What do folks forget when making a retirement budget?

[Bryan Barnfellow]

Dental care. Because you often don’t incur too much during your w*rking years, but in your 50’s and beyond the uncovered costs of multiple crowns, crown replacements, and dental implants are often unexpected.

This, 1000%. We have had to increase that line item in our budget due to the regular rise of problems, replacing 20-year old work especially.

Adding insult to injury, my dentist here stereotypes me (as an American) after finding a cavity or even after a good cleaning/check up, by repeatedly suggesting that I should cut down on Coca Cola, despite my telling him a hundred times that I DON'T DRINK THE STUFF :-(

-BB

 

[JDARNELL]

The Black Swan event, pandemic, war. Whatever you can imagine as worst case double it if not more!

 

[marko]

Like others have said, the big ticket infrequent (not annual, 5-20 years) items are the most overlooked in retirement budgets. Replacing the roof, repainting the house, replacing the furnace and/or AC, replacing cars, replacing appliances (washer, dryer, oven/cooktop or range, refrigerator, microwave, disposal, dishwasher, sump pump, de/humidifier), replacing furniture (definitely mattresses if nothing else), remodeling, landscaping, deck maintenance, desktop/laptop/tablet/smartphone.

Yes. We find that we spend about the same amount of money each year but on different things--expected or otherwise. "It's always something" as they say.

 

[skyking1]

+ 100 for a Gilda Radner " Rosanna Rosannadanna" reference.

 

[scrabbler1]

I'm now ten+ years into retirement and I really haven't had any unexpected expenses except for this CRAZY inflation. I really need to spend more before it's too late. The problem is now that I'm getting older I can't do/enjoy some of the things "as much" as I would have ten years ago.

Same here. However, in my first few years of ER (2009-2011), I had some unexpectedly large increases in my health insurance. By the time the 2011 increase occurred, the ACA had been passed, so I bided my time with a low-cost, bare-bones plan to hold me over until the end of 2013. In 2014, the ACA exchanges began and I regained a broader policy, even with a higher premium than the bare-bones premium which was far lower than what I was paying in 2009-2011.

Income taxes never troubled me. I split them into a basic piece which I did budget for, and an excess piece which would arise only if I had an income spike (from cap gain distributions), and therefore guaranteeing the means to pay any added taxes.

 

[skipro33]

I really need to spend more before it's too late. The problem is now that I'm getting older I can't do/enjoy some of the things "as much" as I would have ten years ago.

That was my reasoning for taking Social Security at 62; I could use the money for more things while younger than I would once I was older. Especially 70 or older. By that time, I can't imagine I'd be taking full advantage of an extra $3,000 or more per month.

 

[skyking1]

^ that has definitely entered my thought processes, taking it at 62 rather than the scientifically calculated wait till 70.

 

[jebmke]

People frequently suggest that folks forget about income taxes. But is that really true? I've never seen a posting suggesting it is actually so, and seen many posts suggesting the retirement tax burden is less than they planned/expected due to favorable CGs/qualified divs, untaxed portion of SS, Roth withdrawals, principal withdrawals, etc.

I have seen frequent posts on Bogleheads of retirement budgets with no line for income taxes. and also posts that discuss health care only in the context of Medicare and supplemental and not the uninsured stuff. Hearing aids can set you back $3-5K in a heartbeat. Can't recall what my dental implant cost me but it was $5K+ for sure for one tooth.

 

[TheWizard]

There are lots of ways to underestimate what you may be spending in retirement.
I think one of them is putting too much reliance on your pre-retirement "expenses" as a meaningful number.
There are a lot of folks at "the other" website who seem to preach this approach.

I did this myself with a spreadsheet back before I retired in 2013. But that number seemed too low and I wanted to spend more on travel in retirement.
So I stuck with my goal of replacing my net employment income in retirement and it's worked out well.
I have excess retirement income to fund my son's Roth IRA (for now) and to invest in my taxable account, with a withdrawal rate of zero from my own investments.

This is what happens when you work a few years too long...

 

[MercyMe]

Thank you for all the comments to my OP. I've already planned for...

• health insurance (ACA), then Medicare and OOP expenses
• car depreciation/repair
• HVAC, roof, driveway, gutters, windows, deck
• furniture, mattresses
• veterinary bills
• taxes

But based on some responses here, I'm also going to add...

• family crises
• tree removal (stump removal is stupid-expensive) and landscaping
• moving expenses
• dental/vision costs

I'm thinking it would be prudent to add a 10% ODTAA budget as well.

Thanks again everyone!

 

[Sunset]

I'm surprised people replace gutters.

I did replace our wood gutters at the cabin. But in the City aluminum gutters last seemingly for me.
I'm at over 20 years at 2 houses and the gutters were the original ones, so they seem to be 40 and 60 years old.

 

[wearefinishedworking]

Since I retired 6 months ago?

Kitchen flooring- $2500
Replace water heater- $1200
2 Large trees removed due to storm damage- $5000
Stump removal and landscaping-$3000
Vet bills after dog died-$800

Also 2 planned trips in 3 months because Covid easing and we are retired now! - $5000

Everyone says the first couple years of retirement are priciest due to travel, taking care of deferred maintenance, new hobbies, etc.

 

[ncbill]

Can't find the link now but one article I read recently said you'll spend another $400/month no matter your budget.

Much less of an impact when your monthly retirement budget is $10,000 versus $2,000.

 

[COcheesehead]

In our second year now of retirement and we actually have had our expenditures drop about $1200-1300 a month. A better HC plan is mostly the reason, but less eating out too.

 

[jpeter1093]

Our retirement lives changed completely post retirement.

We sold our home and downsized. Traveled internationally for seven months. Rented a furnished condo for three months. Then rented a condo, got our possessions out of storage and stayed for four years. Got rid of one car.

Then we bought a lock and leave duplex. Spent four-five months each year traveling. Replaced our roof, fridge, garage door, and major dental work including implants plants,crowns,etc. DW had 15K of other medical expenses that were not covered.

After 10 years we are on our projected after tax spend. Our financial situation is such that it would not matter.

As others have mentions...the distribution of our spend was different than anticipated. Yes, we had unexpected issues crop up.

This is why we believe that one has be very realistic, expect unexpected expenses and budget accordingly for them.

I'm confused by this post...you sold your home but then replaced the roof and garage door? Why?

 

[REWahoo]

I'm confused by this post...you sold your home but then replaced the roof and garage door? Why?

Read the first sentence in that paragraph.

 

[Out of Steam]

I'm surprised people replace gutters.

The gutters on our garage have been hit by one too many tree branches, and need to be replaced. They may be original to the 50 year old house.

I'm comfortable with doing the job myself.

 

[Out of Steam]

1. Items one replaces far less often, like 10+ years, like mattresses are expensive. Gutters/siding/windows..

2. Increase in costs because you are use to getting things free or discounted from work.

1. After having to replace the heat pump a few months after moving into our retirement home, we've been lucky with these expenses. But there is a silver maple on the front lawn that has had about 20% of its branches not green up this spring. Knew it was a short-lived tree, but didn't expect to have to take it down so soon.

2. Except for losing software discounts and not being able to combine business and personal travel, this hasn't been a big factor for us.

 

[NameTaken2]

If you have high-maintenance property (or properties) and do lots of DIY-
A time will come when you can't: plan for that.
It may be later/age related, or any time due to a health issue.

When you start hiring contractors for work you no longer DIY, your budget can take a big hit.

 

[Dash man]

I think a lot of people ignore the possibility of assisted living or long term care. LTC can be covered by Medicaid if assets are depleted, but Assisted Living isn’t covered by Medicare. Many don’t plan for either.

 

[Markola]

ODTAA - One damn thing after another.

I think we have a winner.

 

[skyking1]

ever increasing property taxes.

 

[Jerry1]

Fun. Obviously, it's a pretty controllable expense...but if you suddenly find yourself with an extra 40+ hours a week where you have a decent amount of energy you can easily wind up spending more ( or a lot more!) on travel, activities, and hobbies. Ditto for all the projects you may have been putting off " until you have more time".

It’s not that people forget this. They usually plan for things like more travel, but they don’t appreciate how much lifestyle can creep. You have time and likely a good amount of money and any void yearns to be filled. New hobbies like woodworking, home projects that are nice to have (versus things like a roof) just because you find you like to renovate, etc. If you’re into physical activity - hiking may turn into mountain biking then kayaking, then camping then RV’ing (because you don’t want to see the same scenery every time). Lifestyle Creep. Add another 10% to your budget.

 

[Out of Steam]

If you have high-maintenance property (or properties) and do lots of DIY-
A time will come when you can't: plan for that.
It may be later/age related, or any time due to a health issue.

When you start hiring contractors for work you no longer DIY, your budget can take a big hit.

I discussed this issue in a thread early last year, and remain convinced that I don't want to own a single-family house longer than I can do DIY work.

https://www.early-retirement.org/fo...ppens-when-i-cant-be-the-handyman-107696.html

 

[youbet]

I think a lot of people ignore the possibility of assisted living or long term care. LTC can be covered by Medicaid if assets are depleted, but Assisted Living isn’t covered by Medicare. Many don’t plan for either.

The feasibility of having public funds cover geezer-care is really complicated and heavily dependent of just what your needs are, where you live and whether you have a savvy and hard working advocate. It would be too much thread drift to discuss that in detail now, so I'll just say I'm in total agreement with you that health care aimed at aging issues is a real wild card in geezer-focused financial planning. This is especially true for couples where the healthy spouse might be taken down to near zero financially paying for non-covered care for the diminished spouse before public funding takes over.