How accurately did you predict retirement expenses?

[robnplunder]

Question to you all ....

Did you find yourself on Bernicke spending path or not? That is, did your spending decrease or stay the same (inflation adjusted)?

[jkern]

Quote:

Originally Posted by robnplunder Question to you all .... Did you find yourself on Bernicke spending path or not? That is, did your spending decrease or stay the same (inflation adjusted)?

Through 6 years of retirement (age 51 to 57), the answer is NO. All of my spending has increased with inflation and a little more.

[W2R]

Quote:

Originally Posted by robnplunder Question to you all .... Did you find yourself on Bernicke spending path or not? That is, did your spending decrease or stay the same (inflation adjusted)?

In retirement? My spending seems to go up and down. I am actually trying to ramp up my lifestyle and spend more, but I am used to living a certain way and the desired change has not been too successful.

Here are my amounts spent, not adjusted for inflation and minus taxes and health insurance, since before I retired. These figures are not perfect but are the ones that I have handy right now. Taxes were more when I was working, and health insurance increased all along as it has for everyone.

They are expressed as percentages of my 2008 spending, when I was working. I bought a new "retirement car" in 2010 with money set aside years prior for that purpose, so I provided spending both with the car included and not included.

2008: 100% (working)
2009: 82% (working, last chance to save for retirement, retired on 11/9/2009)
2010: 83% (first full year of retirement; 232% if new car is included)
2011: 104%
2012: 95%
2013: 112%
2014: 107% (projected, based on spending through October)

So, I really don't know what to say about this. I can't make any sense of it.

[Meadbh]

Quote:

Originally Posted by W2R In retirement? My spending seems to go up and down. I am actually trying to ramp up my lifestyle and spend more, but I am used to living a certain way and the desired change has not been too successful. Here are my amounts spent, not adjusted for inflation and minus taxes and health insurance, since before I retired. These figures are not perfect but are the ones that I have handy right now. Taxes were more when I was working, and health insurance increased all along as it has for everyone. They are expressed as percentages of my 2008 spending, when I was working. I bought a new "retirement car" in 2010 with money set aside years prior for that purpose, so I provided spending both with the car included and not included. 2008: 100% (working) 2009: 82% (working, last chance to save for retirement, retired on 11/9/2009) 2010: 83% (first full year of retirement; 232% if new car is included) 2011: 104% 2012: 95% 2013: 112% 2014: 107% (projected, based on spending through October) So, I really don't know what to say about this. I can't make any sense of it.

You're a scientist. Graph it and do regression. Come back to us with an r value and confidence limits.

[robnplunder]

Quote:

Originally Posted by jkern Through 6 years of retirement (age 51 to 57), the answer is NO. All of my spending has increased with inflation and a little more.

The model assumes spending is reduced by 2 - 3% (inflation adjusted) starting from age 56.

[DFA]

Just turned 56, first year of ER for me, but no, the spending is up because of one time expenses as stated earlier. DW is still working so not on full ER budget yet either.

[Live And Learn]

Quote:

Originally Posted by DFA Today's review of expenses since ER 11 months ago was a shocker good thing for severance and DW still w*rking, a little contract work for me, but portfolio is still 6% ahead of planned value at this time. Unplanned expenses: 3 dog surgeries @ $1800/each, knee issues with small dogs Dog dental $1.000 DW dental $1,200 New Furnace $3,300 New Carpet, $5,000 Paid off one car and CC (new Windows & water heater last year $14,000) with 40% of severance the rest into savings to offset my salary and unplanned expenses. Most one time expenses to get house resdy to sell next year when DW ERs', but WOW. When house sells, we will pay off last car and be debt free for our move to Ireland.

This affirms my insanity with setting aside (outside of portfolio):
60k for replacing all major appliances, HVAC, roof, etc
5k for dog emergencies
6k for a hurricane deductible

Believe it or not, I actually worry that I can only do the dog emergency and hurricane deductible one time ! I do have 1k extra per year budgeted for out of budget dog stuff, and 5k per year for "accruals" for future big item home repairs ... but that doesn't stop me from suffering analysis paralysis !

Hopefully your expenses start to level off soon !!

[Live And Learn]

Quote:

Originally Posted by robnplunder The model assumes spending is reduced by 2 - 3% (inflation adjusted) starting from age 56.

I think that model really depends on the starting point. How many years can you do 40k in travel annual before you've "been there, done that" ?

[RetiredAndFree]

In looking back over four years of very detailed budget spreadsheets, we have not been surprised by anything. I consider that good planning, though, not luck. Other than something completely unexpected such as a divorce, or, say, our home suddenly sinking into the ground, I'm not sure what or why anything would be considered a surprise. Appliances break, insects burrow in, people and pets get sick, homes need to be maintained, etc.

We have been running about 15% under budget from Day 1, which we carry forward into the next year as an accrual. We have a Big Item budget category for vehicle replacements, RV replacements, and large scale upgrades and repairs to our home, or even a medical situation, that has as of yet not been utilized. It's building up a nice accrual for the inevitable rainy day situation.

I do think one of the reasons our budget has been so consistently adequate is that we tracked our spend diligently for a year prior to ER. That gave us tremendous insight into what to expect once we pulled the plug.

[RetiredAndFree]

Quote:

Originally Posted by robnplunder Question to you all .... Did you find yourself on Bernicke spending path or not? That is, did your spending decrease or stay the same (inflation adjusted)?

Our spending initially decreased because we dropped a lot of lifestyle expenses we were doing to keep ourselves sane while at our high stress j#bs. It has remained flat for four years in ER while allowing us to feel that we are living as 'big' as we have energy to do so. The only category I see going up substantially in the future is Travel. Once the first of us turns 65, we will start to receive additional streams of revenue in the form of pensions and SS, and see a decrease in our medical costs once we enroll in Medicare. We plan to up our Travel game considerably at that point.

[RetiredAndFree]

Quote:

Originally Posted by Live And Learn I think that model really depends on the starting point. How many years can you do 40k in travel annual before you've "been there, done that" ?

I'm not sure, but I can assure you I am looking forward to the challenge!

What I'm seeing is that we are spending more for each trip as we edge closer to the class of luxury travel, compared to the rice and beans travel we did in our younger years. So, even if we travel less going into our truly senior years (70? 80? 90?), I would expect each trip to cost relatively more.

[albundyz]

I'm 63, retired in So California from MegaCorp at 56. Before retirement, I tracked expenses for 2 years. For us, everything went according to plan except health care. I had no idea how much our health care premiums would be. In the 6 years since I retired, the premiums have gone from $250/mo (for me and my wife) to $550/mo with less coverage. I'm not complaining as Megacorp helps us with the total premium, but I'm just pointing out that the only thing I was "wrong" on was health care premiums. I also made a smaller error on estimating how much we would be driving our cars which really translates to gasoline expenses. With my wife's hobbies and my hobbies, we drive 20,000 miles per year. this is much more than expected and (until recently) gas was 3.80 to 4.20..... currently it is 3.15

[ChicagoGal]

Quote:

Originally Posted by RetiredAndFree I'm not sure, but I can assure you I am looking forward to the challenge! What I'm seeing is that we are spending more for each trip as we edge closer to the class of luxury travel, compared to the rice and beans travel we did in our younger years. So, even if we travel less going into our truly senior years (70? 80? 90?), I would expect each trip to cost relatively more.

+1

That's my plan, too

[heyyou]

Easy way to track pre-retirement spending: Subtract savings from gross income--you spent the remainder. Doesn't matter where, the money was still spent.

We waited to RE until our planned, post retirement income was greater than our spending, so no cutback, and no surprises. LBYM pays twice, (1) you have savings to invest and (2) 25 multiples of a smaller budget is easier to fund. That is what paid for ER instead of waiting for SS.