What could you cut?

[ncbill]

Well, if we had a severe impact, e.g. the proverbial 40% market drop, we could save at least $20,000 to $50,000 (public-in state school to private school) in college tuition payments for our youngest who plans to attend undergrad this fall.

 

[HawkeyeNFO]

Man, you guys live inexpensively already and I am a bit envious!

HCOL around here is my biggest problem. Mortgage payments include PITI and are nearly $50k per year for me. So if the SHTF we could sell the place and move someplace cheaper. But that's not the plan for now. Maybe in 10 years when the youngest goes to college.

 

[DrRoy]

I don't personally plan on implementing any of the $9000 potential cuts I mentioned upthread and in fact I'm working diligently to increase my spending in response to increasing net worth. I'd hate to leave too much to my children and make them horrible spendthrift layabouts. Worst legacy one could leave!

I'm in that boat too. We did cut back to one car this year, but we bought a new one to replace both old ones and spent ~$12,000 over what we sold them for. It's great to have a brand new vehicle with reset reliability and new features that we lacked in the old ones.

 

[Live And Learn]

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.

^ This !!! I could have written this also The only thing that MIGHT cause me to have to make cuts is if healthcare gets even MORE expensive. My "consolation" is that firecalc says I can spend up to $24k more per year than my budget. While I'd rather spend that on something fun, it will cover the dog and the boat even if I have to spend $17k more on HC per year !

 

[street]

No, not I.

People who can live on 0.5% WR with no other incomes such as pension or AA are either extremely frugal or rich. Either case, it's not something I can do or am.

The Federal Poverty Level for a couple is $20,290. To even get this at 0.5%, one needs $4M in investable assets. If I had $10M, then I would be comfortable with $50K/year, but I am a long way from there.

No not blaming anyone my friend.

I understand and I wish I wouldn't of mentioned my WR now. I definitely don't live in poverty level. We buy what we want and need and do live very well on my WR. I have mentioned before that I have some income from part time gig I do in the summer months. I do it for exercise and it consists of all outdoor work and I love it but they pay me. This does off set my WR. I can tell you I spend way more then I should at times. I have a bad habit of buying something I like just because I'm afraid they will stop making it etc. LOL The funny part is I will never wear out the first one I have. LOL

 

[YVRRocketSurgery]

WRT the original question by the OP, we're delaying retirement by a few years in order to build up a large enough nest egg to attain our extended retirement goals, the core of which is to travel 6 months of the year but also to give us a more flexibility to make some decisions without impacting our retirement lifestyle too much. In theory, we should have enough quite a bit of wiggle room if necessarily by reducing or reallocating the travel budget.

If we cut travel, eating out/alcohol, gifts/charity, etc, we might be able to get our spend down to about $25k/year. Even then, we likely wouldn't be able to make due with a 0.5% WR at the start of retirement. However, the missus' has a DB pension that can kick in as early as age 55 so that would get us pretty close. And once government benefits kick in, in our 60's, a 0.5% WR would likely be petty doable for us pending our health spend.

 

[Mdlerth]

Bernicke

This thread is exhibiting a lot of stamina, so I'm guessing it will withstand a related-but-not-exactly-on-path question without risk of hijack.

All the talk of spending cuts makes me think of the Bernicke Reality Retirement option in FIRECalc, where the model assumes that spending just decreases by itself over time.

Aside from the deliberate reductions one might make in response to market-driven changes in the portfolio, what categories would you anticipate cutting as the years - and, with luck, decades - pass?

Travel would be perhaps the most obvious. I'm only pushing 60 and already dislike traveling. (DW loves it, so we've got many years of suffering on airplanes ahead of us.)

What else? Home and auto maintenance, maybe? Rich foods and liquors? Hobbies? Non-FDA-approved aphrodisiacs? Others?

Note to mods: if you see this as off-topic, don't hesitate for a moment to bump it to a new thread.

 

[daylatedollarshort]

This thread is exhibiting a lot of stamina, so I'm guessing it will withstand a related-but-not-exactly-on-path question without risk of hijack.

All the talk of spending cuts makes me think of the Bernicke Reality Retirement option in FIRECalc, where the model assumes that spending just decreases by itself over time.

Aside from the deliberate reductions one might make in response to market-driven changes in the portfolio, what categories would you anticipate cutting as the years - and, with luck, decades - pass?

Travel would be perhaps the most obvious. I'm only pushing 60 and already dislike traveling. (DW loves it, so we've got many years of suffering on airplanes ahead of us.)

What else? Home and auto maintenance, maybe? Rich foods and liquors? Hobbies? Non-FDA-approved aphrodisiacs? Others?

Note to mods: if you see this as off-topic, don't hesitate for a moment to bump it to a new thread.

Our mortgage will be paid off either when the loan ends or we sell the house to downsize. Our next likely place will be a townhouse or condo in a retirement village that would cost much less than our current house. But I keep the house in the budget as we have neighbors over 90 still spry so maybe we will want to stay in our neighborhood in our old age, too. I keep everything else the same in the planning budget.

 

[W2R]

All the talk of spending cuts makes me think of the Bernicke Reality Retirement option in FIRECalc, where the model assumes that spending just decreases by itself over time.

Aside from the deliberate reductions one might make in response to market-driven changes in the portfolio, what categories would you anticipate cutting as the years - and, with luck, decades - pass?

I'm planning on spending MORE, not less, as I become elderly. My dental implants (4 so far) are surprisingly expensive, and other dental costs as well as medical prescriptions will probably be more as I grow older. I'll need to buy into a CCRC or whatever facility is appropriate if it turns out that I need care in my old age. Or, possibly more likely, I'll need to hire someone as live in assistance here in my own home. I'll probably have restaurant food delivered if I can't cook any more. I'll want my computer screen to cover a whole wall if my vision is bad. I'll probably need to hire a lawyer to handle my affairs at some point if I should become incapable of doing that myself. And as if all this isn't bad enough, con artists have a tendency to come out of the woodwork trying to get their hands on helpless old ladies' money.

I think it would be severely wishful thinking for me to assume that I will suddenly, magically lose the desire to spend money any more for anything due to old age, assuming that I have it to spend (quite a big assumption for many/most elderly). I am already spending quite a bit more now at age 69 than I spent when younger.

 

[unclemick]

Love this thread. Looking back to 1993 at age 74 now, I wonder was it really me or just a fanciful dream, accident of history or could a person actually live that 'cheap' ER wise back then.

History and Mr Market have been overall very kind. In spite of some meaningful bumps along the way.

heh heh heh - What would be called cutting expenses now is very different 2018 vs 1993.

 

[athena53]

Like W2R I see some things decreasing and some increasing. My mortgage will be paid off when I'm 78 but it's only $700/month. The real shifts will occur if I have significantly decreased stamina or mobility. That's when travel will be cut back (I'm less likely to enjoy it) but I'll start hiring people to mow the lawn, clean the house, etc. Hard to predict what will happen if I can't drive- will self-driving cars be an option, or will I need a future version of Uber?

If I get to the point of Assisted Living, I figure the car expenses, travel, the church pledge, and all home-related expenses go to zero- but that leaves plenty for high- quality care if I need it. I'm not quite 65 so I hope that's a couple of decades away.

 

[FUEGO]

I'm in that boat too. We did cut back to one car this year, but we bought a new one to replace both old ones and spent ~$12,000 over what we sold them for. It's great to have a brand new vehicle with reset reliability and new features that we lacked in the old ones.

We went from 2 cars to 1 in 2016. Great move. We upgraded two 16 year old sedans to a minivan since we weren't working any more and didn't need a commuter car. Half our mileage these days is long road trips so comfort for the five of us was important. Gas mileage sucks and it's much more expensive to maintain ($600 for a spark plug job?!?!) but we're not hurting for $ so why not have something nice?

We bought a seven year old used minivan but it was 9 years newer than the cars we got rid of. So many more modern tech features even in the 2009 version we bought! Next time around we might replace it with an even newer car since we're more flush with cash.

 

[orangehairfella]

I think the OP's question was theoretical; it's a question I ask myself regularly because I don't ever want my "non-negotiable expenses" to be an uncomfortable % of my investments.

Confirmed, it is a thought exercise. We aren’t retired yet, but I was curious how our 20-30% buffer compared to others, for the sake of inspiration.

This thread also reminded me that our expense accounting includes long term, over-estimated, savings for car maintenance and purchases which amounts to $4k a year so that gets us down to $20k if we had to slash optional expenses and defer costs/maintenance for a period.

 

[Crewer]

I always think it's a good idea to consider the worst-case scenario for almost anything and that includes how one could cut expenses if something unforeseen required it. I can't imagine having to do it but I feel better knowing we could if necessary.

In our case the two big items in our budget are travel and housing costs and both could be cut if we had to do it. So far we're enjoying both. We went to one car several years ago and are not planning to go back to two cars - it's unusual in our demographic but it's our thing (and the garage is now plenty large enough).

 

[brett]

We got rid of one vehicle. Not to save money per sae but because we felt that we did not need it after moving to a condo close to public transportation.

We thought we could always rent one for a few days if we needed to. Well, after five years we have never needed to do this.

It is surprising what a difference it made. No maintenance or insurance costs.
No unexpected repairs. One less thing to be bothered about.

 

[Snidely Whiplash]

Category|Total for 2017|Total after MAJOR cut-backs
Groceries|$2,323.72|$2,500.00

We only spent $32000 in 2017, so not a ton of cutting to be done.

But if we really really had to:

$1500 groceries (economize a bit with what we buy and cut out the alcohol)

I don't understand how anyone can eat (even for one person) for $193 or $125 per month. Even assuming that's just food and not paper and cleaning products that's $6.43 per day. Maybe you live on a farm and have access to chickens and vegetables without cost? If not, are you guys eating 3 meals a day of rice and beans?

(I don't mean this sarcastically. I am genuinely curious.)

 

[Nemo2]

I don't understand how anyone can eat (even for on person) for $193 or $125 per month. Even assuming that's just food and not paper and cleaning products that's $6.43 per day. Maybe you live on a farm and have access to chickens and vegetables without cost? If not, are you guys eating 3 meals a day of rice and beans?

(I don't mean this sarcastically. I am genuinely curious.)

We recently thawed a frozen turkey that cost us $15 Cdn, (about $12 US); had about 5 meals from that, (with veggies/cranberry), rendered the carcass, made stew, another 5 meals....we'll finish the stew for lunch today and still have enough turkey left over for a couple sandwiches.

But...we enjoy/don't mind eating 'leftovers'...some people don't care to.

 

[Danmar]

That does seem like a logical thing to do during this bull market.

After all, if we plan to cut back during future market crashes, the reverse should be true for many of us; we could spend a little more right now while the market is surging upwards.

Agree. If you won’t consider spending more when times are good, why have equities at all? Maybe as an inflation hedge?

 

[Throwdownmyaceinthehole]

I could return my library books on time!

 

[athena53]

Agree. If you won’t consider spending more when times are good, why have equities at all? Maybe as an inflation hedge?

In bad years I don't want to have to cut back on my promises to my church and the local women's shelter or cut back on travel. I'm happy with a stable withdrawal rate and allowing what's left in a good year to be there for withdrawal in bad years.

 

[brett]

Our turkey is in the freezer awaiting the same fate. Turkey dinner. Turkey pie. Turkey soup. We get tired of it after a while so freeze and just freeze any of the pie of soup that remains.

We shake our heads at the cost of that terrible food in the fast food joints. Our idea of fast food is to buy a barbeque chicken at Costco, make a salad, and it's done. Or buy a salad as well at Costco.

 

[MRHARDROCKCAFE]

Smart & Final has ready to eat cooked cheicken.

 

[Nemo2]

Smart & Final

Sounds like a MENSA Funeral Home.

 

[Nomoresnow]

DW and I went down to 1 car 6 years ago, and we both work FT in different states - try pulling that off ... (full disclosure: I get to WFH often, it was the only way we could do it). It's often awfully frustrating, but has allowed us to pile the ' no car payment ' amount into ER savings

 

[daylatedollarshort]

I don't understand how anyone can eat (even for one person) for $193 or $125 per month. Even assuming that's just food and not paper and cleaning products that's $6.43 per day. Maybe you live on a farm and have access to chickens and vegetables without cost? If not, are you guys eating 3 meals a day of rice and beans?

(I don't mean this sarcastically. I am genuinely curious.)

I don't know about other people, but changing where I grocery shop made the biggest difference. The prices at the warehouse and discount stores near us compared to the retail stores are often 50 - 80% less for the same items. I also stockpile the loss leaders from the retail stores.