Retired in Dec 2024; Tracking Monthly Expenses for One Year After FIRE

[Errollyn]

One unexpected expense you may want to consider including is for health coverage, I would assume the max out of pocket annual amount into your projected expenses. I did NOT do this, and 2 years ago I ended up needing a quadruple bypass at 56 years old.

Probably good smart move, I'll have to look into that. I do have an HSA I could draw on if there are unexpectedly large medical costs.

 

[Errollyn]

My family of four was perfectly healthy until I fired. Since, we have had at least 1 person max their out of pocket 3 years out of 5. My out-of-pocket is considerably higher than when I was working.

Maybe OP's spouse has that covered for now.

That is a big benefit to my SO continuing to work for now. I'm not expecting max out-of-pocket costs in my projections, but those costs would be within reason, in theory, since we're still using an old-fashioned employer-sponsored health plan.

 

[Errollyn]

One thing I did today was to do a checkup after four years of retirement. My total expenses have increased 22.06% since Mar 2021 when I retired. Inflation over that same period (based on the CPI) was 19.93%. Glad I have a COLA pension. BTW, I do not forecast inflation. I just leave my COLA income (pension and SS) flat and also leave future expenses flat. Makes it a lot easier than trying to guess what inflation might do.

My "base" year I used to estimate expenses is 2020. Lots of people have told me I'm silly to use 2020 to calculate expenses, because of all the inflation we've seen since then. In reality, I'm finding my current expenses are lower than what I had in 2020, I think because I was ordering so much online that year due to the pandemic. I also tackled some big projects in 2020 since we were home so much of time, which also raised my expenses that year. So far I'm finding my expense calculations to be okay, and 2020 was probably a good year to gauge spending in 2025.

 

[Fermion]

How is your electric bill only $20 a month? I know that is an average, but our new home we built, which is small by ER forum standards at about 1500 sq-ft, has R-49 insulation in the ceiling, R21 in the 6 inch walls, and yet in the winter we are around $250 a month for our electric heating. Summer it drops down to about $60 a month.

Also, wow, bees are expensive!

I think you are looking great though. We retired at age 44ish 10 years ago with about $1.4m and now over $2m. Healthcare has been about $20/yr.

 

[Errollyn]

How is your electric bill only $20 a month? I know that is an average, but our new home we built, which is small by ER forum standards at about 1500 sq-ft, has R-49 insulation in the ceiling, R21 in the 6 inch walls, and yet in the winter we are around $250 a month for our electric heating. Summer it drops down to about $60 a month.

Also, wow, bees are expensive!

I think you are looking great though. We retired at age 44ish 10 years ago with about $1.4m and now over $2m. Healthcare has been about $20/yr.

A couple years ago we invested in whole-home solar, so I'm expecting our electric bill to average close to $0 per month. That being said, because I was still commuting in my EV in 2024, I didn't build up as much credit with the power company as I will moving forward--which means I've still had electric bills this winter, and my average is probably going to end up being closer to $30 per month for 2025. Let me know if that doesn't make sense. Bottom line is I get credits on my electric bill as long as I'm generating more power than I use. Those credits then offset my bill during months when I use more than I generate.

Bees can be expensive! I always warn people who want to start keeping bees for "free honey." I will say, I'm hoping my beekeeping expenses are lower this year, because it's looking like I probably won't have to buy new hardware in 2025.

 

[OnTheBeach]

Thank you!

Yeah, I'm not tracking her income taxes because I'm not really tracking her income as part of my FIRE budget. It's something I'd need to incorporate once we're living solely off our savings. Luckily, Boldin does calculate taxes in its projections, which is what I'm using for long term planning.

Good point about health coverage. Right now it's cheap because we're getting it through my wife. In my Boldin scenario, I have those expenses doubling when she retires in five years.

I agree with not factoring in income taxes on your wife's income but is your "investable assets value" net of taxes? The cost basis associated with the $1.85 million of market value is important. If your $1.85 million in assets has $1 million of unrealized gains - you have about 200K of taxes that need to be addressed in the future.

 

[Errollyn]

I agree with not factoring in income taxes on your wife's income but is your "investable assets value" net of taxes? The cost basis associated with the $1.85 million of market value is important. If your $1.85 million in assets has $1 million of unrealized gains - you have about 200K of taxes that need to be addressed in the future.

Boldin does account for those taxes, so I've got that factored in long term. I won't have to touch any pre-tax savings for years, so for tracking my budget in 2025 I'm not worried about it.

 

[Errollyn]

I agree with not factoring in income taxes on your wife's income but is your "investable assets value" net of taxes? The cost basis associated with the $1.85 million of market value is important. If your $1.85 million in assets has $1 million of unrealized gains - you have about 200K of taxes that need to be addressed in the future.

Here's a screenshot of my projected tax payments through the end of our lives.

 

[corn18]

Here's a screenshot of my projected tax payments through the end of our lives.

View attachment 54485

What is causing the huge spike in 2049? Your graph is about what mine would look like if I don't do 401k to Roth conversions from 55 to 70. Saves me a lot of taxes later on if I do conversion now.

 

[Errollyn]

What is causing the huge spike in 2049? Your graph is about what mine would look like if I don't do 401k to Roth conversions from 55 to 70. Saves me a lot of taxes later on if I do conversion now.

My RMDs start in 2049, and my wife's RMDs start in 2055.

 

[corn18]

My RMDs start in 2049, and my wife's RMDs start in 2055.

Can you do Roth conversions between now and then to level out the tax obligation? Pay a little more now to pay a lot less later.

 

[Errollyn]

Can you do Roth conversions between now and then to level out the tax obligation? Pay a little more now to pay a lot less later.

Yeah, that's still on the table. I know I sound like a Boldin employee, but I'm leaning on Boldin to help me make decisions like that. I'm just trying not to make any rushed decisions since I've only been retired for a few months.

Blue line is how my tax payments are currently projected. Green line is what my tax payments would look like if I do seven Roth conversions. Ultimately, Boldin says Roth conversions would save us $767k over the course of our lives.

 

[corn18]

Yeah, that's still on the table. I know I sound like a Boldin employee, but I'm leaning on Boldin to help me make decisions like that. I'm just trying not to make any rushed decisions since I've only been retired for a few months.

Blue line is how my tax payments are currently projected. Green line is what my tax payments would look like if I do seven Roth conversions. Ultimately, Boldin says Roth conversions would save us $767k over the course of our lives.
View attachment 54487

Coolio! I didn't do any my first year of retirement, either. Just enjoyed being retired.

 

[Alex The Great]

My RMDs start in 2049, and my wife's RMDs start in 2055.

Don't count on it. By that time, RMD age will be higher. They move it up every few years.

Congratulations with early retirement!
I do have numbers not far from yours. I retired 1.5 years ago. But I'm 58 now, so the life span is less. From other side, I live at HCOL place and I don't have working wife so need to account for ACA expenses.
So far I spend less than planned, but it may change with large unexpected expense eventually coming up. For example, my house will require painting soon and it will cost ~$30K or more.

 

[Errollyn]

Don't count on it. By that time, RMD age will be higher. They move it up every few years.

Congratulations with early retirement!
I do have numbers not far from yours. I retired 1.5 years ago. But I'm 58 now, so the life span is less. From other side, I live at HCOL place and I don't have working wife so need to account for ACA expenses.
So far I spend less than planned, but it may change with large unexpected expense eventually coming up. For example, my house will require painting soon and it will cost ~$30K or more.

Thanks, and good to know about RMDs.

$30k to paint your house is crazy. I'm guessing it's an especially difficult job. I re-stain my house every 2-3 years, and it costs around $4.5k each time.

 

[ransil]

How is your electric bill only $20 a month? I know that is an average, but our new home we built, which is small by ER forum standards at about 1500 sq-ft, has R-49 insulation in the ceiling, R21 in the 6 inch walls, and yet in the winter we are around $250 a month for our electric heating. Summer it drops down to about $60 a month.

Also, wow, bees are expensive!

I think you are looking great though. We retired at age 44ish 10 years ago with about $1.4m and now over $2m. Healthcare has been about $20/yr.

Are you sure you have that much insulation in your house, verified by you and a thermal camera and not the builder or inspector that has no skin in the game .
I had an all electric 1800 sf house is Pa and my highest monthly electric bill ever was $260, yea i know different rates but my climate was more extreme than yours.

 

[Fermion]

Are you sure you have that much insulation in your house, verified by you and a thermal camera and not the builder or inspector that has no skin in the game .
I had an all electric 1800 sf house is Pa and my highest monthly electric bill ever was $260, yea i know different rates but my climate was more extreme than yours.

Considering my wife and I put every single board, nail and drywall screw in ourselves, yeah, pretty sure!

 

[Errollyn]

Considering my wife and I put every single board, nail and drywall screw in ourselves, yeah, pretty sure!

Meanwhile, my house is pretty inefficient for its size. I (stupidly) opted for the 4-inch insulation in my exterior walls, even though 6-inches was available. And the guy who sprayed in my roof insulation was drunk at the time; we ended up kinda forcing him to do the job anyway because it was holding up construction progress--maybe not the best idea in hindsight.

 

[TheWizard]

...Blue line is how my tax payments are currently projected. Green line is what my tax payments would look like if I do seven Roth conversions. Ultimately, Boldin says Roth conversions would save us $767k over the course of our lives.
View attachment 54487

$767k is a lot.
I'd need to see a detailed year by year spreadsheet of various income categories and resulting income tax to believe that number with any confidence.

And you'd be front loading your income tax payments for those seven years and I don't see that in the green line...

 

[Errollyn]

$767k is a lot.
I'd need to see a detailed year by year spreadsheet of various income categories and resulting income tax to believe that number with any confidence.

And you'd be front loading your income tax payments for those seven years and I don't see that in the green line...

Conversion amounts...

And here's the projected before/after tax liability:

This is all displayed in greater detail, but I'm a little hesitant to put too much personal account info here.

 

[Errollyn]

Update #2, February 2025 Expenses
Actual: $5,792
Expected: $4,722
I overspent in February; 123% of my expectations. But I can explain...

I got a bill for my long term care insurance, and it had the option to pay for the whole year. So that's what I did, meaning instead of $147 I spent $1,742, but I won't have to pay that bill again for the rest of the year. If I excluded the advanced payment on LTC insurance this month, my actual spend would've been $4,197, or just 89% of my expected expenses.

Breakdown by category:

Notes about February:

Clearly I'm going to be spending more on charity than I was planning, but I'm okay with that.

I'm still feeling the effects of my old commute in my electric bill. This bill will fade to nothing as I'm now generating a lot more solar power than I'm using.

Before we made the switch to my wife's health insurance, I miscalculated the cost. So that's always going to be higher than expected.

All in all, I'm happy with our spending in February.

 

[corn18]

One thing you will need to consider is when you want to re-baseline the budget when you have new information. For something like health care, I would just re-basline to the new cost and track from there. This lets me update my planner and see what impact that may have on the next 30 years.

 

[Errollyn]

One thing you will need to consider is when you want to re-baseline the budget when you have new information. For something like health care, I would just re-basline to the new cost and track from there. This lets me update my planner and see what impact that may have on the next 30 years.

Will do that for sure. I just figured this first year I'll see how things play out in real life versus what I was thinking pre-retirement. My budget in 2026 will be heavily influenced by what I learn this year.

 

[Errollyn]

Update #2 (continued), February 2025
(Didn't have time to do this when I posted my budget yesterday.)

Here are our total investable assets and NW numbers as of 28 February. Investable assets decreased by ~1% since my January update, but are still up over 2% since I quit my job in December 2024.

TBH, I'm bracing myself for these numbers to tank this year as the US goes into trade war mode. Hope I'm wrong about that.

Finally, this is our updated net worth forecast through the "end of our retirement plan" (i.e. death), according to Boldin.

 

[Errollyn]

Update #3, March 2025 Expenses
Actual: $4,570
Expected: $4,722
I underspent in March; 97% of my expectations.

I did put off having rock delivered for my driveway to stay under my target number in March, so that's kinda cheating. Otherwise, I didn't curb our spending in any conscious way.

Breakdown by category:

One stupid thing I just noticed a couple days ago was that someone (probably me) accidentally switched our furnace fan to "On," which means it's been running 24/7 for who-knows-how-long. That was contributing to my electric bill being higher than I expected last month.

I'll update my net worth later today probably, but spending in March was fine.