I'm interested in the percentage of retirement budget that others categorize as discretionary spending. My planned budget is about 25% discretionary spending.
For those of you who have found it necessary to tweak your spending in response to market conditions, emergencies etc.
1. Was it a minor adjustment (drink cheaper beer
) or were more drastic measures taken?
2. Did the action taken give you confidence that lifestyle flexibility is indeed a powerful tool in retirement security?
I have been thinking about this, too. Surely this bull market can't last forever, and I want to be ready to axe my spending mercilessly ASAP if/when the market crashes. I like your thread topic because I think a very good way to prepare for the worst, is to cut essential expenses to the bone, but spend more on discretionary expenses that can be easily dropped.
I could cut back 29% pretty painlessly, by cutting back or eliminating spending on clothes, miscellaneous, video gaming, restaurants, home upgrades, utilities, and fitness. If more was needed, I could cut back on grocery expenses too.
This is only my 8th year of retirement, so I haven't had to cut back due to market conditions. Last year I wanted to cut back because I just bought my house, and wanted to prove to myself that I wasn't going to keep spending so much each year. Of course, I don't buy a house every year but I wasn't sure how much it would cost to live here. (Answer: about the same). I didn't *have* to cut back, since I have been averaging about 2% WR, but I wanted to just to reassure myself that I wasn't going overboard.
Anyway, I cut back a little but not enough to overcome the unexpected costs of a brand new HVAC system, and a lot of expensive dental work. These together comprised 25% of my spending in 2016. So, instead of my 2016 spending dropping by more than 16% in comparison with 2015, it was actually higher. This is why I'm thinking about the topic now. If the market crashed, unexpected expenses would still arise. I need to think about where else to cut back.
So, my answers are:
1) a minor adjustment, and
2) I've got to believe in lifestyle flexibility as a tool for retirement security, because what else do we have? Besides, I know I can be pretty good at it if a true need for that arises.