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Old 01-05-2018, 01:29 PM   #61
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... anecdotes like these give me confidence that I'll be able to manage regardless of where I end up.
Good or bad, I was in an uncommon situation before I hung it up for real. Prior to fully retiring in 2012, I was doing part-time contracting work with irregular income for 9 years. And prior to that, having left the cushy job at megacorp to pursue a dream of my own, I had to struggle to survive for a few years with little or no pay. Good thing my wife still had her job then. Then, she quit her job due to stress while I still continued on with part-time work to support our children through college.

And so, we segued into retirement. I can see how people quitting cold turkey find it a lot tougher. It is a big change in one's life, no doubt about it.

Don't worry too much about financial aspects. If one is well prepared, he should be able to face some difficulties such as market going down.

But I can tell you from personal experience that the shock that I could not imagine was when I was diagnosed with a potentially life-threatening health problem, only 6 months into retirement. I am OK now, but could be pushing daisies instead of posting here. It could have become something no money could fix.

I did not worry that much about financial issues, and am even less concerned now. Of course I always want to make more money, to show myself that I am good, but I am not fearful of a lifestyle downgrade.
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Old 01-05-2018, 01:59 PM   #62
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I think it's really interesting how many of us currently spend around $40k, could trim to a comfortable, if unexciting, $30k-ish, and dip into the $20k range without selling off cars and homes.

I'm not planning to cut my spending to the bone, but it's good to know we have room to cut if things went haywire.
If I'm reading you right, I think it's a big mistake to think that what you can do can be based on what other people have done (or said they could do).

What you could cut depends on your needs/wants/situation. What's a $1,000 booze budget to a tea-totaler? You really need to evaluate your particulars.

For me personally, I don't plan to cut back on anything, ever. I retired with the idea that my conservative WR supported the lifestyle I wanted to live, and it would do so through think or thin, assuming that the worst of the future is not much worse than the worst of the past.

On the slim chance that my portfolio shrinks to danger levels (and growing slimmer as I grow older, my portfolio grows larger, and I'm closer to SS/pensions), I'll figure out how to adjust as that approaches. I'll likely still be far better off than the average retiree, so I'm sure I'll manage somehow.

Others may take a different approach, with a a higher WR with a lot of discretionary income, with the plan to cut back if things get not-so-good. That can work too, and is probably a more "efficient" way to avoid leaving a large portfolio on the table when you pass. Whatever works for you, the important thing is to recognize the plan and work it, and adapt.

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Old 01-05-2018, 02:09 PM   #63
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I am impressed by how frugally the OP and others on this thread are. We are age 66, retired around age 50 and have been fortunate we have not had to worry too much about income and expenses (but we did tighten our belts in 2008-09). We spend around $70,000 per year. I have thought about what we could cut and have thought of these things:

1. Charity--Last year we gave around $15,000 to charity, all for things near and dear to my heart, I would hate cutting charitable giving but it could be done.

2. Cars- We have 2 cars, could pretty easily go to 1 car and walk or use public transport more

3. Restaurants-- we eat out at least twice a week, this could be cut

4. Family gifts--we are pretty generous with family gifts, i think we spent around $1000 on Christmas alone. This could be cut.

5. Groceries--We eat meat most days. We could cut grocery expenses by going more vegetarian

6. Cable--we could eliminate cable and just have internet, I hardly watch TV anyway

7. Travel--we love to travel, spend several thousand a year, this could be cut

8. Golf--we both play golf, this could be cut

9. Insurance--we have our car and house insurance with Amica, because we think the are the best but we could find a cheaper company. We could probably reduce the amount of insurance, get rid of umbrella insurance, etc. We have traditional medicare with a supplement and part d, we might could go cheaper with a Medicare Advantage policy

10. Utilities--we could reduce utilities, do a better job cutting off lights, cut the heat lower (I dread to see our heat bill after this cold weather)

11. Prescriptions--my husband has a medical condition and takes a prescription that is expensive even with Medicare Part D. We could get it filled cheaper in Canada or somewhere, but I would be worried about fake medicene

I hope we never have to make these cuts but this is good exercise to think of if we had to reduce expenses
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Old 01-05-2018, 02:32 PM   #64
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If I'm reading you right, I think it's a big mistake to think that what you can do can be based on what other people have done (or said they could do).
I don't know. I think there are examples where folks derive inspiration from other folks' achievements.

Speaking solely for myself, I am prone to underestimate what I am capable of. My first reaction to most challenges is to assume I can't do them. It's only after seeing someone else do it that I will even try.

But maybe that's just me.
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What could you cut?
Old 01-05-2018, 02:52 PM   #65
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What could you cut?

IMG_0717.JPG
I could cut about 95% if I really had too. This duplex could be rented out to cover the taxes.
In reality I want to start spending more though. Last night I Did a back of envelop what if equities dropped 40% and never came back? I'd live at about the quality of life as I do now but I want to move up to the Fidelity Planner level starting this year.
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Old 01-05-2018, 02:58 PM   #66
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If I had to I could sell my coastal condo. Eliminate a good bit of fixed cost and put money in the bank. And I could eliminate golf club dues. Those 2 things could easily go away in another 15 years anyway due to age. Hopefully I'm still alive and playing golf another 15 years or so......
+1. Don't golf but also have thought about selling off down south snowbird condo if needed. Up until this week.........
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Old 01-05-2018, 03:02 PM   #67
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If I'm reading you right, I think it's a big mistake to think that what you can do can be based on what other people have done (or said they could do).
Quote:
Originally Posted by Mdlerth View Post
I don't know. I think there are examples where folks derive inspiration from other folks' achievements.
That's what I was thinking, reading the posts on this thread, that there is a lot that we could cut if we had to. I usually don't even look at prices in the grocery store for example, and changing to Aldi would almost certainly save a lot there, but choices are more limited there, and we don't have to change and we don't want to. We have two vehicles and could certainly manage with one. We keep the house warmer than most people would like in the winter, we could wear thermals and save some there. Most of all we could seriously downsize the house and all the expenses that go with keeping up a large (for us) house. Cable TV could go, and we could change our phone and Internet plans to cheaper or cut them out entirely. We could dramatically reduce gift-giving to grandnieces and grandnephews but it is something that DW greatly enjoys doing. All that is just off the top of my head and if I gave it serious thought I'm sure I could find other things to cut.

But we have no plans to do any of that. The pension income is about as stable as one could hope for (not all are in trouble) and SS and dividend income is too. While SS could possibly take a haircut in the future I don't think it is going to happen to those who are already collecting it. If it does happen we could easily withstand it.

Therefore while few would call us wealthy we are by almost any definition comfortable, so there is room to cut out some optional spending if we had to.

BTW, I didn't mention travel because we travel so little it's not even a line in the budget. When we do it's driving only a few hours and two or three times a year we stay maybe one to three nights in a hotel.
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Old 01-05-2018, 03:06 PM   #68
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Quote:
Quote: Originally Posted by ERD50 If I'm reading you right, I think it's a big mistake to think that what you can do can be based on what other people have done (or said they could do).
I don't know. I think there are examples where folks derive inspiration from other folks' achievements.


Speaking solely for myself, I am prone to underestimate what I am capable of. My first reaction to most challenges is to assume I can't do them. It's only after seeing someone else do it that I will even try.

But maybe that's just me.
Yes, sometimes the examples can spark an idea. It just seems to me that threads like this take things too literally. Like "how much do you spend on travel, or the holidays, or at Amazon", etc type threads. It's a very individual thing - fine for curiously, 'fun', whatever. But people seem to come away with "Wow, I'm spending more than you, I should cut back". Maybe, maybe not, maybe you should spend more if you get value from it. You can't take it with you.


ooops, cross posted with Walt34, this was written before seeing his reply, if it matters.

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Old 01-05-2018, 03:09 PM   #69
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After summarizing our 2017 spending I looked at the number with a bit of disappointment. We live in a paid off home in a low cost of living area, with 2 paid off cars and employer healthcare, and we still managed to spend more than $37000 this year.

But what could I cut?

- $3000 on home improvements, $2000 was necessary but could’ve been delayed
- $5000 on “personal purchases”. This is everything from clothes to going out. DW and I each get half of that per year. We could probably cut this in half, but it wouldn’t be fun.
- $2000 on travel. A lowball, all of the airfare and most of the hotels were paid for with points.
- $1000 on booze
- $700 in union dues. $200 on Spotify.
- We’ll move in RE and save $1300 on neighborhood fees.
- We don’t have cable, our hobbies are cheap/free, we eat out maybe 5 times a year.

So we’re looking at $35k a year (plus healthcare & taxes) in retirement. We could trim down to about $30k a year while still covering needs and most wants. Down to $24k if we had to scrape by for a bit for some reason.

What about others? How much wiggle room do you have?
Cut out or reduce booze, spotify, travel and half or personal expenses.
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Old 01-05-2018, 03:19 PM   #70
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If it meant I was ER but would need to go back to work, I could cut:

Gifts - Charity, family and friends. Although I feel I would be sad.

Expensive Hobbies
Skiing, Event Tix, Concerts, travelling

Food
Stop eating out, shop smarter

Auto
Shop around for better rates, less coverage if necessary (IE drop full cov on a car and or simply sell a car and go one car). If I had to I could rely on Uber and friends for a few months if I really had to.

Those four above could likely reduce my budget by >40%

If we experienced history of 00-01 or 08, and I was first year ER, I would likely try to reduce my budget by as much or more as the pullback. So if it was 50% I would try and sustain a 50% reduction until necessary.

I could unplug anything I don't use until the market recovers, turn the heat down as much as the market dropped, or basically try and consume that much less energy, so if it dropped 10% reduce my utility bills by 10% somehow, even if it meant asking for a special rate/plan/reduced fees etc.

I would watch all fee's and ensure I don't pay anything I don't need to like Netflix, AMZN Prime, etc. I would do a no grocery month where I simply don't buy groceries that month. Involves getting creative by the second week when milk and veggies run out but best to do this in summer when veggies stay fresh.

And I would make sure I never have any cash or credit cards on me, only a drivers license, ensuring I never pay for anything lol.

I couldn't probably go without a pay as you go phone and some sort of internet connection. But right now that overall yearly cost is only $250 for us with credits, reimbursements and others paying partial phone bill. SO not much reason to cut that.

But again if it meant saving power, I would set timeframes for when to use my smartphone and make sure all bills are autopay so I don't consume power/time paying them. Possibly even browsing in no image mode, saving bandwidth and time.

I think I could switch to the smaller trash bin if I needed to, or cancel trash altogether if it meant passing a landfill. That could be rough though.

And now, without the penalty for lapsing on ACA, I could forego health insurance if I really needed to. No dental work until times get better. Save my appointments and do WebMD instead. Buy/use less medication when safe.

That is all basically apocalyptic scenario. My guess is I could probably scrap 70-80% of our current budget in doomsday scenario.
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Old 01-05-2018, 03:19 PM   #71
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We could cut a lot, maybe 30% if we had to. We could almost get there by downsizing. Also could cut travel a lot and almost everything else a little.
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Old 01-05-2018, 03:28 PM   #72
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Cut out or reduce booze, spotify, travel and half or personal expenses.
Frayne's list above, and the 1,000 in home improvements that was not "necessary"

Your budget overall looks fairly frugal and prioritized. $37k isn't the budget of a crazy spendthrift, so no worries if you've run Fircalc and can easily afford it.
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Old 01-05-2018, 04:34 PM   #73
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I'm reminded of the time when I was the Financial Secretary for my church and when the pledges came in for the next year, one lady reduced hers by $300/year (I don't remember what it was the previous year- likely under $2,000). She attached a note saying she was finding expenses in retirement higher than she'd expected. I'm sure it was part of a series of cost-cutting measures but that really struck me -it must be stressful to live that close to the edge that a $300 annual decrease in charitable giving would make a difference.
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Old 01-05-2018, 04:56 PM   #74
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Everybody's situation is different. DW and I could cut back by selling the second home and reducing expenses most significantly. However it's not a life choice we're willing to make at this point.
We could reduce the booze but that only amounts to a $5.39 six pack of Miller light each week.
Likewise eating out is limited to our out of town trips a few times a year. After thousands of dinners and events over the last 40 years eating out has no extra appeal. Buying high quality food to prepare at home is nonnegotiable. Less volume more quality.
Our biggest expenses are Federal, State and Local taxes which there's not much more to do in that area.
While we could cut back I see that as defeating the original purpose of ER. And bear in mind we're overall in very good times now.
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Old 01-05-2018, 06:38 PM   #75
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Travel - $10,000
Golf - $4,000
Booze - $2,000 to cheaper wine and hard liquor
Cable - $1,000
Home Repairs -$3,000
Charity - maybe $1,000 but probably wouldn't give this up

This is only if we're in dire straits
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Old 01-05-2018, 07:15 PM   #76
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This is only if we're in dire straits
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Old 01-05-2018, 08:13 PM   #77
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I already have the thermostat at 65 degrees during the day and I'm always freezing.
Seems like you could squeeze a little extra $$ into the heating budget, no? That's one area where I don't mind spending what it takes to keep it comfortable in our hot, humid summers and our cold winters. Going from uncomfortable to comfortable adds maybe $200-300/yr to our heating/cooling budget (aka about the same cost as one day on a family cruise or 2-3 days of family slow travel).
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Old 01-06-2018, 12:20 PM   #78
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After summarizing our 2017 spending I looked at the number with a bit of disappointment. We live in a paid off home in a low cost of living area, with 2 paid off cars and employer healthcare, and we still managed to spend more than $37000 this year.

But what could I cut?

- $3000 on home improvements, $2000 was necessary but could’ve been delayed
- $5000 on “personal purchases”. This is everything from clothes to going out. DW and I each get half of that per year. We could probably cut this in half, but it wouldn’t be fun.
- $2000 on travel. A lowball, all of the airfare and most of the hotels were paid for with points.
- $1000 on booze
- $700 in union dues. $200 on Spotify.
- We’ll move in RE and save $1300 on neighborhood fees.
- We don’t have cable, our hobbies are cheap/free, we eat out maybe 5 times a year.

So we’re looking at $35k a year (plus healthcare & taxes) in retirement. We could trim down to about $30k a year while still covering needs and most wants. Down to $24k if we had to scrape by for a bit for some reason.

What about others? How much wiggle room do you have?
We are in a similar situation - paid off home in the midwest (not LCOL, but not HCOL either).

Our numbers are pretty much identical - $35K per year excluding taxes and health insurance. That includes $4-5K on vacation.

Note that that does not include intermittent large purchases (car, furnace, etc).
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Old 01-06-2018, 12:43 PM   #79
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A big thank you to the OP and all the respondents. This kind of thread is gold for a pre-retiree. For me right now, it's a higher priority to get a handle on future outgo than future income.
When I got serious about ER I started
a) looking at what I could pay off early to reduce expenses later.
b) what I could save more of..

this was like multiplying our retirement plan - we increased savings TIMES reducing our spending.

In our case we started doubling up mortgage payments and I did more 401k contributions and after tax savings.

Net result - we still had a great lifestyle - even though we were now spending far less (if you look at extra mortgage payments as savings rather than spending.) The old "pay yourself first" meant we didn't have a lot of "extra cash" to fritter away.

We did this for 2 years and were comfortable in our lifestyle... which let me re-run the firecalc, fidelity RIP, etc with a much lower lower annual spend... and Voila - I could retire. I retired write after I made the last mortgage payment. We haven't expanded our budget since retiring in 2014... although market returns suggest we can... We have enough.
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Old 01-06-2018, 12:48 PM   #80
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Similar situation here. This is the first year of FIRE and downsized to the Midwest, so the number I planned for is $50K with all the fun stuff. I could cut cable, entertainment, and travel and probably get down to $30K
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