Spending more than you thought??

[kz]

I'm the curious type so here's my questions.

Are you spending more in retirement than you thought you would? If so, what are you spending it on?

Have you had to cut back in some areas in order to pay for some unexpected expenses?

Have you gone back to work in order to pick up a little extra income for those expenses?

Do you worry about finances more than you thought you would?

As I stated....just curious.

 

[kowski]

Personally my wife and I are right on track with our spending after 4 years of retirement.  We planed for unexpected expenses and are saving in our retirement.  Again just as in our work a day life we live within our means. Neither of us plan to go back to work, in fact we often laugh and say we are very glad to be retired.  As far as finances go we have all our money in 6% CD's.  We have a very low risk tollerance.  Life is truly amazing when you don't get up at 4:15 each day to head out on the highways.  Just wonder what little project you might accomplish today.   

 

[tryan]

Yup ... decided to develop some water front property so the 4% SWR is out the window. It's a rental so the line between "spending" and "investment" is pretty blury too (furnishings, toys ...)

Just need to keep reminding myself "I can sell for a profit ... I can sell for a profit".

 

[grumpy]

All of my pre-FIRE planning was extremely conservative. We are spending more than I planned for things like travel and entertainment but I am finding that we can afford it. We have also had some unexpected expenses for vet care of our cat. I have to remind myself that its OK to enjoy ourselves while we are healthy enough. DW's Social Security will kick in in 3 years and she will probably inherit a significant sum in the next few years. We have been fully retired for almost two years and despite the weak stock markets and our higher than planned spending, our net worth has still grown slightly. We are going to Las Vegas for a week on Monday and we are taking a three week trip to Europe in the Fall. These two trips will be about three times the cost that I budgeted for travel for the year - but what the hell! You only live once.

Grumpy

 

[REWahoo]

I've only been retired for a year, but...

Are you spending more in retirement than you thought you would?

No, we're actually spending less overall. However, a couple of areas have been higher than expected but were more than offset by lower than expected spending in other areas.

If so, what are you spending it on?

Experienced higher than anticipated spending on home maintenance (unexpected repair/replacement of appliances).

Have you had to cut back in some areas in order to pay for some unexpected expenses?

No

Have you gone back to work in order to pick up a little extra income for those expenses?

Heck, no!

Do you worry about finances more than you thought you would?

Nope. But that may be due in no small part to drawing our living expenses from our portfolio for a year and ending up with a larger bottom line than when I retired. Having 3-4 years living expenses in MMkt funds and CD’s also helps me sleep well.

 

[Nords]

I'm the curious type so here's my questions.
Are you spending more in retirement than you thought you would? If so, what are you spending it on?

Heck no.

We've refinanced our mortgage from 8% to 5.375% and dropped our monthly payments by over 20%. Big difference, and getting those interest rates almost made up for the lousy stock market returns during 2000-2003.

We're not putting money in savings or IRAs anymore. We're only going to save money for college over another 4-8 years.

We don't pay a housecleaner anymore. We don't clean the house very often, either, so that's a double-bonus savings!

No more after-school childcare. No more eating out because we're too tired or too late to cook. (Now we eat out for celebrations or because we're too lazy to cook.) Only about half as much driving (unless the surf is really up), so less money spent on gas and a lower insurance rate on the cars.

We had the time to do the numbers and search for a cheap photovoltaic solar system which has nearly flattened our electric bill. (Without it our electric bill would be pushing $120.) We do our own home/auto maintenance & repair. We have time to plan our vacations way in advance and shop for cheap airfare/lodging, or drop everything for a last-minute fare on an interisland cruise.

Dental insurance premiums are more expensive than the cost of visiting the dentist every couple of years. Another double-bonus savings.

I'm no longer buying military uniforms or aloha attire. My biggest clothing expense is sneakers, slippers, and tae kwon do uniforms.

Some expenses have gone up-- martial arts and surfing. But now I'm in the best shape of my life and undoubtedly our medical expenses would be cheaper in retirement than working.

Have you had to cut back in some areas in order to pay for some unexpected expenses?

No, but we have enough slack in the budget that we could find places to cut. It'd probably come from vacations & dining out first.

We have more time to plan meals & shop for groceries, but our teenager eats more than we thought humanly possible. So that's probably a slight loss.

Do you worry about finances more than you thought you would?

For the first year we did, but now we have the routine down pat. Our retirement portfolio was hitting a seemingly never-ending series of new highs earlier this year and is still within 5% of its best. I think the issue is more in line with Cut-Throat's question: "What are we saving it for?"

 

[cute fuzzy bunny]

Spending considerably less. Even including the two cars we bought this year.

 

[lazygood4nothinbum]

july 4th will be one year here. spent way less than budgeted. i originally planning to travel but haven't been able to get myself to go very far for very long since i still have mom here. (there's nothing quite like watching someone die for 12 years, yuck).

and since i've been on this forum, i've learned of places like thailand. so probably for first few years after mom, travel won't be much more expensive than living where i do now.

but i don't look at this as spending less on retirement. i look at is as saving up for a better boat later. i'm pretty sure all this cash is gonna get spent somewhere along the line.

 

[audreyh1]

We've been retired for almost 7 years now.  Interestingly, it seems as if each year we've spent a little less - mainly because our travel budget has shrunk every year.  Actually - in the past two years we switched to fulltime RVing, so our "travel budget" disappeared, and we are traveling all the time on what used to be our  "base" budget (i.e. budget not including travel)!!

We had set aside quite a bit of "extra" to spend on travel the first couple of years and we figured we'd want to do a lot of extra running around.  We actually took 3 years to spend close to this amount.  Funny thing - we didn't get travel out of our system, rather our wanderlust grew considerably.

The nice thing about travel is that as you gain experience you find out ways of cutting costs big time, without giving up any of the adventure.  As an newly retired traveler, it's nice to go on pre-planned, all-expense paid trips.  As an experienced traveler, you are more interested in having it your way (doing it on your own), and that is always way less expensive than any kind of organized travel.

Travel is interesting in that you can throw a lot of money at it, or you can spend far less for about the same level of adventure (it just requires more research and planning and logistics on your part).

So it all sounds well and good....

EXCEPT

After a several years of retirement we decided to make a major purchase (a motorhome).  Now I can't say that we ever "budgeted" for such a thing.  But we could afford it.  Basically we've never spent close to what our retirement portfolio could support.  So pulling an extra 4% out of the retirement portfolio to pay for our motorhome was OK by us.  We also knew that our annual expenses would drop because we got rid of the house and a lot of extraneous toys, hobbies and related expenses and RV travel is pretty cheap (not including the up-front cost of the motorhome, of course).

So it's hard to tell someone who is budgeting carefully.  It's easy to find things to spend way more than you have budgeted.  It's  not hard to be clever and spend a lot less than you might think.

Whoever had the rule of take your base, no-frills budget and multiply by two  - that is very wise.  That gives you the "slack" you need to splurge here and there or save for a major, life changing purchase.  It also gives you the piece of mind of knowing you can cut way back if you ever really have to.

OK - maybe my rambling story will provide some insight.  We're fortunate in that we have had adequate funds to do what we want to do.  And we're also fortunate in that our annual expenses have gone down rather than up.  I'm not sure if others have seen a similar pattern.

Audrey

 

[Eagle43]

Spending less, but DW is trying to help.

 

[ShokWaveRider]

We are actually spending far less that we thought. But in all honesty it is probably more by luck than design. We intended on having our own home soon after we came back from the boat in the Caribbean. But because of such good rentals in NE Florida, and house prices dropping, we have posponed that until we have to leave our current rental. Or home prices become irrisistable. We estimated the owning of a home equivalent to loosing the Relative ROI. No we do not take Capital Appreciation into account because that is only applicable if you sell. Here is the Logic.

Rental: $800 pm all utilities included (Equivalent 3/2/2 Home Value $350k based on our looking around)
Phone: $30 pm
Cell: $30 pm

Food: $650 pm
Wine: $100 pm
Fuel: $225 pm

Total: $1835 pm (Say $2000 rounded off)

Versus
Income Gained by not buying (Excluding any capital gains)
Capital Offset: $1604 pm ($350k in concervative CD's for 1 year @5.5apy = $1,604 pm Taxable)
This offsets the $800 rent even after taxes.

Estimated Monthly Repetative costs.

Housing

Utilities: $250 pm
Taxes: $500 pm
Maintenance: $200 pm
-------------
$950 pm

General

Phone: $30 pm
Cell: $30 pm
Food: $650 pm
Wine: $100 pm
Fuel: $225 pm
-------------
$1035

So I currently cannot justify a home purchase until my current rental expires or changes.

The above does not include medical cost which have been $3000 so far this year. I am fed up of that. So I may just end up living in Canada for 153 days a year to get their medical and paying $1000 for emergency care here in the US from Canada. That will be expensive as then I must have a place in Canada and the US as rentals are not so lucrative for Winter only.

SWR

 

[markplus4]

Spending more as above plan financial returns have tempted us to ...1) Eat out more...2) Travel a bit more...3) Also had a few thousand in unexpected health care costs. Need to reread "Your Money or Your Life"....where are those dryer sheets?

 

[free4now]

I early "retired" at 36 about four months ago, with a bare bones budget of about $40k/year. I just did a spending review of the first three months of retirement and found that I'm spending about 15-20% more than I had planned. Mostly the reason is that my planned retirement budget was quite bare bones and just felt too restrictive in practice. I decided that I'm probably going to be doing some kind of work for money in the future so it makes sense for me to treat this period in my life as a temporary respite rather than something I need to be able to keep up indefinitely.

Another significant factor in the additional spending is that my planned budget assumed I'd save some money with a cheaper health plan but my it turned out that a pre existing condition has prevented that savings.

 

[kcowan]

Retired for 4 years now. Spending less than planned. No cutbacks other than downgrading cell phone plans (and no employment expenses). Total is dropping because we are now doing selected home swaps and flying on airline points. Went to Europe for a 12-day Med cruise and 3 week motor tour of Spain last fall. That was a biggie.

Spend 8 weeks in PV each winter. That will drop when we start spending the season there (monthly rentals, drive down). We have a few contingency plans. If times get tough, we could rent home to a professor from Sept 15th to April 15th and live in Mexico (costs are about 30% less than home).

So far so good. Looking at VOIP to reduce long distance calling from Mexico. Could save over $600/year including local phone line savings. Experimenting free Skype to assess LD quality.

 

[heyyou]

Retired for 8 months, spending is within budget. We were living on less for several years prepping for RE so now is easy. We eat lunch out more often with friends since we now have the time. I think about money a lot less than before, since my pension is deposited each month instead of being a generic estimate from the math-challenged HR Dept.

 

[tednvon]

Hello,
Will be 2 years into phased retirement in October...amazing as far as budget...our lifestyle has changed very little, in fact, we now spend 3 months in Florida in rental home 2 miles from Disney. I am averaging less than 2K/month withdrawal from cash to supplement 1/2 time phased retirement.

Combined salary before retirement was well over 100K...now living on less than 4K cash/month and doing everything we want. No huge budget trips, no expensive hobbies,( hobby is I officiate high school sport and make about 5K/year) 2 cars aren't new but nice, still pay $450 mortgage but no difference in life style at all...As with Nords, I no longer pay into 403B which was huge and my health insurance is covered at this point...

You can live on less than 50% of gross easy IMHO....thanks to these boards...

All the best...Ted