What you actually spend vs planned to spend in retirement

[AZsniper]

Hey all, I have been tracking my expenses pretty closely this year as I am planning to retire next year. I am curious on you thoughts of what you planned to spend monthly/annually for retirement vs. what you actually spend in retirement.

My expenses will go down when I retire due to a home sale, kids out of the house, no more CLUB VOLLEYBALL, etc.

Did you spend more or less? I guess I am trying to see the trend and how far the margins are for people, like was it 10 or 20 percent different. or the Same?

Thanks!

 

[jebmke]

Aver the 15+ years we have AVERAGED pretty close to expectations. What has surprised me is the range. Year to year variation is quite high. I'd have to look it up but from memory I think -20%/+30% around the mean.

 

[PaunchyPirate]

I’m just wrapping up my 5th year of retirement. My spending is very much in the ballpark of my thinking when I retired. And that’s without any significant budget setting. I sensibly spend whatever I want. But, I track it closely in Quicken to see where I’m at all year long.

 

[VanWinkle]

This is the first year I've come close to spending what I thought originally. A move to Tennessee, new house, furniture, landscaping and sod, and other numerous projects have
me actually spending from my portfolio. 2-3% of portfolio this year, but still under 1% for the 7 years of retirement. I am working on spending more, but still in the saver frame of mind. My SO is helping loosen up the wallet and she has the same frame of mind.

 

[MarieIG]

I retired 12/21. I spent money on the things I planned to spend money on, but more than I thought - due to inflation. I did plan in advance to have room in the budget.

 

[jollystomper]

I retired in 2018, with a 5 year plan of annual spending starting at $125K and rising 3% per year. Over those years that spending would be close to $664K.

Our actual spending for those first 5 "fiscal" years (July-June) was about $580K, roughly 12.5% less.

 

[Dtail]

Through our first 5 full years of retirement, we have spent a composite average of 14% less than budget.
I expect this year to be very close to budget.

 

[scrabbler1]

I retired in late 2008, at age 45, 5 years before the ACA. Health insurance has been my most volatile expense until 2020 when I made a change to my portfolio in order to maximize my federal subsidy. This also reduced my income taxes due.

Health insurance before the ACA rose quickly before I went underinsured for a few years between the passage of the ACA and the start of the exchanges.

Excluding medical expenses and income taxes, the rest of my expenses have been quite stable, in a narrow range, despite recent inflation, and about what I budgeted for.

 

[folivier]

More than I expected but we've done way more than I ever expected in my 13 years of retirement. My bucket's almost full!

 

[COcheesehead]

We spend below what we “planned”, but likely higher than when we were working. Paying our own health insurance, more travel, more fun makes up for expenses we no longer have when working.
We spend about 12% less than planned, but about 55% below what the portfolio throws off.

 

[Car-Guy]

I've never really had a plan other than to BTD which I've done over the past 10+ years in retirement. Admittedly I've burned the candle at both ends and now it seems like I've checked off everything on my bucket list. Good thing too since I feel like the Energizer Bunny with low batteries. So next year I suspect things will reverse and my spend rate will drop dramatically but still no real plan. Only planned major "extra" expense next year is another new vehicle purchase.

 

[bizlady]

On plan, but as we approach the mid-late 60's, spending seems to be slowing some

 

[AZsniper]

Great responses!

Thank you everyone and keep them coming!

 

[bada bing]

It's all mental games, but I set my spending on a "do not exceed" limit of $120K/year and didn't try and bullseye my budget. $120K/year is just barely 100% on FIREcalc. I've been comfortably under my do-not-exceed limit in each of my 3 years of retirement so far $80K,$97K,$93K.

One thing I didn't do was put an inflation adjustment on my spending limits. I didn't think it necessary as I will transition to living off of partially COLA'd income when I start SS and pension in 5 years. It doesn't seem so unlikely that inflation could crimp my spending a bit now though, as my never-exceed-limit has less fat in it than it did just 3 years ago. I'm planning some travel next year that will push spending above $100K and probably more to come in following years.

Another mental game I have is a lower limit on nest egg. I don't really have much necessity for more than $1M in the nest egg. That is the amount I've estimated as potentially necessary for either CCRC or long-term care in a worst case scenario. I think that's still a good number, but it bears watching as inflation screws with the prices of everything.

 

[HI Bill]

In my final years at w$rk, I spent roughly $50K annually, living in a paid-off condo, and saving up to 48% of my pre-tax pay. In ER, we sold the condo, bought a house with a pool (and a mortgage), and now have pool and yard maintenance costs. We have been blowing that dough, with a little travel, toys, jewelry, home theater upgrades, and house upgrades. We now spend 3-4X what we did pre-FIRE, but that was the plan all along!

 

[Teacher Terry]

A grey divorce 3 years ago cut my income and assets in half so my budget had to change dramatically. I have completed my bucket list and this inflation has made things worse. I am consulting part time which I really enjoy and also either eliminated or substituted items to make my budget work.

 

[racy]

The same. Retired 10 years ago. Been tracking expenses since 2009. Inflation adjusted annual spending has remained pretty much the same, +/-10%. Mortgage and kids' college expenses prior to retirement have been replaced with spending on home improvements and vacations.

 

[old medic]

Approaching 2 years retired and DW has a few more years to go. We are spending more now on BTD type stuff like going out and such than ever in the past. Once the house is done and DW retires, I expect we will be spending even more. We don't really track spending. Our current plan... Shes maxing 401K contributions, and my HSA, We get paid the end of the month and do 50/25/25. 50% goes to bills and balances. 25% into savings.
The rest is our BTD money for the month.

 

[Car-Guy]

Another mental game I have is a lower limit on nest egg. I don't really have much necessity for more than $1M in the nest egg. That is the amount I've estimated as potentially necessary for either CCRC or long-term care in a worst case scenario. I think that's still a good number, but it bears watching as inflation screws with the prices of everything.

Interesting you mention a lower limit on your nest egg. I know I posted the same idea here on this board years ago. It was 2m back then and still is today. I'm sure you can look it up. Of course with inflation, maybe I should re-think that number. It's unlikely I'll get that low but it's possible. And if I do, since it is just a "mind game", I maybe change my definition of "nest egg" from "investable money" to "networth" (Money and assets). And if that starts to get close to 2m at some poiint, I may redefine it again and add in the future value of my SS.

 

[ShokWaveRider]

We spend what we want to, but like others, I track it. It is hard to get an actual number as my tracking methods have changed over the years.

We are spending less today on mandatory expenses than we were when we both fully retired about 10 years ago. Discretionary expenses are up, but that was planned.

This year is going to be an anomaly as our income tax bill will be big. We both took SS this year and DW still had 1 more year of ACA. I said screw it and decided to take our SS., so we will have to pay back the ACA subsidy + the increased income Tax bill. Oh.. Well..

 

[street]

I would say we are on track with expenses over 7 years in ER. One year we spent 3.25% (WR) and then those years at .5%. We also had one year @ a negative 2% (WR). Spending hasn't changed much for working years to retired years.

 

[pacergal]

Our general day to day living expenses are the same. Our discretionary expenses are higher. Everything is going as thought and planned so far, 7 years in.

 

[Winemaker]

After tracking all expenses 5 years prior to retirement, the only thing s for us that have gone out of whack for us is utilities. Monthly water ran <$50, electric averaged $80, now $180/month, gas was about the same as water, and sewage has tripled since we retired to $80/quarter.

 

[tmitchell]

I'm only 18 months in. I COULD be spending according to budget, but travel expenses have been quite a bit higher. Of course this is discretionary, but some of it has to do with inflation.

Without the extra travel, I'd be in line with expectations. I'm still within my guard rails however.

 

[W2R]

I am curious on you thoughts of what you planned to spend monthly/annually for retirement vs. what you actually spend in retirement.

I retired in 2009, so I did that planning during the years back around 2003-2009. There has been a lot of inflation since then! During the past 5 years, my average spending has been 117% of what I had planned. I could spend more but have no need or desire for anything more. It's all been working out just fine. Good for you to be planning your spending in advance, though! Sounds like you are on the right track.