How to estimate retirement spending with kids still at home?

Remmi

Confused about dryer sheets
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Oct 14, 2011
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This will be a long explanation for a short question. Does anyone know what percent their expenses went down when they became empty nesters? We are struggling to determine how much we think we will need to spend in retirement. I have read many blogs, watched youtube case studies and I'm still wondering what others were able to retire with and if they felt comfortable. We have 3 children and they will each have roughly 15K-20K in 529 plans when they graduate. Our focus is on our retirement contributions and will help when they go to college over the next 3-6 years.

Here are our stats:
48M/42F
200K gross income.
Hoping to retire in 2036 when we are 60/55.
Brokerage = 425K
401K/IRA = 825K
Roth 401K/IRA = 80K
Total: 1.33MM

55K in emergency funds as well.

Just started contributing to Roth 401K and will continue to add 23k/annually to that account. Wife will drop contributions down in her 401K to get the match. So we will add roughly 10K/annually to traditional. At a 7% average return with $2750/month contributions we should be in the 3.4-3.5MM range. Our mix should help us manage our MAGI for ACA subsidies.

After contributions and deductions for taxes/benefits we take home about 10-11K/month. We have had to purchase vehicles for our 2 older children in the last 18 months but the only debt we have is about 200K on our home. Mortgage will continue through about 2042. We plan on having 2 newer vehicles when we retire and we'd probably take 3-4 all inclusive resort vacations each year (5K per trip). Even with that I just don't think our monthly expenses will be overly high?!?!?!?!?

Fidelity's estimate on their retirement planner says we will have 11,300 in a significantly low market which is a shortfall from about 12,050/month needed per their estimate. Those are in today's dollars. I honestly can't imagine us needing more than 8k/month in today's dollars (11K/month 12 years from now). The 4% rule on 3.4 million should cover that and then social security will be a bonus when we start collecting.

Sorry for the long winded rant but I'm hoping someone can give me an example or clarity.
 
This will be a long explanation for a short question. Does anyone know what percent their expenses went down when they became empty nesters?
This is really unique to each of us. It depends.

When our 3 moved out our spending fell nicely. That didn’t last long, we started doing things with our newfound freedom, like eat out more often and take weekend trips, and the spending crept back up.

Then came weddings and grandchildren, and our spending went up some more.

I think it’s much more productive to build your budget and spending needs bottom up, and base it on the lifestyle you want at retirement. This thread might help Some Important Questions to Answer Before Asking - Can I Retire?
 
Just to add, the real spending for us was our children’s college. Not just tuition and board, which was budgeted and funded, but the additional spend which most people don’t budget. Trips home, spring break, books and supplies, spending money. All of a sudden they’re living like independent adults, but without the income.

When they left college the sigh of relief was heard ‘round the world.
 
I just know from 18-21, we got her a new car, through college and married. Our spending definitely went down and income way up 1 year later (moved to LA for opportunity).

College we required her live at home and get the remaining credits for her associates at county community college. She decided to stop there & get married. That was a chunk but that was it.

Now we're back on spending on the 2 GKs and traveling much more. We have been spending $50-75k (all in) for the past 10 years, so I use the $75k as our base and add in ACA (when we get there) & lumpy car/roof/medical for spending.
 
How much are you estimating college to cost? Will it be sucking up all your disposable income? When are they heading to college? I ask because $15-20k sounds very little. Did you mean $150-200k when they graduate? And are they young because you are working another 12 years.

I totally in same boat no idea what we'll spend after kids, but I figure it doesn't matter. As long as we save enough it'll be fine. Mostly because I can't see us quitting until the youngest is done with high school if not college.
 
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