What have been/will be your big money spenders in retirement?

[pacergal]

Home/upkeep, taxes, gifting, travel

 

[iloveyoga]

Ours was in 2018, we redid our backyard, two decks, and put in an in ground pool. I only wish we had spent the money and done it earlier. By far our biggest retirement expense.

 

[TheWizard]

Huh? Odds are you’ll pay higher taxes now or later, so it’s a legit spend whenever. If your taxes are among your top spending categories now (and/or later), and it’s certainly mandatory per the IRS…

Right, unless someone does an excessively large Roth conversion and gets into the 32% Federal tax bracket whereas if they had just done RMDs later on, they would be in the 22% or 24% marginal bracket.
In that case, the extra Federal tax certainly wasn't mandatory...

 

[RetireAge50]

 

[Midpack]

Right, unless someone does an excessively large Roth conversion and gets into the 32% Federal tax bracket whereas if they had just done RMDs later on, they would be in the 22% or 24% marginal bracket.
In that case, the extra Federal tax certainly wasn't mandatory...

Presumably they would have been in a higher tax bracket later if they had not converting into the 32% bracket. And the OP didn't ask whether spending was mandatory or not...

 

[USGrant1962]

Since I semi-retired in 2017 in order:
1. Taxes (by far, more than the next 4 combined, due to SE tax mostly)
2. Travel
3. Healthcare (unsub ACA)
4. Autos (bought 2 new cars in 2018/2019)

 

[Souschef]

Travel! We were spending about $40 K a year for the 10 years since we got married in 2007.
DW did was not able to travel much before , so I made it up to her. We averaged 4 trips a year with an average of 50 days a year.

 

[sengsational]

But it's N/A to this thread as you're not "spending" it....really I meant more personal/"fun" expenses, what are you doing with the money you have options with, not mandatory expenses.

Every dollar that flies out of my grasp, never to return again is an expense.

I'm kind of a stickler on the point of separating this. I "get" that if it's money that leaves your fist, it's "gone", but how gone is it?

When I see "spend", I think not just money out of your hands, but money that's no longer on the balance sheet.

So a kitchen remodel. Hmm. I'm afraid that's not quite "gone" enough for me. That expense increased the size of one of your biggest assets...your house. So while it's fuzzy, it's not quite as "gone" as money you spend on travel or something. This is personal, and your opinion is as valid as any other. Mine has cars in the "gone" category, because cars are depreciating assets. But if you have a collectable car, that might be considered an asset, for instance. If that's your hobby, a new collectable could be anywhere from "gone" to "invested", but that has an emotional component...it's about what it would sell for today, not "what it's worth"

The thread was supposed to be about fun expenses, but as noted, that wasn't made very clear, and thread drift is what we do here. We're retired, what else do we have to do, hehehe! So we have another dimension to split out: whether we "have to" incur some expense, like taxes and other mandatory expenses, along with whether it adds to the balance sheet. I would have liked to make this an interactive app, where you could write your own post it notes and move them around, but I took ideas from the thread and pasted them in the quadrants. Things like house renovation can span invested and gone because if you, say, added a deck yourself, and the buyer falls in love with your place because of the deck and pays full price, you probably made money on that spend (positive return on your investment). If you made a questionable home renovation just because you wanted it, and buyers could take it or leave it, you probably got a poor ROI, so at least some, maybe all of that money is gone. Some may argue an RV has a bit of investment, but anything that depreciates that fast, I'm putting in the "gone" quadrant.

 

[jebmke]

I'm kind of a stickler on the point of separating this. I "get" that if it's money that leaves your fist, it's "gone", but how gone is it?

When I see "spend", I think not just money out of your hands, but money that's no longer on the balance sheet.

So a kitchen remodel. Hmm. I'm afraid that's not quite "gone" enough for me. That expense increased the size of one of your biggest assets...your house. So while it's fuzzy, it's not quite as "gone" as money you spend on travel or something. This is personal, and your opinion is as valid as any other. Mine has cars in the "gone" category, because cars are depreciating assets. But if you have a collectable car, that might be considered an asset, for instance. If that's your hobby, a new collectable could be anywhere from "gone" to "invested", but that has an emotional component...it's about what it would sell for today, not "what it's worth"

The thread was supposed to be about fun expenses, but as noted, that wasn't made very clear, and thread drift is what we do here. We're retired, what else do we have to do, hehehe! So we have another dimension to split out: whether we "have to" incur some expense, like taxes and other mandatory expenses, along with whether it adds to the balance sheet. I would have liked to make this an interactive app, where you could write your own post it notes and move them around, but I took ideas from the thread and pasted them in the quadrants. Things like house renovation can span invested and gone because if you, say, added a deck yourself, and the buyer falls in love with your place because of the deck and pays full price, you probably made money on that spend (positive return on your investment). If you made a questionable home renovation just because you wanted it, and buyers could take it or leave it, you probably got a poor ROI, so at least some, maybe all of that money is gone. Some may argue an RV has a bit of investment, but anything that depreciates that fast, I'm putting in the "gone" quadrant.
View attachment 52168

That was my point. If the money flies out and has no way back, it is an expense. Everything else is rearranging the chairs, as they say.

 

[c4t3rp1ll4r]

Travel. Right now we're constrained by our work schedules, and especially my educator spouse's inflexible time off during peak travel times. A huge part of the motivation to FIRE is allowing for more travel and to places that might be less than ideal to travel to during the summer.

 

[foxcreek9]

Since 1/1/2019 Travel 26%, Insurance 19%, Taxes 18%

 

[Franklin]

DW and I spend on remodeling houses we live in. In 2014 bought our forever home for $1.1M. Remodeled extensively thru Covid and 2 years ago sold it for $3M (recouped the expenses).Purchased the next forever home for $1.5M and just finished remodeling again. Plan to sell this one soon and hopefully recoup because I have purchased the hopefully last one for $1.4M (all of these are cash and sucking up Reno funds) so Im running low on cash. So we are spending a lot but are getting the $ back. Separately (excluding renovations) I stay within my 3% withdrawal's. Like a few others here I was bit by the golf bug and that was a new expense totally. Im done with moving after this next project.

 

[brett]

Travel.

Plus the usual. Roof for 10K, about $3.5K for appliances. Usual ongoing mtce items that are not really retirement expenses.

We do not have a budget nor do I spreadsheet our expenses. What we spend is what we spend.

 

[MichaelB]

Let’s see. So far our biggest post-employment past expenses have been

College for 3 children
Weddings for 3 children
3 new cars
A new roof
A family cruise / get together

Our biggest current expenses is a bathroom remodel.

The only planned future expense right now is long term care, which may happen or not. We also will need to buy 1 or 2 new cars.

When I quit my job I was already planning for the college and wedding expenses. They were greater than I planned, and if I had foreseen just how much we would end up spending I might have reconsidered leaving my job.

 

[flyingaway]

Travel to see the world and play for fun at casinos will be the two most costly discretionary items in my retirement life.

 

[pb4uski]

You made me curious so I went back to Quicken and looked at our spending from the beginning of 2018 to now... almost 7 years. Top 9 catergories represent 64.2% of total spending.

1. Property taxes... on two homes, mostly Vermont lakefront summer home... increased from when working where we only had one home... 12.1%
2. Income taxes... mostly on discretionary Roth conversions up to the top of the 12% tax bracket... 10.4%
3. Medical inurance... Obamacare and now Medicare... 8.4%
4. Travel... much higher in retirement than before retirement... 6.4%
5. Golf... much higher in retirement than before retirement... 6.3%
6. Food and groceries... 5.7%
7. Depreciation... effectively car replacement funding.... 5.1%
8. HOA fees on Florida condo (now sold)... only when retired.... 5.0%
9. Dining... higher in retirement but not sure how much... 4.8%

I was a bit surprised.

 

[GoBears]

Travel (don’t you hate how full payment for a Viking river cruise is due a year or more in advance) will probably be our biggest expense this year. We are also in the process of buying our new build retirement home much closer to the grandkids. The initial deposit plus paying a 20% deposit for contracted upgrades is a very close second. Medical costs and taxes are battling for third place.

 

[djsander]

I'm kind of a stickler on the point of separating this. I "get" that if it's money that leaves your fist, it's "gone", but how gone is it?

When I see "spend", I think not just money out of your hands, but money that's no longer on the balance sheet.

So a kitchen remodel. Hmm. I'm afraid that's not quite "gone" enough for me. That expense increased the size of one of your biggest assets...your house. So while it's fuzzy, it's not quite as "gone" as money you spend on travel or something. This is personal, and your opinion is as valid as any other. Mine has cars in the "gone" category, because cars are depreciating assets. But if you have a collectable car, that might be considered an asset, for instance. If that's your hobby, a new collectable could be anywhere from "gone" to "invested", but that has an emotional component...it's about what it would sell for today, not "what it's worth"

The thread was supposed to be about fun expenses, but as noted, that wasn't made very clear, and thread drift is what we do here. We're retired, what else do we have to do, hehehe! So we have another dimension to split out: whether we "have to" incur some expense, like taxes and other mandatory expenses, along with whether it adds to the balance sheet. I would have liked to make this an interactive app, where you could write your own post it notes and move them around, but I took ideas from the thread and pasted them in the quadrants. Things like house renovation can span invested and gone because if you, say, added a deck yourself, and the buyer falls in love with your place because of the deck and pays full price, you probably made money on that spend (positive return on your investment). If you made a questionable home renovation just because you wanted it, and buyers could take it or leave it, you probably got a poor ROI, so at least some, maybe all of that money is gone. Some may argue an RV has a bit of investment, but anything that depreciates that fast, I'm putting in the "gone" quadrant.
View attachment 52168

Good chart. However, I would think Home maintenance might fall between invested and gone. It seems to be more of a gray area. We replaced our roof. That’s maintenance, but it keeps the value of our house. Some people may look at is the moneys gone, but the new roof increased or should have increased our home value.

 

[Midpack]

Since some are also posting what they spend most on, versus what increased most in retirement (my earlier reply), I was inclined to look at the former for us:

1. Income taxes (Fed & State - Roth conversions...) - 33% of total spending
2. Entertainment (dining out, theater, TV streaming, etc.) - 13%
3. Home (HOA, prop taxes, insurance, lawn/landscaping, pest, security) - 11%
4. Food/groceries & liquor - 10%
5. Medical (Medicare, Plan G, Part D, Dental, out of pocket) - 9%
6. Me (golf, clothes & personal care/misc) - 7%
7. DW (clothes, pickleball/fitness & personal care/misc) - 5%
8. Utilities (elec, gas, internet, phone, water) - 4%
9. Auto (gas, insurance/umbrella, maintenance, lic & regis) - 4%
10. Charity - 3%

 

[523HRR]

Taxes. Not even close.

 

[Dtail]

1) Food
2) Housing type exp
3) Travel
4) Medical

 

[Surewhitey]

All annually
Taxes pre-retirement ~$40k+$7k property
Otherwise, travel (Europe 3 times in 3 post covid yrs) ~20-25k
Insurance products ~$12k
Food ~$10k

The $40k will eventually drop considerably & insurance will be a bit more.

 

[unclemick]

Really really cheap SOB er frugal early in ER - now after 30 years age 81 spending on discretionary family reunions (his and her side ), VRBO vacations, and selected charities - within reason before I croak.

heh heh heh - still tend to be 'cheap' er frugal.- it's a struggle sometimes!

 

[Palmtree]

In the first year of retirement we spent an added 75K on improving our "weekend" lake house to make it a place we could retire in. Added a workshop garage for me, paved the driveway and had rip-rap installed at our shore. Then we coasted a few years and spent another 35K on finishing the basement. Last year we bought a new Tri-Toon boat for over 50K. In 2024 we have not been home near as much. Our largest expensive has been travel.

 

[Sunset]

Our biggest expense in 1 year was a new vehicle (cash).

Our regular biggest expense is taxes, due to Roth conversions, so we are pre-paying taxes.

I'd suggest to folks to ramp up their travel, as I've noticed with myself less desire to travel and my age is only within the normal retirement age span, not early. If I was healthy I could have another 30 years of rocking chair viewing the grass grow. It all just seems like a hassle now..