Increasing budget in retirement... the kids and extra travel

[Independent]

No comments so far on the "extra travel" in the title.

That seems 100% discretionary to me, so if medical bills are unexpectedly high, the travel budget can go down.

That said, consider the possibility that your extra free time will generate a greater desire to do something expensive.

 

[Mdlerth]

This doesn't work so well in California. For the first year a minor has a license s/he cannot drive other minors in the car unless s/he has another licensed adult over the age of 25. Not even siblings unless there is a note and a specific/limited reason. If you're caught in that first year of provisional license with other minors (friends or younger siblings) you lose your license.

Trust me - this is a factor - my kids go to a highly rated school that is not in our immediate area - it would be a BIG deal if older son could drive younger son next year... it would sway the decision towards him getting his license sooner.

Another factor on the multiple cars thing. DH and I have discovered that now that we're retired we rarely need 2 cars. So DH's old pickup could be used some of the time by kid(s). Not sure we need to buy a 3rd or 4th car.


https://www.dmv.ca.gov/portal/dmv/detail/teenweb/dl_btn2/dl

Unfortunate about CA, but in VA having an extra driver was a lifesaver. We have analogous restrictions and curfews for teens, but there are exceptions for family members.

Also, we didn't have to buy the kids a car. They got hand-me-downs. It worked out okay; since minivans don't even pretend to have a sporting character, they don't offer as much temptation to get cute behind the wheel. I was 16 back in the day when even station wagons had huge, rubber-squealing V8s. Today's family chariots have smaller, more economical powerplants mated to higher-traction front-wheel-drive arrangements which are less likely to stoke the fires of teenage speed fantasies.

When I think how reckless we were, I'm amazed any of my generation survived to adulthood.

 

[Aiming_4_55]

No comments so far on the "extra travel" in the title.

That seems 100% discretionary to me, so if medical bills are unexpectedly high, the travel budget can go down.

That said, consider the possibility that your extra free time will generate a greater desire to do something expensive.

Agreed, I have $10k extra in my retirement budget plus our standard budget for vacationing. It will be an area of consideration in lean times, however, it's important to us/me, so we will probably spend most of the budget as planned as time is limited.

 

[Aiming_4_55]

.... Also, we didn't have to buy the kids a car. They got hand-me-downs....

We have a 2015 Prius as a daily driver now, it might work out as a good hand me down when the time comes.

I hear it loud and clear about the driver's ed and insurance teenage needs.

 

[Aiming_4_55]

I've been amazed that, having been retired now for nearly 19 years, I'm spending considerably more than I made when I retired. Much of it is thanks to SPIA's and a good stock market over that period. Also, the older I get the more I'm inclined to think if I don't spend it now when will I.

Gill

Good problem to have. I won't be able to afford RE if I spend my current peak earning year salary amount, but I will try and have "good years" of fun and travel by spending upwards to 6 figures which is a fair amount higher than my current spend.

 

[Aiming_4_55]

So far, here is a list of extras that I should make sure is in my rough budget.

Car (used or hand me down) plus insurance ($2k per car/driver/year) Yes, you should get the chance to makeout in a car ;-)
Sports (kids preference?) and medical (OOP) Ok, but if I have too many sleepless nights, you are done.
Braces ($5k each) Yes, I think it's nice to have teeth for most part ;-)
Prom ($1k each) Yes, they should have the experience.
Food ($1k year) Yes, I guess I'll feed them.
Clothing ($1k extra each) This is beyond the current budget for their fashion appealing needs.
2 Cell Phone Service ($1k year) Basic smart phones can be had for under $100, anything beyond they will have to earn.

Yes, I know teenagers are impossible to plan for, but I am just listing what I might be willing to contribute if I support the activity/action. It is not a given that I will increase the current clothing, sports, or discretionary budget yet.

 

[imoldernu]

Can't give suggestions on increases in expenses immediately after retirement, but think that longer term planning for 30 to 40 years after retirement might be easier by considering what I call phase two of retirement. In our case, beginning at age 70, expenses began going down rapidly. so that now, 10 years later, most of the variable expenses have dropped, or have gone away completely.
Our budget today, is about 55-60% of what it was in 2006. Much of this came when stopping the snowbird and travel expenses, but the balance was from across the board reductions in "buying things".
The change in expenses has not come from a decline in health or any concerns about future financial security.

Certainly, as often mentioned in other posts in ER, there are those who continue to travel and stay active as they age. Many have parents or friends who are still doing international travel at age 80 to 95. Bless them!... Checking our own life expectancy today, it looks like age 91.

Putting real dollars to the drop in expenses, on average the past ten years have seen a drop of about $3,000 to $5000/year. Current basic expenses are essentially stable, and look to remain that way.

As I see it, the decision to retire really depends on the desire. Particularly at age 50, there is always a fallback position to go back, if at a lower rate of pay. We were always prepared to do that, but were fortunate to get through without problems.
Below, a life expectancy chart for a current 50 year old.

 

[tn3sport]

In the younger years it was braces and travel sports that challenged the budget.

The expenses on my children increased as they aged. High school age is expensive. College costs are out of control. Food expense being this biggest shocker. A kid eating out 3x a day is expensive.
My son and daughter spend like crazy on clothes in HS and college.
Also, according to them, everyone has the latest iphone. Those are about $750 a pop.
16? They will need a car. Their own car. For me, that was buying 2 cars.
Boy? car insurance. Tickets or hit something? more car insurance...

College. You should be set with $100k if the target is state U and you have a few more years to invest. Our state U is about $120k for four years. I saved $90k each in 529s and the rest came from scholarships. This didn't include food, fraternity fees, spring break, fall break, and formals.

Study abroad for a semester or year? If you don't do it in today's competitive college environment, you could be putting your kid at a disadvantage come job hunting days.

Just some items to be aware of. Sounds like you have a decent plan.

 

[exnavynuke]

/snip

Study abroad for a semester or year? If you don't do it in today's competitive college environment, you could be putting your kid at a disadvantage come job hunting days.

Yeah, I'm going to go ahead and say that's not going to be a problem for most people.

Studying abroad isn't a common experience for most U.S. college students. In fact, only 1% of students manage to study abroad.

Studying abroad could give you an edge in the job market - CNN.com

If 99% of students don't study abroad (according to that 2 year old article), then I don't think it's something likely to impact someone's ability to get a decent job.

 

[rodi]

That's what I was referring to. But I think a parent can teach a kid to drive, I mean some people cannot afford this fee. So it's not a requirement.

It is a requirement. You must have at least 6 hours of professional instruction as well as a classroom or online written course. I suspect the laws have changed since your kids were learning. I linked the current rules above, for California. OP is from California.

 

[tn3sport]

Yeah, I'm going to go ahead and say that's not going to be a problem for most people.


Studying abroad could give you an edge in the job market - CNN.com

If 99% of students don't study abroad (according to that 2 year old article), then I don't think it's something likely to impact someone's ability to get a decent job.

Tell me you didn't cite CNN as a credible source... I'll let that be your mulligan.

At any rate, the OP was looking for potential cost items. That's one that has potential. Yeah, Study Abroad has a mere 3% participation rate (See College Boards site) but the rate in increasing; however, only 13% of college grads find jobs in their field of study. Optimum word(s) here in study abroad is "advantage/disadvantage". It can be a costly option, and something to budget for in the college experience, but clearly provides an advantage to the students that participate in it.

 

[Fedup]

It is a requirement. You must have at least 6 hours of professional instruction as well as a classroom or online written course. I suspect the laws have changed since your kids were learning. I linked the current rules above, for California. OP is from California.

Interesting. How do poor people do it. Maybe the laws have changed because I did remember my oldest kid gave the youngest a ride. But very fuzzy. It was almost 10 years ago.

 

[Fedup]

Yeah, I'm going to go ahead and say that's not going to be a problem for most people.


Studying abroad could give you an edge in the job market - CNN.com

If 99% of students don't study abroad (according to that 2 year old article), then I don't think it's something likely to impact someone's ability to get a decent job.

I don't think this is a requirement for job. Some BS programs you can't spend a semester abroad like CS or engineering. Hence my kid did a summer abroad. But you need a car for internships and that's more important for jobs after graduation, even if you did nothing in those internships.

 

[exnavynuke]

Tell me you didn't cite CNN as a credible source... I'll let that be your mulligan.

At any rate, the OP was looking for potential cost items. That's one that has potential. Yeah, Study Abroad has a mere 3% participation rate (See College Boards site) but the rate in increasing; however, only 13% of college grads find jobs in their field of study. Optimum word(s) here in study abroad is "advantage/disadvantage". It can be a costly option, and something to budget for in the college experience, but clearly provides an advantage to the students that participate in it.

According to NAFSA, in 2015 approximately 1.5% of students studied abroad. The article I mentioned said 1% and was from an earlier year with trends showing "more" students studying abroad. It did say the increase was ~3% (2.9%). Whether you trust the source I quote or not, it was pretty accurate for the year it was describing. I don't really need a mulligan for quoting a source that, it turns out, is accurate based on other sources as well.

Trends in U.S. Study Abroad | NAFSA

Then there are the following questions one could consider regarding studying abroad:
Does the advantage outweigh the costs though? Is there any data to suggest it does?
Are they going to recoup the costs of paying for that advantage?
Does it provide an advantage to all students, or just students of select fields?
If there is a difference based on field of study, which fields should consider it and which should ignore it?

I don't disagree that studying abroad could be a potential cost if parents want to pay for their kids to do it. So could financing a 1 year global vacation for their kids, or buying them each their first house, etc. I disagreed with the implication that failing to do so was going to somehow negatively impact some unknown kid's job prospects.

 

[Aiming_4_55]

snip/

Food expense being this biggest shocker. A kid eating out 3x a day is expensive.
.....
Study abroad for a semester or year? If you don't do it in today's competitive college environment, you could be putting your kid at a disadvantage come job hunting days.

Just some items to be aware of....

Hmmm Food expense of eating out 3x a day would be a bit much but I can see with schedules and activities, i.e. sports, clubs, etc. I think I'll still have them pack protein bars, sandwiches, fruits, etc. Let's hope they don't get silly with 3x a day Starbucks as I won't fund that.

Studying abroad is an interesting one. I think it'll depend on their major and experience they could benefit. I know during the high school years we'll plan 2-3 week trips to Asia and Europe. This falls in the category of experiencing something I never did in high school or college and prefer to do the trips while I'm young with them.

 

[Aiming_4_55]

snip/
I don't disagree that studying abroad could be a potential cost if parents want to pay for their kids to do it. So could financing a 1 year global vacation for their kids, or buying them each their first house, etc. I disagreed with the implication that failing to do so was going to somehow negatively impact some unknown kid's job prospects.

I might be narrow minded, but I rather use the extra $25k - $50k to assist with their first house/condo down payment, but it'll depend on their major and the benefit. In CA, it'll be a small down payment, so it might not make sense, but in the Midwest, the $50k could be their 20% down payment and launch them in housing.

Sometimes I wonder, what it would take to "set them up" (not spoil them) so they would have a better life, so childhood education and learning activities cover that along with college funding is what I've accepted. New car, wedding and house fund would be bonuses I would like to do, but not working say an extra 5 years in a job I dislike.

 

[ivinsfan]

So far, here is a list of extras that I should make sure is in my rough budget.

Car (used or hand me down) plus insurance ($2k per car/driver/year) Yes, you should get the chance to makeout in a car ;-)
Sports (kids preference?) and medical (OOP) Ok, but if I have too many sleepless nights, you are done.
Braces ($5k each) Yes, I think it's nice to have teeth for most part ;-)
Prom ($1k each) Yes, they should have the experience.
Food ($1k year) Yes, I guess I'll feed them.
Clothing ($1k extra each) This is beyond the current budget for their fashion appealing needs.
2 Cell Phone Service ($1k year) Basic smart phones can be had for under $100, anything beyond they will have to earn.

Yes, I know teenagers are impossible to plan for, but I am just listing what I might be willing to contribute if I support the activity/action. It is not a given that I will increase the current clothing, sports, or discretionary budget yet.

Boy the cost of prom is high? Is this "normal" for your area and what does it cover?

Aside from Prom and the "extra 1K for clothes" everything else is pretty standard. Do you plan on having your kids work or giving them allowance money?..if you do, I think sticking to the standard clothing allowance is a good way to teach them about brand names and the value of money.

 

[Fedup]

Boy the cost of prom is high? Is this "normal" for your area and what does it cover?

Aside from Prom and the "extra 1K for clothes" everything else is pretty standard. Do you plan on having your kids work or giving them allowance money?..if you do, I think sticking to the standard clothing allowance is a good way to teach them about brand names and the value of money.

It could be high, maybe not the yearly expense either. But IIRC, new dress, new shoes, hair and make up, limo, food, etc.. was $500 for senior year and that was in 2008. But my brother paid $800 for his boy back in 2003. He lives in a richer area. So this is the case that it varies depends on the school and your own situation. I think one of my kids, the school had one event at Disneyland. The ticket is expensive there now, not cheap.

 

[akck]

Figure a cost for weddings, although actual wedding expense can be optional. We gave our son $5,000 to cover expenses, in addition to paying for rehersal dinner. I believe her parents gave them the same amount.

On car insurance, the cost can be reduced with good grades and we only carried liability coverage (older used cars worth less than $2,000). We also had our youngest take an online drivers safety course which cut 10% for several years. I think our agent also listed them on the cheapest vehicle to keep the cost down. If they go away to school without a car, let your agent know as it will drop the cost.

One other post retirement expense is travel to see kids, assuming they move away or while they're at school. Our oldest with the grandkid is on the opposite coast, so we travel there often. Trade off is we don't vacation travel elsewhere for now.

 

[NanoSour]

"Car (used or hand me down) plus insurance ($2k per car/driver/year) Yes, you should get the chance to makeout in a car ;-)"

Man, that's and expensive kiss. Doesn't fit into my FIRE philosophy.

 

[NanoSour]

I'll comment on each of these as they have worked out for us. I left work 4 years ago with a 5th, 6th, and 9th grader. Our oldest is now a senior in HS and will be heading off to college in the fall. Our 2 youngest are boys.

Car (used or hand me down) plus insurance ($2k per car/driver/year) Yes, you should get the chance to makeout in a car ;-) -- DD got her learners permit right after freshman year and didn't get her license until spring of junior year. Since she didn't get a job, I told her she didn't need her license. I much preferred she spent time on studying than get a part-time job. The better grades were way more profitable as she got top merit money. At many colleges the difference between 3.5 and 3.8 GPA is $20000-25000 in merit money over 4 years. When she got her license last spring our insurance only went up $27/month. (2 Cars - neither worth over 10K so don't carry coll/comp, but lot's of liability)

Sports (kids preference?) and medical (OOP) Ok, but if I have too many sleepless nights, you are done. -- Youngest S is into premier soccer and that has run me $3800-4200/year for that last 3 years. It was a family decision to do this for him as we wouldn't pay this money for each kid. Fortunately no serious injuries.

Braces ($5k each) Yes, I think it's nice to have teeth for most part ;-) -- Paying $95/month for 3 years for middle child. Dental insurance paid $1750.

Prom ($1k each) Yes, they should have the experience. DD going to the prom next month. Didn't cost me anything. She bought her own dress.

Food ($1k year) Yes, I guess I'll feed them. -- Boys appetite has increased almost exponentially as they have moved into their mid-teen. I'd plan for 2K.

Clothing ($1k extra each) This is beyond the current budget for their fashion appealing needs. -- They buy their own clothes from their allowance. Each child gets their age/week paid at the beginning of each month. They have to manage their own money. We buy them very little.

2 Cell Phone Service ($1k year) Basic smart phones can be had for under $100, anything beyond they will have to earn. -- You can pay as much or little as you want here. Our 8th and 9th grader don't have a phone and DD bought her own used iphone 5S last XMas after selling her ipad. We use Consumer Cellular and pay $53/month for 3 iphones. Basically only use data when on wifi networks.

 

[Aiming_4_55]

Boy the cost of prom is high? Is this "normal" for your area and what does it cover?

Aside from Prom and the "extra 1K for clothes" everything else is pretty standard. Do you plan on having your kids work or giving them allowance money?..if you do, I think sticking to the standard clothing allowance is a good way to teach them about brand names and the value of money.

I was thinking $500 per prom, junior and senior proms x 2 kids. Just a wild guess.

I do anticipate my kids working part time in school. It builds character, however it will depend on schooling needs, grades and/or ability to pass the class are important. The work income will supplement their personal choices, savings, and spending money.

 

[Aiming_4_55]

Food ($1k year) Yes, I guess I'll feed them. -- Boys appetite has increased almost exponentially as they have moved into their mid-teen. I'd plan for 2K.

Thanks for sharing your experience.

I guess I'll still feed them regardless of the cost.

I better look up my restaurant connection and get 100 pound sack of rice for $20. Rice and ketchup when my parents were broke as a kid. Glad those days are over.

 

[Hermit]

Tell me you didn't cite CNN as a credible source... I'll let that be your mulligan.

At any rate, the OP was looking for potential cost items. That's one that has potential. Yeah, Study Abroad has a mere 3% participation rate (See College Boards site) but the rate in increasing; however, only 13% of college grads find jobs in their field of study. Optimum word(s) here in study abroad is "advantage/disadvantage". It can be a costly option, and something to budget for in the college experience, but clearly provides an advantage to the students that participate in it.

DD thought of it as an unnecessary lark. It would have increased her time in college by a semester for a semester abroad. I tend to agree with her.

 

[FUEGO]

I'm taking notes since my oldest is 12 and my next is almost 11.

So far we haven't seen any outsized kid expenses. The biggest one we did see was the middle school $150 overnight field trip fee to travel 4 hours to a residential camp by the ocean. That's all the field trips for the year for her though. In the past we were spending $20-25/yr per kid on field trips but that was elementary and a lower income school. My money-conscious kid's thoughts on the $150 field trip: "it was fun, really fun but probably not worth $150 since many of my friends didn't go. I liked eating the food."

6th grade for the oldest involved an extremely intense core math course that covered 6, 7, and most of 8th grade curricula so we kept after school activities to a minimum, therefore zero sports or club-related fees (other than the occasional swimming or roller skating admission fees).

We went in for a braces consult and the quote was $4800 I think. So far we're opting to wait because the teeth might grow into place straight enough and I'm not sure my daughter is willing to take care of the increased dental hygiene and post-braces retainer usage (so might be 4800 mostly wasted dollars). The situation isn't that visibly noticeable as is, but we will definitely go for the braces if it makes sense.

Car insurance and an inexpensive reliable, safe, used car is the other big expense. We will probably get one car for the two older kids to share since they'll be at the same high school together. We're a 1 car family now so going to 2 cars won't make our overall transportation expenses go crazy. City bus / uber / bike is also an option

We do extensive family vacations. Usually a long summer trip of 3-9 weeks and 1-3 shorter vacations during the school year, usually 5 to 7 day cruises to the Caribbean. Kid-related costs are big but budgeted for. For the long vacations we do airbnb and find 2 BR places that are reasonably priced. YMMV on other kid costs. In Europe this summer, kids often travel free/cheap up till age 12-15 or so, and many places offer discounted rates for young adults up through age 19-26 or so. I've also seen many "family" ticket packages that work out much cheaper than the 2 adults / 3 kids tickets we are used to buying. I'm not sure how long the kids will want to join us on these big long trips, so our kid-related travel costs might actually drop down in several more years if one or more kids stay home without us (summer job, camp, volunteering, educational stuff, etc).