Surprise costs in retirement....

[NoOneGetsIt]

Curious for those who have taken the leap what are the few surprise expenses you have encountered in FIRE?

I ask because it is a concern about prescription drugs and I hope to learn more so am totally prepared.

 

[heeyy_joe]

The doughnut hole is often upon you faster than you think possible.

 

[arky]

Although not a complete surprise, health insurance premiums have increased more than expected the last 6 years.

 

[mpeirce]

Either through good planning or (more likely) through good luck, we haven't had much in the way of surprises.

It helped ALOT that we had been living on basically the same budget we expected to live on in retirement (the difference between that budget and our income all went into savings - which we stopped when we retired).

The only real surprise I guess was that health care spending was lower than we expected. We still budget for our premiums plus the deductible for our HDHP, but have never spent even close to our deductible.

We expect our health spending to go up because of the misnamed ACA - since we'll be helping to subsidize our fellow citizen's health spending. Only time will tell.

 

[bondi688]

I was just about to say, the significant jump in health insurance premium before one qualifies for MediCare is the biggest (and not welcomed) surprise, and I need to revamp my budget.

 

[pb4uski]

Either through good planning or (more likely) through good luck, we haven't had much in the way of surprises.

It helped ALOT that we had been living on basically the same budget we expected to live on in retirement (the difference between that budget and our income all went into savings - which we stopped when we retired).

The only real surprise I guess was that health care spending was lower than we expected. We still budget for our premiums plus the deductible for our HDHP, but have never spent even close to our deductible.

We expect our health spending to go up because of the misnamed ACA - since we'll be helping to subsidize our fellow citizen's health spending. Only time will tell.

Similar experience here. Living costs are broadly the same as prior to retiring since our lifestyle is the same. Our retirement budget included increases for golf club memberships and season downhill ski passes because we planned to do more of that once we retired. The one surprise is that health insurance was less than what I expected and out of pocket costs have been lower as well, but I was pretty conservative in the amounts I built into the retirement budget.

While we don't deprive ourselves we like to cook and eat at home more but only because we moved to a more rural area so going out to dinner is more of a chore since restaurants are 10-20 minutes or more away. No takeout here in the boonies!

I plan to manage our income so we qualify for ACA subsidy so our net health care costs will go down next year.

 

[REWahoo]

Approaching the eight year mark, no real surprises - at least not yet.

Other than the first year when (as is the general rule) we spent very cautiously, our spending has been roughly the same overall as when I was working. We really ramped up spending in year two with a major purchase (RV) then have seen our annual spending decline year over year during years three through eight.

The decline during the last two years has been primarily due to the two of us going on Medicare (me in late 2011 and DW earlier this year). I think we've found the equilibrium point in spending and won't see further declines for the next several years - until we give up the RV and traveling a couple of months out of the year.

 

[W2R]

Health costs are more than I expected. It's not just the health insurance, but the fact that I am getting older, so a few more things have needed attention.

BUT - - income taxes are way, way less than I anticipated. I know, I know, people on the forum were telling me 10% was a good ballpark figure, but I didn't believe them. I planned for 25%. Well, my state+federal income taxes have been roughly 10%.

ALSO - - even less for travel than I anticipated. I never have been bitten by the "travel bug", but still, before retirement we did enjoy day trips and getting out of town by car now and then. Lately we have decided that neither of us likes that as much any more. So, no more trips except for hurricane evacuations.

I spent roughly the same amount during each of the first three years of retirement. This year so far I have been spending about 140% of that amount. That is still within what FIRECalc allows, but I am not totally comfortable with spending that much and plan to cut back a little. I could blame the new TV and the dental implant, but really I think the root cause is attitude more than anything.

 

[LitGal]

Ah, the Price of Leisure......!

Most expenses are the same as we'd expected, but:

1. We are going through more cans of coffee than ever before! Since we're no longer at work, sitting in meetings with steaming urns nearby, we now have to brew more of our own. Quite affordable, though, since we don't want to head out in the AM to find a Starbucks, etc. Would rather stay home and read our books till about 11AM, noon, maybe 1 PM.... Thus, drinking more cups than the commuter mugs we used to fill in the early AM.

2. There are those danged admission fees-- to the museums, Presidential Libraries, National Historic Sites, the movies, etc. Because we ER'd we don't often qualify for a senior citizen's discount, so have to pay full price to show up mid-afternoon to tour places we rarely could get to before, even on weekends or short vacations.

So, we're racking up sightseeing costs. But we just take a picnic with us (to avoid MacDonalds and other cholesterol-inducing temptations).

3. I'm spending more $ (even with coupons) at the local fabric/craft store: it's up to almost $15/mo.! I've been making tote bags and purses to donate to silent auctions for local charities (plus cat beds, placemats, quilted pillows). It's fun to do this while listening to Dickens' novels on CD. While his reams of pages drone on, I keep the sewing machine humming. Will soon finish my 20th tote bag; it's fun to shop, match remnants with garage sale fabrics, then create a gift that will bring in $20-25 for a charity.

4. We're burning more gasoline, just having fun: driving through hills and valleys to enjoy spring; making more trips to the library, the gym, the pool; going more places with friends; taking dinner to our son's house when he's had a long day at work. Most of the gas used to be for commuting, not having fun. (Well, maybe we're saving some money after all. But we certainly never did so much driving just to have fun.)

So, yes, some of the new fun costs $. But the library and daily walks are still free! (Just like posting here!)

 

[gerrym51]

Curious for those who have taken the leap what are the few surprise expenses you have encountered in FIRE?

I ask because it is a concern about prescription drugs and I hope to learn more so am totally prepared.

i'm a pharmacist-depends on where in retirement you are, most part d plans-medicare drug help out. but they do have some limitations. I need to know more to answer your question

 

[scrabbler1]

Put me down for health insurance premium increases. They rose 50% for my individual plan in just 2 years! I had to switch to a bare-bones plan I am not too crazy about otherwise. Even though I would end up paying more for a subsidized exchange plan under Obamacare, it will be far less than what I was paying for the prior policy when I dropped it and around what I was paying for it when I first enrolled in it (i.e. before the 50% jump).

 

[ERhoosier]

Not to hijack, but how 'bout NEG 'cost' surpsises in retirement? In prep for ER I've dropped personal disability insurance. Many also report lower clothing costs (depending on j#b) & commuting costs (gas, parking, etc.). And the extra time in ER might improve general 'frugality factor'- like finding best deals/coupons on stuff (inc food!), tending to small fix-it job they might have paid for while w#rking, etc. Doubt that all that compares to health care cost surprises, but every bit helps the bottom line

 

[Meadbh]

Not to hijack, but how 'bout NEG 'cost' surpsises in retirement? In prep for ER I've dropped personal disability insurance. Many also report lower clothing costs (depending on j#b) & commuting costs (gas, parking, etc.). And the extra time in ER might improve general 'frugality factor'- like finding best deals/coupons on stuff (inc food!), tending to small fix-it job they might have paid for while w#rking, etc. Doubt that all that compares to health care cost surprises, but every bit helps the bottom line

+1
I am seeing the savings. Fortunately no increase in health care insurance as it is not tied to employment.

 

[ksr]

For me, the only surprise has been a pleasant one - overall federal and state taxes are less than I could have guessed.

 

[Tree-dweller]

Other than the first year when (as is the general rule) we spent very cautiously...

I tippy-toed through Year One (just finished) as well, no significant surprises. As for health care, we're anticipating that to actually decrease over the next few years as the kids finish school and get jobs with HC bennys (or turn 26 and are off the family plan, whichever comes first).

 

[pb4uski]

Same here. We were pretty conservative in our first year but ending the year really close to the budget, along with good tidings from Mr. Market have given me confidence to loosen my grip on the purse strings this year and do a few home improvement projects and buy a new dining room set.

 

[David1961]

Just 6 months out, but the only surprise is how much less I'm spending on food not that I'm eating at home more often. And enjoying having the time to cook.

 

[Accidental Retiree]

Not to hijack, but how 'bout NEG 'cost' surpsises in retirement? Many also report lower clothing costs (depending on j#b) & commuting costs (gas, parking, etc.). And the extra time in ER might improve general 'frugality factor'- like finding best deals/coupons on stuff (inc food!), tending to small fix-it job they might have paid for while w#rking, etc. )

This is DH and me. Mainly me, re: clothing. Now that I don't work for the VP of HR who looked me up and down every day to check out the quality of the suit I was wearing, I no longer shop at Nordstrom or Macy's.

Some lucky frugalista has probably now purchased and is wearing and enjoying all the suits I donated back in 2009. Good for her! I wish I'd been that smart, earlier.

FIRE-wear is now white shorts or jeans in summer, black or blue jeans the rest of the year, with clogs or sandals as the season dictates. Marshall's, Ross, Kohl's, Target and WalMart provide any new items I need. (OK, OK, sometimes I still splurge on Lands' End or LL Bean.)

We also find we use way less gas, of course, and save DH's $5/day bridge toll to cross the SF Bay. When he started that commute, I believe the toll was 75 cents.

We also have time to shop grocery store sales and make the rounds of 2-3 stores in the immediate vicinity. I especially love to find the Folger's Black Silk -- when it's $6.99/2 lbs -- that has replaced my Peet's habit.

In so many ways that we hadn't expected, we spend less.

 

[Dave J]

My biggest surprise in last 13 years is not an expense but the drop in interest rates. More impact than a little price rise, in my opinion.

 

[truenorth418]

When I was commuting I drove over 50 miles per day and spent between $7-8,000 per year on car-related expenses. Now I hardly ever drive. Last year I spent less than $2,000 on car expenses, this year a little more.

I also spend a lot less on food and eating out. I used to eat at least 2, sometimes 3, meals per day at my desk at work. Now I prepare most meals at home, much less expensive.

As for increases, like other posters, health insurance is a bigger expense for me now.

 

[Katsmeow]

DH has been retired almost 3 years and I semi-retired (work a day or 2 a year) for the same period.

We have a lot of high expenses the past couple of years based upon selling once house and buying another (complicated situation) but those are non-recurring.

Otherwise -


Electric - Before no one was at home during the day so we could set program the thermostat not to use a lot of electricity during the day. Now, someone is home all the time so we don't get to do that.

Health Insurance - we went from DH's workplace plan to subsidized retiree medical. That wasn't all that bad for the first couple of years but last year had an over 250% premium increase (Megacorp doesn't subsidize hardly anything of the increases). My big worry is that Megacorp will drop the plan and we will have to get insurance through exchanges and it will be much more (we will not be eligible for subsidy).

Income based Medicare premiums - DH went on Medicare a few months ago. Due to those aforementioned house issues we had larger withdrawals than usual from the IRA for a couple of years and I was still working part-time during those years. Adding all that together we hit the threshhold to pay extra for the Part B and Part D premiums for this year and next year. It is only temporary but it is a substantial increase over the regular Medicare premiums.

Life Insurance - We wanted to maintain some life insurance on DH after he retired since I am 7 years younger and if he died before I became SS eligible, particularly while we still have kids in college, I would not like having to withdraw more from the IRAs than I really want to withdraw. Basically I see the life insurance as a bridge that could be used until I become SS eligible. He had life insurance through Megacorp and could convert the policy when he retired but it is really expensive. 3 years later, we have decreased the amount of coverage but it is still expensive. We will eliminate it in a year or two.

 

[clifp]

My biggest surprise in last 13 years is not an expense but the drop in interest rates. More impact than a little price rise, in my opinion.

Although healthcare cost have doubled in the 13 years I've been retired, the dramatic drop in interest rates have dwarfed every else.

As I was finish my mom's taxes and doing the preliminary work on my tax I was struck by how much my and her interest income dropped.

On a 50/50 $1,000,000 portfolio the 3% interest rate drop is $15,000/year that is huge.

 

[ducky911]

Like other have said health care has gone nuts...can be over 20k per year...went with a high deductible to get back down to around 10k

Comcast is also nuts. I have triple play at home and at a cabin...lam paying way to much for this stuff.

Positive!
Taxes.....qualified dividends are taxed at zero or 15%.....I hit the sweet spot on the chart and paid feds only 2% and the state less than 3%.

 

[FreeAtLast]

Health insurance is the big one. I have also done more home repairs.

 

[gerrym51]

Approaching the eight year mark, no real surprises - at least not yet.

Other than the first year when (as is the general rule) we spent very cautiously, our spending has been roughly the same overall as when I was working. We really ramped up spending in year two with a major purchase (RV) then have seen our annual spending decline year over year during years three through eight.

The decline during the last two years has been primarily due to the two of us going on Medicare (me in late 2011 and DW earlier this year). I think we've found the equilibrium point in spending and won't see further declines for the next several years - until we give up the RV and traveling a couple of months out of the year.

i would love to buy a class c rv. how did you convince the wife