How much do you live on in retirement?

F

Fender

Confused about dryer sheets
Joined
Jul 27, 2010
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2
I know the answers will change dramatically based on lifestyles, health insurance, mortage, etc, however the biggest struggle for me as I get closer to "the number" is how much I'll actually spend each year. 51 year old, sold a business, have invested the proceeds of that sale and have no personal debt.
Investable assets are split between taxable and no taxed and would throw off $80K/yr at 4%SWR. I've budgeted $12K a year for the higher deductable health plan that I currently am paying $8K/year for. I have an interest in some commercial buildings and land that will provide cash if and when I decide to sell them. I've talked to contemporaries that pull anywhere from $40K/yr to $150K a year from their portfolios. I guess none of this information really has an effect on spending, other than to say I'm curious what people actually live on... health care and SS aside.

Thanks !
 
We live quite confortably on 56000 euros a year. We could live on much less but we don´t want to be the richest inmates of the cemetery:) and our 34 years old son has more than his basic needs perfectly covered:)
 
I live on very close to the same amount that I lived on before retirement. I save money on some things but spend more on others, and it balances out.

The best way to figure it out, is from your present budget. You might want to subtract some for the costs of commuting and work clothing, which you will no longer need. You might want to add some for entertainment, travel, and so on.
 
I live on the same net income (adjusted upwards for my personal rate of inflation) as I did before I retired, four years ago.

As you said - disregarding income sources and lifestyle expenses (which are different for everybody), I feel I lived a good life (financially) before I retired - meaning I did not delay anything till retirement, nor reduce any expenses after retirement, so I chose to live in the same manner. Luckily, I can afford it...
 
rescueme said:
meaning I did not delay anything till retirement, nor reduce any expenses after retirement, so I chose to live in the same manner. Luckily, I can afford it...
Click to expand...
Nothing to do with luck, but merely a reflection of your superior virtue.

Ha
 
This could be an interesting thread. I'm not FIRE yet, but I hope to live on the same budget as before/after work life.... give or take about $60k. I've factored in $75k in my spreadhseets. This assumes mortgage free/auto loan free.

Healthcare and kids' expenses could be the wildcards.
 
Gonna just say it again, the right amount is going to be something near what you were living on before. It is the amount you spent a long time getting comfortable with, and a huge change would be very uncomfortable.
 
I'm looking at that too. I don't see that it will be much different, with a few exceptions.

Our last child has probably 3 more years of college; when he graduates, our expenses will go down by that amount.

Our mortgage will be retired in about 6 years, so that amount will go down.

I don't see anything else going down. Maybe the laundry for the dress shirts and suits I take there, but that won't amount to a hill of beans. Maybe lunches, but I'm pretty cheap there already.

The idea of assuming you will live on significantly less in retirement has never made sense to me.
 
plex said:
Gonna just say it again, the right amount is going to be something near what you were living on before. It is the amount you spent a long time getting comfortable with, and a huge change would be very uncomfortable.
Click to expand...
Unless you're a very adaptable person.
 
plex said:
Gonna just say it again, the right amount is going to be something near what you were living on before. It is the amount you spent a long time getting comfortable with, and a huge change would be very uncomfortable.
Click to expand...
Yep...pretty much.

We budget our spending to 3% of our portfolio. Some years I'm sure we'll go over and some years we'll spend less. Life happens.
 
Our income has changed considerably over the years but our expenses have not. I guess we found our comfort level. I see no reason to spend differently in retirement.
 
We are spending about the same as when we were both working (which is a whole lot less than we were earning) but what we spend on has changed a bit. Lots more on travel, lots less on restaurants at home and lots less for DW's clothes :). It balances out.

Edit: Actually, I didn't include two mortgages that we paid while working but paid off prior to retirement. ER spending is down that much.
 
Fender said:
I know the answers will change dramatically based on lifestyles, health insurance, mortage, etc, however the biggest struggle for me as I get closer to "the number" is how much I'll actually spend each year. 51 year old, sold a business, have invested the proceeds of that sale and have no personal debt.
Investable assets are split between taxable and no taxed and would throw off $80K/yr at 4%SWR. I've budgeted $12K a year for the higher deductable health plan that I currently am paying $8K/year for. I have an interest in some commercial buildings and land that will provide cash if and when I decide to sell them. I've talked to contemporaries that pull anywhere from $40K/yr to $150K a year from their portfolios. I guess none of this information really has an effect on spending, other than to say I'm curious what people actually live on... health care and SS aside.

Thanks !
Click to expand...

Been retired for about a year, and expenses are about the same as before. For what is worth, I live on about 4k a month and still am paying on my mortgage. Other than my semi monthly trips to Vegas to feed my sports betting habit, I live a pretty simple life. Fender your 8k a year for high deductible insurance seems high. Is that for you or a family plan? My HD insurance is $700 a year for 5k deductible, individual. I'm only 4 years younger than you.
 
Since it's how much do we live on, not how much do we spend, I'll feel free to ignore taxes and gifts to the kids.

I used to make mid 6 figures and we probably 'lived on' about $75K. It may be $85K today, I don't keep detailed records.
 
Pre-FIRE: My gross salary used to be > $75K.

Post-FIRE: Less than $50K gross income from pension + annuity. Not tapping into my investments at all.

I live in a semi-rural area, no mortgage, high taxes, moderate COL (compared to urban areas). Spending is too variable to quantify.
I have enough left over after all expenses to continue DCA at varying levels as prudent, build up some more cash, make some minor improvements on the house (windows right now), and go on an annual low budget trip to FL.
 
Annual expenses are $60k. Once the mortgage is paid off that will be $30k. Half of that will be covered by rent from the ground floor apartment. I live in Boston and that $30k includes everything, taxes, health insurance @ $5k a year etc. Areas where significant savings can be made are food and transportation. I eat very well but I'm very frugal as I grow fruits and veg in my garden and do a lot of cooking. Why pay $10 for a big apple pie when it costs $2 to bake one and it tastes better. I have a car, but use my bike around the city to shop and go out. The saving on gas and maintenance are big.

Once I ER a 1.5% WR plus the rent will cover my expenses and once SS starts I will have no need to withdraw from my investments for income.
 
Ms G. and I have about 40k in expenses. So far in 5 years of ER, we have generated that much yearly from our taxable account alone. As a matter of fact we are about half a year ahead of ourselves.

We are spending about 5k more in retirement than our w**king life. Our home and cars were paid for before ER, and BCBS sets us back about 7k a year. Additionally the roads here ate an SUV we owned and had to buy a new GMC truck.
 
Hubby just FIRED last week. But our plan is to live on the same amount we have been for the past 3 years, plus inflation, plus 11k for health insurance - income tax decrease.

Bottom line= essentially the same as before retirement.

BTW-- FIRED as in the good way- not the bad -kicked out the door way ! :)
 
I think a lot of it depends on how much you will change lifestyle before retirement.

In our case, DH retired last year and I move semi-retirement (working about 20-25% time compared to before).

Our expenses have already drastically decreased and basing retirement expenses on our expenses, say, 18 months ago would be wildly different. Some changes we made:

1. One child is now on his own. We no longer pay any of his living expenses. And it isn't just that. Our auto insurance bills went down by 2/3 (he had had a relatively minor but nonetheless at fault auto accident). Food bills are lower, and so on.

2. One child that had been in a private high school is now attending community college. Way less expensive (that will go up when he transfers for his last 2 years).

3. We sold our expensive to pay for and maintain house. Our expenses went down a huge amount (we are going to build a new house but it will be much smaller and much more energy efficient).

4. Commuting expenses. Auto related expenses are down over a $1000 a month. DH and I both had long commutes before. He now has no commute and I go to the office usually one day a week.

5. Eating out is down. Now that we are at home more we are less likely to go out just to get something to eat. Even though I used to take my lunch to work several days a week I would eat out a couple of days.

6. Groceries are down a little bit. We have more time to shop and have more time to prepare things so don't have to rely as much on convenience items.

7. Less household maintenance related expenses. Even apart from selling the house we already had more time to do things ourselves that before we would pay someone else to do due to lack of time.

8. Clothing and dry cleaning. This obviously depends on what you had to wear before retirement, but I had to wear "nice" clothes that had to be dry cleaned. Now I wear that kind of suit once a week and can wear jeans and T shirt the rest of the week. Both DH and I have found those costs have gone down a lot.

Obviously much of this depends upon lifestyle. One of our key decisions was to move from a 4500 sf house to building about a 2500 sf house. We are working on the design now and have designed it to be very energy efficient with no wasted space. Our housing related expenses will, as a result, go down a lot (right we are renting so they are super low).

Had we wanted to keep the large house then the income we would have needed during retirement would have been much greater and we would both still be working full time. But, we really decided we didn't love living in that house enough to want to work a few more years to stay in it.

Once the dust has cleared (i.e. we have built the new house and moved into it), we project spending about $90,000 a year for a couple of years and then $70,000 after that (the difference is child related expenses that will go away), but that has quite a bit of discretionary expenses in it that could be cut if necessary.
 
DH retired last June and I've tracked expenses for the last couple of years. Since his retirement we live on less than $2500/mo = 30K/year. The planned itemized budget actually comes to $2309/mo so there is wiggle room.

There is no mortgage but that does include property taxes and insurance and our portion of regularly occurring medical costs (office visits and prescriptions with high deductible plan). Our area is average to low cost of living. Despite our utility consumption going down some of the costs have increased, like for satellite tv and internet and a water increase.

The 30K does not include 2 major home expenses since retirement - new windows and new HVAC. We had the money in savings but put plans on hold while life changed due to DHs job loss and transitioning into retirement. We've needed the new windows since we moved in in 1983 but kids/college/mortgage always took priority. The HVAC was the original furnace from 1955 so when it needed a part IT WAS TIME!

This has all worked out better than we expected. We can actually accumulate savings every month. That makes a world of difference to me.

Just like many other retirees this could all change with health care changes. Right now we have retiree medical insurance but who knows what could happen down the road if that changes and we have to start covering more of the cost.

But, so far, so good.
 
12k to 89k. Lately running 40 to 50k ballpark. 1993 - 2010.

Agile, moible and hostile.

I've been known to aggresively cut expenses during 'hard times'.

:D

Ran on the cheap end of the range in the 90's while Mr Market did his thing.

heh heh heh - and that really helped 2000-2010. Tested my nerves to 'stay the course' on full auto letting those Vanguard computers rebalance. My main 'emotional response' was to vary expenses on a look back basis. Deferred travel, adult toys, and remodeling were the big variables. :cool:
 
Have not fired yet but planning in next 12 to 24 months. Currently spend in a low year $54K and a high year $62K per year. Fired budget looks to be $72K per year. $45k essential and $27k descretionary. HC and LTC Insurance and travel the reason driving the increase.
 
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