How accurately did you predict retirement expenses?

[Rustic23]

We tracked expenses for three years. While there were several changes, most were off setting. i.e. we spend more on travel, but less on eating out. New house is more remote and we don't go out as much, but we have taken more cruises. So on the expense side we are just about on track.

I would call it the 'Unexpected' expenses that have surprised me. These are things I never thought about spending on while saving for retirement, but now spend money on. We spend more on toys now than we use to.

 

[Lsbcal]

Absolutely plan for this if you don't have healthy teeth.

My dental bill this year? About 50K.

This could be another thread but I've found those rechargeable toothbrushes to be an excellent investment. Changing the heads is probably cheaper then replacing standard toothbushes too. Before I used one I always had way more need to go to the dentist then now.

Not to say that this fixes all teeth issues. DW had about 10k in work about 1 year ago.

 

[Alan]

I tracked what we spent each year for many years before we retired, and planned on spending as much as we did, on average, during the last 2 years which included an additional rented 2 bedroom apartment. (My last 2 years were spent on an out-of-State project so we kept our place in Texas, lived in Louisiana and traveled back every 6 weeks). Our parents also got sick during those 2 years so the 3 trips to England I figured would be typical of overseas travel costs when in retirement.

No unexpected expenses so far, now in our 5th year of retirement.

 

[ChrisC]

Six months into retirement and we already underestimated our exposure to bad hearing (unexpected), bad teeth (unexpected), and bad knees (expected). We have great health and dental insurance and we're still over budget by 30 percent this year. Hearing aids and dental implants can be a hurt on your budget. And we're in general good shape!

I'm also thinking we have some additional expenses and exposure to taking care of elderly parents. Thank goodness we don't have any boomerang children to handle.

 

[youbet]

DW RE'd 11 years. Me 8 years.

Fed Taxes - Higher. Roth conversions are the main culprit.

Dental - Higher. Who knew I'd crack a molar and need an implant?

Heath Insurance - Higher. Part D and Part B penalties due to income. (See Roth conversions above.) DW's employer eliminated her retiree plan.

Funding disabled grandchild's trust - Higher. Grandma says no amount could ever be enough and no one is happy here if Grandma ain't happy.

Funding other grandchildrens' 529b's and Coverdells - Higher. See Grandma notes above.

Everything else is within expectations. Minor changes to routine living expenses (we're modest/frugal consumers) and discretionary spending are insignificant when bounced against the issues listed above.

So, higher taxes, higher medical/dental and more gifting to family. Routine living and discretionary spending about on expectation. BTW, pre RE we tracked routine expenditures on a very rough cut basis and this has turned out to be more than accurate enough.

 

[Huston55]

I'm not retired but I've seen it mentioned to allow for future inventions. I don't think people who retired in the 70's had an expense line item for a $60-$100 a month cell phone bill.

I wonder what inventions, I'll have the income for in 30 years

I've been watching "Almost Human", and I'm thinking SexBots could be quite expensive.

 

[theOAP]

I started a spreadsheet about 2 years before actual retirement. At the time, I hadn't planned on ER. After the 2 years, I was way ahead in savings, so at retirement I redid the sheet into one of the super duper all dancing multi-tabs described earlier to obtain a more accurate picture.

That was 8 years ago. Today, I'm still ahead of the curve (have more assets than planned to have for year 8). The reason is probably because I included a compounded inflation increase of 7 1/2% yearly for spending, and only put increase in assets at 3 1/2% yearly between pensions and investments. I'm happy with the results as I predict that at some time in the future, inflation (or unseen spending requirements) will catch up. I track year to year expenses and I do not believe government yearly inflation figures. They can't be that low. Then maybe I'm being well over cautious. My proposed rate of inflation has been close to my actual yearly rate given our circumstances, at least for the past several years.

The problem I now have is I'm tempted to think why am I doing this, and should I now loosen up the fun spending a bit. We have one of those lifestyles where non-essential spending is the same as pre-retirement, or may have possibly increased since retirement.

BTW, if I reduce yearly inflation on the sheet to 5%, I'm good well past 100. I know I'll never make it that long.

 

[BBQ-Nut]

I way overestimated on beer. Don't need nearly as much when you are retired.

Whaaaaa?

 

[W2R]

Medical expenses have been a lot higher, true, but other expenses (notably income taxes) have been lower than I expected. No big surprises overall; the surprises are just in the details.

 

[Independent]

If I look at the sum of Food, Shelter, Clothes, Cars, Cleaning supplies, Charitable contributions, Christmas & BD gifts to kids, Social, and Miscellaneous, I was right on (after 7 years).

Medical was way off. I had anticipated a slow increase as my former employer got thriftier with retiree medical. Instead they cancelled it -- about half way through my wife's chemo treatments.

I planned for significant travel expense. Very little of that happened. I didn't plan to provide any financial support for relatives. That has easily exceeded my planned travel expense.

 

[BBQ-Nut]

Thanks everyone for sharing - the medical/dental expenses increasing unexpectedly seems the most unanticipated.

But - that does seem to make sense.

Is it the premium increases or the co-pays/deductibles that are the 'killers'??

 

[Hermit]

It is the premium increases and the co-pays/deductibles that are the 'killers'.

 

[Lsbcal]

Thanks everyone for sharing - the medical/dental expenses increasing unexpectedly seems the most unanticipated.

But - that does seem to make sense.

Is it the premium increases or the co-pays/deductibles that are the 'killers'??

"Killers" depends on how tightly you want to define your budget. Our 10k dental billings in 2012 were unexpected buy a one time event. Unexpected premium increases could go on and on but who knows for sure.

 

[Brett_Cameron]

Thanks everyone for sharing - the medical/dental expenses increasing unexpectedly seems the most unanticipated.

But - that does seem to make sense.

Is it the premium increases or the co-pays/deductibles that are the 'killers'??

so far it has been unanticipated dental work. i budgeted to meet max out of pocket on medical every year because we always reach it.

i anticipate massive increases in retiree health care insurance premiums in the near future.

 

[BBQ-Nut]

So, instead of a luxury vacation to Hawaii one year, it's dental copays and deductibles?

Does this happen more often than not?

I have budgeted a certain amount of yearly expenses for 'vacations' - so, in any given year the same amount could be used for medical/dental expenses, but it would be nice to actually have a vacation!

 

[kcowan]

We tracked expenses for three years. While there were several changes, most were off setting. i.e. we spend more on travel, but less on eating out. New house is more remote and we don't go out as much, but we have taken more cruises. So on the expense side we are just about on track.

I would call it the 'Unexpected' expenses that have surprised me. These are things I never thought about spending on while saving for retirement, but now spend money on. We spend more on toys now than we use to.

Ditto

Our total was very accurate but the categories varied widely in the first few years. Now I just do an annual reconciliation.

 

[Rustic23]

Current plan includes travel, as opposed to vacation . We also include a sinking fund for one time expenses. This includes home repairs, medical, new car, and things that pop up. So far it works and the sinking fund is growing. We have a second sinking fund for LTC. Calculating this is a little more complicated than looking at a balance.

 

[NanoSour]

Only 9 months into ER, but it seems to be going as planned. I tracked our expenses via Quicken for 8 years prior to ER and had a pretty good idea of how we spent our money. I will say that being retired has ramped up my inner frugal consumer and as a result we are roughly 25% under budget for the first 9 months. Nice to have that buffer building up.

 

[Lsbcal]

So, instead of a luxury vacation to Hawaii one year, it's dental copays and deductibles?

Does this happen more often than not?

I have budgeted a certain amount of yearly expenses for 'vacations' - so, in any given year the same amount could be used for medical/dental expenses, but it would be nice to actually have a vacation!

Some extra costs could be absorbed without denying ourselves a vacation. That luxury vacation could be revised to reduce the luxury (but not the time necessarily). One has plenty of flexibility.

Also if your portfolio is rising that same year (more years are up then down), it's easier to give yourself a bit of more room that year. Especially if you are trying to spend a set percentage of the portfolio.

Example, in 2012 our portfolio was up double digits and the 10k dental bill was incurred late in the year. So it was no hardship to take the one time uptick in expenses.

 

[walkinwood]

Absolutely plan for this if you don't have healthy teeth.

My dental bill this year? About 50K.

50K! May I ask? What did you have done for that amount?

 

[seraphim]

We spend about what we planned, but have more leeway for extras than I had figured on.

 

[mickeyd]

Other than assuming that RE expenses would be about the same as before, I did not make any other assumptions or projections as I am unable to predict what will happen in the future. Our expenses are pretty level.

 

[Ozstache]

Six months into ER here. My retirement expenses are turning out to about 25% lower than I estimated and they are trending further downwards. Said to the wife yesterday that, had I known that was going to happen, I would have retired a few years earlier! Just joking of course, as it is too early to tell, but the massive underspend certainly surprised me.

 

[kcowan]

We find the flexibility of timing allows us to capitalize on discount days and sale periods so we are consistently under budget.

 

[HillCountry]

50K! May I ask? What did you have done for that amount?

10 implants (some w/ bone grafting), 1 bridge, 2 crowns, and full lower denture.