downsized to a 1500 sq ft house, but found it a bit too small, with a college aged daughter still at home. So now we're at a 2200 sq ft home in a golf community, although long term it should pay out. Health care can hurt more than you think, if you're on the hook for it. We had a couple unexpected issues. Eating out and mini trips can be addicting...but fortunately we don't spend much on stuff/toys. We thought it would be easier going from a 100K lifestyle to a 45K one, but we find 70K much more fun. Need to reread Your Money or Your Life!

 

[Jarhead*]

True, but is this more fun than working? Maybe if you are a coalminer, otherwise it isn't clear to me.

Ha

Ha: My wife and I have spent far more on ourselves since I retired. (Hard to be self-indulgent when raising a family and 70 hour weeks).

The trick now is to get to the finishing line.

Beings we only have to run a 440 at this stage,
keeping our fingers crossed.

 

[wildcat]

The only thing I have heard about this was from Gillette Edmunds book, "How to retire on less than a million dollars." In it, he pointed out that he had never met anyone who had successfully retired and then cut back. He said it let to both unhappiness and eventually going back to work.

Hey Petey, good to see you here.  Interesting point.  I haven't read the book but I wonder what it was based on---what kinds of cost increases, what kinds of lifestyles did these people lead after retirement and what kind of planning did they do.  If that statement is accurate then the avg US citizen 50s-60s is in big trouble.

 

[haha]

 Need to reread Your Money or Your Life! 

Right. That really seems like fun! 

ha