How accurately did you predict retirement expenses?

[BBQ-Nut]

So, I've got this elaborate multi-tab spreadsheet I've built up that does all sorts of calculations to estimate our retirement.

One tab has our expenses, which I've been tabulating over time from our expenses when we settle up to write/pay bills.

I'm pretty confident that it captures our current expenses.

But - was wondering, what else may jump out later in retirement that I may not be accounting for.

For those already deep into retirement - did you do a good job of estimating post retirement expenses, or did something jump out at you I should consider and budget for?

Thanks!

 

[REWahoo]

I tracked our expenses closely for 3 years leading up to retirement, then estimated what would change once we pulled the plug. No real surprises.

 

[SoClose]

I'm not retired but I've seen it mentioned to allow for future inventions. I don't think people who retired in the 70's had an expense line item for a $60-$100 a month cell phone bill.

I wonder what inventions, I'll have the income for in 30 years

 

[Brett_Cameron]

Dental expenses as we aged and teeth degraded.

 

[aja8888]

For those already deep into retirement - did you do a good job of estimating post retirement expenses, or did something jump out at you I should consider and budget for?

Thanks!

Maybe not too deep into retirement (going on 70 1/2), but plan for medical expenses to rise substantially over time, especially Medigap Policy rates, uncovered medical/dental expenses, Part B drug costs that are not covered (this can be quite expensive, but very unpredictable).

 

[audreyh1]

We padded and padded and padded our budget some more, and then I still set aside extra funds for serious splurging on travel the first year or so.

So our spending didn't exceed our planned expenses.

 

[Corporateburnout]

Dental expenses as we aged and teeth degraded.

I will be retiring in June and I plan to keep my retiree dental plan coverage at $63 per month for both of us. Last year we had two root canals and a few other dental procedures.

 

[Lsbcal]

It took some years into retirement before I had a method to track things. But it's very loose. We just have 2 real categories: BASIC and FUN. And I invented this all on my own.

BASIC is everything including eating out once a week and modest items like tools, bedsheets, etc. FUN is vacations, discretionary home improvements, luxuries (don't have any examples on that one though), car replacements.

Right now the FUN category has plenty of money in it as our portfolio is flush. I really intend to spend it.

 

[walkinwood]

We tracked expenses for about 5 years prior to ER, so no bad surprises on the expense front. I recommend keeping a good buffer in your planned budget/annual withdrawal because you may want to reduce your withdrawal if you have a 2008/09 happen early in ER.

 

[Hermit]

I didn't do so good. RE July 13.

I predicted health insurance to be about 500/mo. It was 822 last year and went up to 1008 this year with a much larger deductible than while working.

Car expenses are a lot higher than expected. Son hasn't graduated from college as expected so he is still on insurance policy and I'm still paying for his car maintenance expenses. The rest of his expenses are managed from funds set aside for his education and I don't count those funds as part of my expenses. I've also added to my collection of vehicles (hobby mostly).

As noted in other posts above, I didn't plan to pay for my kids' phone and data plans but somehow I am. This situation will be revisited when current contract is up in 2015.

 

[imoldernu]

My 1989 decision-making final spreadsheet that covered our year end asset expectations for our retirement years is $5000 ahead of plan, overall.

Virtually nothing in the detailed planning turned out according to the plan... Detailed Inflation, housing, auto, investment income, health and household expenses... None of these followed the projected numbers.

That said, the fact that we actually had an itemized plan, (versus a general retirement calculator) allowed us to determine what specific differences were occurring, and to make necessary adjustments when required.

Some of these major differences were inflation (which at the time, we planned @ 5%) and Investment return @6%... healthcare... because of medicare, less than planned... Auto expense... less than half planned mileage and replacement costs.
Daily living expenses came in well below our projections, as we chose very low cost housing (Illinois Campground and Florida Mobile/Modular home community) for the first 15 years of retirement. That wasn't planned that way for the economy, but by choice, for the activities. The bonus was that it worked out to save many dollars.

So, no awards for being smart about projections on a detailed basis, but knowing the deviations from the original plan, allowed us to adjust accordingly. Thus our three plans... Optimal, Nominal and Austerity... have worked out so far... and surprisingly, almost all of the first 25 years of our retirement have been in the Optimal column.


In no way am I suggesting that FireCalc or any other financial planning tool is not the right way to go. We just didn't know about them at the time, and the Financial Advisor that we had originally planned to use, was a turn off.

Guess one could say we were accidentally accurate.

 

[jebmke]

I will be retiring in June and I plan to keep my retiree dental plan coverage at $63 per month for both of us. Last year we had two root canals and a few other dental procedures.

I did the math on dental insurance and in my case, it made no sense. Most dental policies have low annual limits. Maybe yours is different.

 

[ducky911]

blew it on taxes....way lower

I am addicted to zero taxes on dividends!

 

[Corporateburnout]

I did the math on dental insurance and in my case, it made no sense. Most dental policies have low annual limits. Maybe yours is different.

I have a $2000 per person benefits. Last year we paid $1000 out of pocket including premiums and our plan paid $4000.

We expect to have more dental work over the next few years that will most likely reach the annual limit.

 

[Sue J]

I've been very close on food, utilities, property taxes, car expenses, stuff like that. I assume our internet and DirecTV will go up every year or so. I did not predict how nicely our water/sewer bill would drop when I got a new high efficiency washing machine and the last kid moved out, but those are a bonus!

Our only unpredictable expense was the health insurance. It went from zero in 2010, 2011 and 2012 (high deductible low cost retiree plan completely covered by retiree allowance) to $375/mo for the only choice left in the retiree plan in 2013 to $475/mo for 2014. That's a huge chunk of our budget! So we dropped the retiree plan and moved to an ACA HDHP with HSA for 2014.

I expected our health insurance costs to go up, but I never could have predicted it would got from $0 to $475!

 

[scrabbler1]

The most volatile expense I have had since I ERed in late 2008 has been health insurance. I had budgeted a 10% increase in my 2010 premiums but instead it rose 20% then in 2011 it rose another 25%. By then, however, the ACA had already been passed and signed into law with a 2014 effective date so I switched to a bare-bones HI policy, one I did not plan to keep after 12/31/2013. My premiums were rather low for most of 2011 into 2012 and 2013 but rose for this year as I got a more comprehensive HI plan again. Still, even without the subsidy, I will be paying less in 2014 than I was paying in 2009 before the big increases hit. So with the subsidy I will be paying a little less but still more than the unwanted bare-bones policy I had in 2011-2013. At least my dental bills have come in under budget.

My other expenses have not fluctuated a lot in the aggregate although some unexpectedly went up while others unexpectedly went down. For example, I did not anticipate wanting to increase the liability limits of my personal auto policy. Nor did I expect the unusually good deal I had with my cable TV provider to end, forcing me to pay for my cable TV service what I should have been paying all along. On the positive side, I did not expect my co-op board to actually respond positively to my repeated suggestions to pay down some of its underlying mortgage using its bloated reserve fund (without causing the RF to become too low, of course). This has not only kept recent maintenance increases in check but has actually decreased our maintenance slightly in the last few years.

My income tax bill has been a little lower than expected because a little more of my routine investment income has been qualified dividends and LTCG, both of which are taxed at 0% at the federal level. That being said, I am not too concerned about this relatively small part of my expenses because whn I had a spike in my income taxes payable it was because I had a spike in (fully taxable) investment income, meaning that I always had the means to pay the extra taxes.

 

[HillCountry]

Dental expenses as we aged and teeth degraded.

Absolutely plan for this if you don't have healthy teeth.

My dental bill this year? About 50K.

 

[MichaelB]

We had a pretty good idea of our overall spending, without the detail. More than a decade later we aren't spending much more, despite a big increase in healthcare, and our standard of living seems to be holding up well.

 

[martyp]

I set up a detailed spreadsheet as part of my decision to ER 2010. It turned out to be pretty accurate. No surprises. I kept it updated for about 2yrs. DW plans to ER in June 2015. I will start tracking again in January.

 

[Walt34]

No big surprises as far as the routine expenses but we underestimated what we'd be spending on fun stuff.

 

[bbbamI]

Even though we planned for them, meeting maximum out-of-pocket medical and family member's expenses can be a 'gotcha'.

 

[travelover]

I way overestimated on beer. Don't need nearly as much when you are retired.

 

[robnplunder]

Questions to you all - did expense go up as much as inflation did? Less or more? I am trying to figure out impact of inflation to the RE expense.

 

[Hermit]

I way overestimated on beer. Don't need nearly as much when you are retired.

I spent a lot of my first summer in RE drinking beer with a friend. He is on a diet and has lost almost 100 lbs. The only beer he allows himself is Michelobe Ultra. In the spirit of his new found healthy habits, I joined in drinking it. That stuff is like water but priced as a premium beer. My beer budget at least tripled.

This summer I think I will buy him his Ultra, but I will to stick to something that tastes more like beer.

 

[pb4uski]

Only two full years in for me but I would say very close overall. We have tracked expenses in Quicken for over 10 years prior to retiring so I had a lot of good data and out lifestyle in retirement is about the same as when I was working other than a larger vacations/travel budget and health care.

Lower than expected taxes was a pleasant surprise but that has gone up since I decided to prioritize Roth conversions over 0% LTCGs but is still less than I thought they would be when I retired.

Health insurance has been lower. I used our COBRA as my budget but was able to find individual insurance that was about 40% lower. In fact, even after 13% and 9% increases in 2013 and 2014 what we are paying for health insurance is still lower than the COBRA from when I retired - and the plan benefits are broadly comparable. So that has been a pleasant surprise but I thought I was probably being too conservative to begin with. Co-pays and deductibles have been close to plan.