Pandemic spending results as example of 'Lean year'

[yidal8]

The question of how much discretionary spending can we forgo in case the market goes really south was answered last year curtesy of the pandemic.
A couple in mid 60s, one daughter fully independent, house paid off, no other properties, living in HCL area.
Between March and December 2020, we forgo dining out, vacations, trips, visiting family and friends, our driving mileage was less than half, etc. My part-time engineering consulting gig went completely dormant (still is), which was also on my mind, and put us in 'full retirement mode'.
Recent normal yearly spend pattern is $190-220K all inclusive.
Covid-19 2020 year spend was $140K all inclusive.
So there it is.
Other immediate low-hanging fruits possible for further reduction of spend: eliminating my Jaguar lease payment ($11k/year currently expensed on my business), selling my other sports car 'toy', etc.

On the income side, Firecalc claims we can 100% spend $260k/yr. for the next 35 years, and still potentially leave something substantial for our daughter (considering SS, small pensions, etc.)

 

[disneysteve]

Same here. 2019 spend was about 84K. 2020 spend was about 60K.

 

[ElizabethT]

We are 50% fixed, 50% discretionary with regard to our annual spend (which we call a budget ). We pulled in the reins hard at the start of the pandemic, but then switched over unused travel $$ to buying new toys like kayaks and carbon fiber bicycles, new furniture for the house, and private lessons for things like golf, tennis, and music (piano and guitar).

So we ended up spending exactly as we have in prior years.

 

[Vincenzo Corleone]

Went from around 51% fixed / 49% discretionary in 2019, to 73% fixed, 27% discretionary in 2020. Wasn't the most fun, but we weren't hurting.

 

[marko]

Mid Pandemic, we decided to build a new house. An extra $200K (on top of the sale of our old house) for 2020, so I guess I am---once again---an outlier.

We did note that our usual/normal discretionary spending dropped by about 50%.

Oh, and in the 'timing is everything' column, the leases on our two cars were up and we had to put $11K down in deposits for two new lease cars. Ugh!

Also because our new house wasn't ready for three extra months we had a $14K Airbnb expense!

 

[GravitySucks]

Total spending down around 40%.
Not only discretionary but my essential as well. Thought I'd wear my car out by now but I can easily get 3 years more than expected. Part miss estimating, part no t driving.
Groceries lower even with inflation and steaks at home by moving to near 0 pre-made foods.

 

[Out of Steam]

Until this summer, our spending was 5-10% less than expected. Would have been lower, but we had our adult daughter living with us until recently.

We refinanced our mortgage into a shorter term, which raised cash outflow somewhat, but produces a significant savings in interest. We're also starting to travel by car, and hotels are very expensive right now.

We're probably back to baseline or slightly higher.

 

[braumeister]

2020 spending was 26% less than 2019, mostly accounted for by the loss of any international travel opportunity.

 

[ivinsfan]

The question of how much discretionary spending can we forgo in case the market goes really south was answered last year curtesy of the pandemic.
A couple in mid 60s, one daughter fully independent, house paid off, no other properties, living in HCL area.
Between March and December 2020, we forgo dining out, vacations, trips, visiting family and friends, our driving mileage was less than half, etc. My part-time engineering consulting gig went completely dormant (still is), which was also on my mind, and put us in 'full retirement mode'.
Recent normal yearly spend pattern is $190-220K all inclusive.
Covid-19 2020 year spend was $140K all inclusive.
So there it is.
Other immediate low-hanging fruits possible for further reduction of spend: eliminating my Jaguar lease payment ($11k/year currently expensed on my business), selling my other sports car 'toy', etc.

On the income side, Firecalc claims we can 100% spend $260k/yr. for the next 35 years, and still potentially leave something substantial for our daughter (considering SS, small pensions, etc.)

What if we use % instead of actual numbers. That's more consistent and doesn't lead off in other directions. I didn't actually need to know that you lease a Jag and how much it costs you.

 

[jollystomper]

Our 2020 expenses were down 29% from 2019. 2019 was inflated a bit since we bought a car, but taking that out spending was still down about 18%.

2021 spending is on track to be higher than 2020, but not by much (and still less than 2019), since our largest discretionary spending category (vacation/travel) is still impacted on the international side.

 

[Hubcity]

My 2020 spending was down about 33% from 2019.

 

[RunningBum]

I spent more in 2020 than any year since 2015. I always have a few unusual large unusual expenses that I note on my tracking spreadsheet, but they happened to be larger in 2020. Taking those out it would pretty much be the same. I got in 2 ski trips before things shutdown last year.

 

[Alan]

Our 2020 spending was 49.9% less than 2019. No international travel, no cruise.

 

[Golden sunsets]

Our core spending was down 22% in 2020, mostly due to lowered travel and dining out. Groceries were up though, which muted the decrease in spending.

 

[TheWizard]

I don't track my spending in retirement so I can't give you dollar amount or percentage changes.
But I did start age 70 SS at the beginning of the pandemic early last year.

So with international travel not possible for the last 17 months, my pension/annuity +SS income has greatly exceeded my current expenses, similar to what others have reported.

So I've been investing anywhere from $2000 to $4000 per month of excess income into my taxable account...

 

[MrsHaloFIRE]

Our spending from 2019 to 2020 was only down 3k. BUt here are the caveats: for our routine savings we still expense them ex: we save 1k a month for travel whether we travel or not and we mark it as spent on the monthly spend bc when it goes to savings its spent. SO those didnt change. SO when we travel we spend out of savings line item marked travel and it doesnt show up in our monthly budget. SO a 5k trip isnt a blip on the monthly spend the month we take the trip or pay for the trip. We also stopped eating out but spent a TON on groceries. i mean a ton. ORganic and alot of it. Nice cuts of meat. We skimped nothing. Our house was also needy.

 

[Romer]

Overall spending was down about $20K a year due to no travel and limited eating out, did a lot of togo to support our favorite restaurants. I did spend more on Amazon, Otherwise it would have been down more.

 

[cranberryjoe]

Compared to 2019, in 2020 I spent much less on automobile expenses, much much less on restaurants, slightly more on groceries, infinitely less on travel, much more on face masks (I did actually buy a few N95 masks for a home project in 2019), and I continued my trend of spending more on hobbies than the previous year.


Overall, I spent about 10% less in 2020 than 2019. It would have been even closer had I not had a big emergency home repair bill in 2019.

 

[Koolau]

I didn't track it, but other than charities (way up) we spent almost nothing but what was required to "exist" (food - groceries, utilities, HOA dues, etc). We did almost nothing in 2020 but sit in the apartment and walk around outside - filled gas tank maybe 3 times. I'd guess discretionary spending was down 80%.

 

[DrRoy]

We did not have a low spending year for 2020 because we had a couple remodeling projects. However, during the lockdown period we had several consecutive months that were under half of the years' average/mo.

 

[scrabbler1]

My expenses dropped 48% in 2020 versus 2019. But this huge drop can be attributed to doing one thing at the end of 2019 - I liquidated my holdings in an actively managed stock fund I had been in since 1996 and bought a comparable stock index fund. This did 2 things: it reduced my income (no cap gain distributions!) so my income taxes dropped; and it put me back on the ACA subsidy train, something I had not been on since 2016.

My remaining expenses in 2020, after excluding the volatile income taxes and medical expenses, were basically unchanged from 2019, dropping less than 0.5%.

 

[athena53]

Some of my charitable donation and discretionary spending is driven by how bad the taxes are in a given year. I owed extra in 2019 for 2018 and then had to make bigger estimated payments in 2019 so taxes were a big hit in 2019.

So.... 2020 taxes lower than 2019 by $14,000. 2020 travel lower by $19,000 and I've got a giant credit that I hope to use on a trip scheduled for October of next year. Home maintenance and improvement up by $4,000 and charitable donations up by $7,000.

2021 is starting to look more like 2019 with, fortunately, lower taxes.

Another discretionary item I don't include in the categories is the 529 funds for my 3 grandchildren. I think I added more in 2020 than in 2019. I've been able to add a lot in 2021 as well. My average withdrawal rate since retirement 7 years ago has been around 3.5% but invested assets after withdrawals have gone up 4.7%/year so I see no need to decrease my withdrawals in a low-expense year. I just give away what I don't need, one way or another.

 

[Badger]

Since 2 European trips had been cancelled and an additional 2 European trips were postponed our spending for the past couple of years was reduced while our investments increased. So we used some of that extra money to increase a few donations. Probably be the same next year if this pandemic continues with more variants.


Cheers!

 

[iloveyoga]

Since we were home with time on our hands....we did several home improvements in 2020 - new roof and new 2 zone HVAC system, which is so nice for our two story house. When we did the roof, we added a solar attic fan that DH has always wanted. So we came out about even or maybe a bit more. I don't track expenses as closely as some on the board. The info is there if needed.

 

[athena53]

Since we were home with time on our hands....we did several home improvements in 2020 - new roof and new 2 zone HVAC system, which is so nice for our two story house.

Home improvements are another item that's dependent on income and expenses for the year. In 2020 I got a decent tax refund for 2019 and had lower travel expenses so I had quartz countertops installed in the kitchen. It was before vaccinations but we all wore masks around each other when we were in the same room.

This year I had the exterior of the house painted and the lower deck replaced with TREX. There was a LOT of exterior painting going on in the neighborhood this year, maybe a combination of less spending on other things and a safe project to do since it's outdoors.