Were expenses what you thought after you retired?

[traineeinvestor]

No offense, but you really need to examine your planning assumptions. If you don't build a substantial cushion into all your spending categories, including the "once in a while" expenses, you could easily be in trouble.

+1

I assumed an arbitrary 20% increase in total expenses on retirement and ignored part time income. Some expenses have gone up (especially boarding school education for our daughters and associated travel) but still well within our income.

 

[Dash man]

Helping kids out with their unexpected expenses...helped with hospital bills for birth of our grandson since mother and baby both hit out of pocket maximums. This happened just after a major move for a new job for my son that he had to pay moving expenses.

 

[Danmar]

After 11 years expenditures in total are about as planned. This is because available funds are about what I expected. Components are quite different though. More real estate related items. Not surprising as we now have more real estate. Probably less on cars than originally planned. More on eating out. More gifting.

The key point is our expenses are , to a large extent, conscious decisions, ie they are set by us based on what we can comfortably afford. Isn't this true for most people in retirement?

 

[2017ish]

...

The key point is our expenses are , to a large extent, conscious decisions, ie they are set by us based on what we can comfortably afford. Isn't this true for most people in retirement?

I think definitely true for most forum members, and for others who have planned ahead. Probably true, but to a much lesser extent, for "most" people.

 

[Danmar]

I think definitely true for most forum members, and for others who have planned ahead. Probably true, but to a much lesser extent, for "most" people.

Good point. I should have said "most people here". No doubt for many retirees, their expenses are "set" and they might need to scramble somewhat to cover them. It would be these people who are at risk of running out of funds?

 

[brett]

Our living expenses have been less than anticipated. Our travel expenses have been more than anticipated. Pension income static. Investment income/asset growth has been substantially greater than we anticipated five years ago.

 

[RunningBum]

For me, medical was the biggest surprise. Premiums have risen faster than I expected, and I only partially budgeted for the deductible amount I'd have to pay.


I thought I had over-budgeted for home maintenance costs, but as it turned out I don't think I've had much buffer at all, and I don't think I've been having bad luck.


I knew I was probably overestimating taxes, and as others have said, they can be pretty low for many of us in retirement.

 

[athena53]

The key point is our expenses are , to a large extent, conscious decisions, ie they are set by us based on what we can comfortably afford. Isn't this true for most people in retirement?

True for the biggest of my discretionary expenses- travel and charitable giving. They're definitely affected by how the investments are going and whether or not I've had large expenses in the "rainy day" category.

 

[wyecrabber1]

Beachfire; Thanks for sharing. You lost all credibility when fishing was assigned $0.00 as a non-discretionary expense.

 

[Senator]

My spending was less, although I assumed I would spend 2x as much as I was spending.

Estimated taxes are the worst expense I have.

 

[pb4uski]

... Estimated taxes are the worst expense I have.

A first-world problem for sure!

 

[beachfire]

Good point wyecrabber1. I clearly need to revisit that.

 

[Teacher Terry]

HI and dental expenses much higher then I thought. We also spend much more on eating out and travel then I thought we would because we now have time and are not so tired from working f.t. I still work p.t. teaching an online college course and do some consulting. MY DH does consulting occasionally too. These fun small jobs help with adding to the fun reserves.

 

[Nature Lover]

Have not pulled the trigger yet, hoping to in 2018. Curious for feedback on any expense surprises once you retired. Any blind spots that you did not plan for? Anyone feeling like they have retired into a situation where they have to pinch pennies too much and wish they had worked one more year or decided to get some part time work so you don't have to watch how you spend every dollar?

No blind spots, no surprises (yet), no wishing I worked longer. Planned for ~150% of pre-retirement after-tax spending, and am spending ~100% (2/3's of planned amount).

 

[euro]

Have not pulled the trigger yet, hoping to in 2018. Curious for feedback on any expense surprises once you retired. Any blind spots that you did not plan for? Anyone feeling like they have retired into a situation where they have to pinch pennies too much and wish they had worked one more year or decided to get some part time work so you don't have to watch how you spend every dollar?

I had three years worth of ACTUAL expenses before I pulled the trigger. After 18months, no surprises at all yet. Knock on wood

 

[Walt34]

I don't see a category for big occasional expenses (what I referred to earlier as "once in a while").

By which I mean a new roof, a new car, a bucket list vacation, a sudden new HVAC system, etc.

That can and does happen, at least here. So far unplanned-for expenses have been replacing an 18-month-old clothes dryer, several kitchen appliances that we thought would last a lot longer than they did including dishwasher, microwave, the kitchen sink itself, a water line from the meter to the house, replacement central A/C, porch roof repair, and most recently realizing that the tires on my pickup truck were 6 1/2 years old and the spare was fourteen years old, so a bit over a grand for five new tires. Those are just the ones I can remember off the top of my head, there were certainly lesser ones I'll remember later.

So yes, one definitely needs to have a substantial stash of cash to pay for stuff like this that is almost certain to occur, but difficult to impossible to predict when. Well, except for the tires, I should have seen that one coming.

 

[brokrken]

My spending was less, although I assumed I would spend 2x as much as I was spending.

Estimated taxes are the worst expense I have.

I see you retired today! Congrats!

 

[kcowan]

Our living expenses have been less than anticipated. Our travel expenses have been more than anticipated. Pension income static. Investment income/asset growth has been substantially greater than we anticipated five years ago.

Ditto. Our snowbird expenses have gone down dramatically since retiring. It helps to fund our annual trip to Europe for a month. Plus we rent our northern place for 5 months. We are rolling in the dough. Counting our blessings.

Plus we bought the snowbird place with the proceeds from equity investments in 2007. Luck helps a lot.

 

[kcowan]

Estimated taxes are the worst expense I have.

Yes me too. Those revenuers get their pound of flesh from our gains. And I get the feeling that they waste them too!

Happy anniversary.

 

[Hermit]

I guess I am way out in left field on this one. My expenses are way more than I anticipated. So how much can a hermit possibly spend?? - At least that was kinda my thinking. I have been spending about twice what I had figured based on spending while working and subtracting costs associated with work. The biggest additional expenses are an increase in cost of building my house by around 50% and my son starting his eighth year of college this fall. Both of these costs are because I can. Cars are another bigger expense than I expected. (I probably don't really need 3 vehicles.) If I didn't have the money to be comfortable with these expenses they would be lower. If my expenses go down to what I originally thought, I will be putting way too much money into savings and investments and if that happens I will find more ways to spend more money.

 

[Scuba]

The only expense I worry about a bit is healthcare. We are still 8+ years away from Medicare and have a pre-ACA plan with Anthem. We did plan on substantial costs and used the Fidelity Retirement Income Planner tool to inflate them and estimate post-Medicare costs. However the huge increases in HC costs over the years plus the unpredictable changes to the HC landscape make this the biggest risk area in our budget. So far we are spending a lot less on HC and we are both very healthy, but that could change. If so, we have plenty of other discretionary spending budgeted for gifts, wine, travel & entertainment and would need to cut back on something in these categories if HC spending gets too high.

 

[gamboolman]

View attachment 26279. Thanks for all the insights. Very helpful. I am not sure if spreadsheet will come through on this post. We have about 20% of our budget that is quite flexible. For about 2 years we will have 2 houses, then the property and utility costs will come done a good bit. Any thoughts on big gaps?

Beachfire - thanks for posting your estimated expenses in a simple format very similar to what we use.

We are looking to retire in about 2 years and have been tracking expenses for years now.

We wanted to toss our estimated expenses for our retirement planning out to the forum for review and comments. these are our estimated expenses for After Tax, i.e., Net dollars per month needed

What do you you and the Forum think?

 

[beachfire]

Your expense file did not come through on the post.

 

[Bir48die]

I did forecasting prior to ER. I have historically used "buckets" to cover larger costs as property taxes, car repairs, medical copays, etc. We did take another distribution to do a large project and hot tub installation but all other things have tracked. I do have a seasonal spike for alcohol during golf season. Outside of that, no issues.

 

[DFA]

Well since DW has been RE for 1 year we have spent more than projected, but have not touched investments, we are just using a little of our cash reserves to pay stuff, once SS (3 yr for me, 6yr for DW) kicks in and DW military pension (age 60), kicks in we will be adding to savings again. At that time we will need to start spending more and gifting since we don't have and Dchildren to leave it to.