What you actually spend vs planned to spend in retirement

[flyingaway]

There is spending level that your models say that you could spend, for example, the 4% rule. We spent about a half of that. However, we have an estimate of retirement spending before my retirement, which comes close to what we actually spend now. However, this year we will spend more, with a car repairing, roof replacement copay, and new HVAC, about 20% more.

 

[Gallaher]

We budget on paper and in our brains. In reality we don’t budget anything. Want it buy it. Don’t want it don’t buy it.
Fortunately, we are both naturally pretty frugal.
Our “paper budget” is $120-$150K. I dont think we’ve spent $100k in a year yet.
Retired five years, built a new house, actually downsized and did a lot of the work ourselves. Bought a couple of cars including a DYI adventure van. Traveled half way round the world.
I thought it would have been a little harder.

 

[Gumby]

We spend what we want, but I track closely. After 4 years of retirement, we are spending almost exactly as much as we did the last few years while we were working.

 

[dm]

Retired in 2007. Spending the first five years was on budget or below. The market tanking will do that to you. But since then we have been spending more than I thought. But we have done a lot more also. I didn’t think we would move to SW Florida, owned a plane for a while, or bought a house with a boat lift in the backyard.

 

[SecondCor521]

Hey all, I have been tracking my expenses pretty closely this year as I am planning to retire next year. I am curious on you thoughts of what you planned to spend monthly/annually for retirement vs. what you actually spend in retirement.

My expenses will go down when I retire due to a home sale, kids out of the house, no more CLUB VOLLEYBALL, etc.

Did you spend more or less? I guess I am trying to see the trend and how far the margins are for people, like was it 10 or 20 percent different. or the Same?

Thanks!

54, single, three kids 28M/23M/21F, FIREd spring 2016.

I track but do not budget.

I expected my expenses to drop by about half when I retired, mostly due to taxes. This in fact happened and so I am spending pretty much what I expected I would spend in retirement.

I think if you've been tracking and have a reasonably consistent lifestyle, then if you subtract for the things you won't spend on anymore and add in for the things you will start spending on, you're pretty likely to be in the ballpark (maybe +-10% depending).

Like most, I could spend more. In my case, a lot more. Don't feel the need.

Year over year, my spending has gone up slowly - maybe 0.5% in nominal terms annually. So my spending has dropped over time in real terms.

I track the average of my last six months spending, and I do see in my case monthly or seasonal variations which are quite large - a bit over 2x from peak to trough. But this is mostly due to property taxes and Christmas both being in December and having a relatively cheap lifestyle otherwise.

I think my kid expenses peaked when they were in high school - child support and private school tuition added up. After HS graduation, they were pretty much off the dole except for college, which I funded out of a separate bucket.

In terms of individual spending categories, I spent less on eating out because I didn't need to relieve work stress any more. I spent more on gas than I thought I would because I was driving my kids to and from school and work a lot and that's just something I overlooked. Not a big deal in the scheme of things.

Right now I'm trying but mostly failing to increase my discretionary spending on things like vacations. Basically it doesn't take much to keep me happy and I have it all at my house. Don't much feel the need to fly to Europe for a few weeks even though I have some interest in doing so. Spending on travel like that is like w*rk to me.

 

[Al18]

I’ve been retired 5 years, and spending is 18% less than the yearly plan. Never tracked expenses in my life and refuse to do so now. Budget is going up another 15% in 3 years when SS kicks in. I’ll need to figure out how to spend more!

 

[Samething]

I’m in my fifth year of retirement. I track my expenses and 3 of the first 4 years I spent between 3 and 3.5% of my investable. The year I bought my new house I spent 6.5%. This year is tracking at about 3% again.
My expenses this year should be about 16% more than the year I retired. I received an inheritance last year that increased my NW by about 11%.

 

[2017ish]

We retired in summer of 2017 (at 56 and 57) to travel--from a combination of jobs that foreclosed serious travel. We knew that to live at same level as when working (post-taxes and savings, less kids/work related expenses) we needed 110K per year.

We have spent that much, plus right at 120K a year traveling since retiring. Pretty much as planned. (Travel 6 months a year, and drawing down portfolio based upon percent of value each year. AND trying to get our adventure travel in before we physically can't.)

Your experience, of course, will be different.

 

[rwdflynavy]

I retired in 2018 with a Coast-Fire mindset to live mostly off mil pension and VA disability (which was an unknown when I retired) and then supplement with a part time gig.

In the next couple years I did a part time gig until COVID hit (it was a museum and it closed during Covid) then I ended up taking a full time job at my alma mater for nostalgia reasons which was fun, but the pay was terrible and so were the hours. Left after a year and re-promised myself no more full time work.

Now I work 2 very part time jobs for fun and to support my photography addiction and we live on my pension(s) and have been supplementing our fun activities with a small inheritance from my MIL who passed in 2020.

The good news is that we have not touched any of our investments and don't plan to in the short term, so they continue to age and grow well.

 

[DrRoy]

We are spending 55% over my expectations, largely due to BTD travel. That is partly due to how well the market has done over our RE years. In our peak year, we were still at a 3% WR.

 

[LateToFIRE]

This thread has been been interesting and useful. I am NYRE (we need an acronym for "Not Yet RE-tired" or "Not Yet Retired Early"). The spending part of FIRE is what I've been focused on lately. I generally know how much goes out the door to maintain our present lifestyle (and assume we will continue spending that amount). What I haven't closely tracked is what it gets spent on.

Which makes it harder to form a detailed retirement budget, but I recently took a stab at it - with two major categories: essential (housing/grounds, medical, vehicles, eat-in-food) and non-essential (eat-out, clothing, wellness, travel, charitable, gifts, misc splurges). Turns out that its about 50/50 between the essential vs non-essential. And then there is a third blow that dough bucket - we'll see how that develops - have not filled it in yet.

Where I'm going with this is that will be interesting to see how our expenditures evolve. I can take great comfort that we could cut back as much as 50% in down portfolio years, and/or shift spending around as needed, say if housing or medical went up by a lot. So far, haven't seen anyone here say they've had to do that given how well market has done over the last 10-15 years and also many of you seem to have stable income streams (SIRE?).

EDIT:
- Guess I shouldn't complain about income streams as will be clocking close to$90K between SS/pension when they eventually kick in.
- One thing I'm also seeing in the budgeting process is that we have enough spending flexibility that we could choose whether to grow, deplete, or hold stable the portfolio (subject of course to market performance).

 

[jebmke]

This thread has been been interesting and useful. I am NYRE (we need an acronym for "Not Yet RE-tired" or "Not Yet Retired Early"). The spending part of FIRE is what I've been focused on lately. I generally know how much goes out the door to maintain our present lifestyle (and assume we will continue spending that amount). What I haven't closely tracked is what it gets spent on.

Which makes it harder to form a detailed retirement budget, but I recently took a stab at it - with two major categories: essential (housing/grounds, medical, vehicles, eat-in-food) and non-essential (eat-out, clothing, wellness, travel, charitable, gifts, misc splurges). Turns out that its about 50/50 between the essential vs non-essential. And then there is a third blow that dough bucket - we'll see how that develops - have not filled it in yet.

Where I'm going with this is that will be interesting to see how our expenditures evolve. I can take great comfort that we could cut back as much as 50% in down portfolio years, and/or shift spending around as needed, say if housing or medical went up by a lot. So far, haven't seen anyone here say they've had to do that given how well market has done over the last 10-15 years and also many of you seem to have stable income streams (SIRE?).

Once I retired I pretty much stopped tracking details. While our average aggregate spend has been pretty close to the budget I created, anecdotally I know that the category totals are likely wildly off.

As far as shifting, one of my criteria for retirement was being able to go forward without compromise. I specifically wanted to ensure that we would not have to hunker down if things went south in the markets. I retired in December, 2007 and the next three years were among the highest spend years in our 15+ retirement period so far [although some one-time items this year will probably create a new high].

 

[LateToFIRE]

Once I retired I pretty much stopped tracking details. While our average aggregate spend has been pretty close to the budget I created, anecdotally I know that the category totals are likely wildly off.

As far as shifting, one of my criteria for retirement was being able to go forward without compromise. I specifically wanted to ensure that we would not have to hunker down if things went south in the markets. I retired in December, 2007 and the next three years were among the highest spend years in our 15+ retirement period so far [although some one-time items this year will probably create a new high].

Yes! I agree with your sentiment - all the calcs have us leaving too much $$$ on the table when we expire, so I need to get comfortable with some BTD. But being the worry-head that I am, just helps me sleep better knowing that we COULD hunker down by a lot IF something UNEXPECTED happened.

 

[Gumby]

....
As far as shifting, one of my criteria for retirement was being able to go forward without compromise.....

Same here. I was willing to work until I could be certain that our post retirement standard of living would be the same as, or better than, our pre-retirement standard of living. And it is.

 

[COcheesehead]

I also never wanted to have to cut expenses in retirement. I probably overshot how much I needed, but I guess that is better than worrying about money.

 

[O2Bfree]

After four years of retirement I'm about 10% below my estimated expenses. But I was spending only about 46% of what I could spend at my very cautious 2.5% WR until age 99, and now that's gone down to about 32% since I inherited a nice sum last year. What a great problem to have!

 

[athena53]

Probably more than expected but it’s OK. I keep total withdrawals at 3.5% (although it was higher than that the year after I retired when we downsized- ultimately lower carrying costs but a lot of one-shot expenses).

Retired 9 years ago and I’m feeling more secure- the pot is still increasing and I won’t live forever. Dad left me money that I didn’t expect and won’t need (going mostly for the grandkids’ 529s and charity plus upcoming family travel). DH, who was 15 years older, died in 2016 and although I’d love to have my travel partner back, I have to admit one Business Class airfare is cheaper than two. I also got a nice jump going from Survivor SS to my own at 69.

I’m in London for a couple of nights on my way home from a tour of Serbia, Bulgaria and Romania. BTD.

 

[scrabbler1]

What has had a bigger impact on my overall ER budget than spending has been the monthly cents per share my main bond fund has been paying since late 2008. Back then, it was averaging about 5 cents per share per month but has gradually dropped to about 2.9 cents per share per month, about a 41% drop. However, through the reinvestment of excess dividends and some occasional rebalancing, the number of shares I have in that fund has risen by about 69% Taken together, these 2 changes nearly perfectly cancel each other out. I can supplement this with smaller dividend and cap gain distributions from my other (taxable) mutual funds if I need to.

 

[ls99]

Did not have spending plan before retirement. Still don't. At one time considered burning the hardwood floors of my house for heat, fortunately got by without having to do it, do have more than enough to cover anything that I want to do. My lifestyle and habits are not expensive, thus my nieces will do well when I kick the bucket.
YMMV

 

[TickTock]

DW is retired, I am not (yet!).

I have tracked spending for several years. Note that I don't count taxes as spending, nor do I count savings as spending. [My end-of-year accounting looks at three categories: spend, save, taxes.]

I expect our fully retired spending to be approximately the average of the last several years, adjusted for inflation, and with some modifiers (house is paid off, so subtract mortgage P&I, we'll likely buy a new vehicle [budgeted as a one-time cost, so subtract auto loan spending], add in [this is the big one] healthcare insurance costs until they drop with Medicare at age 65). And add taxes back in - again, in my mind, not 'spending' per se, but an expense that does need to be accounted for.

If we do increase spending, it will likely be deliberate - travel/vacations, before we get too old and frail to do so. But that will be based on SWR.

 

[tbis]

This is my first year of "retirement" and (HOPEFULLY) shows the importance of having a larger sample set of years. I 've had 30K worth of home repairs and will hit my max out of pocket on medical costs (beyond premiums). This is on top of seeing the real effects of inflation. In short, I am WAY overbudget...of course hoping next year will be less brutal. Still, another version of "sequence if returns" risk...except this is "sequence of expenses" risk.

 

[Imackenzie]

Way more...

I have been spending way more--probably 25% more than I expected over the last seven years. Mostly it comes down to travel because I realized when I retired at 59 that there are only so many years left when I could hike the Inca Trail, hike and bike in Iceland and go on safari in Tanzania. But house stuff is also a lot more than I realized and has gone up astronomically in the last few years. It hasn't been a problem because I have always lived very cheap so the increase hasn't kiled us. I figure in another 5-10 years it will drop back to normal.

 

[tbis]

I have been spending way more--probably 25% more than I expected over the last seven years. Mostly it comes down to travel because I realized when I retired at 59 that there are only so many years left when I could hike the Inca Trail, hike and bike in Iceland and go on safari in Tanzania. But house stuff is also a lot more than I realized and has gone up astronomically in the last few years. It hasn't been a problem because I have always lived very cheap so the increase hasn't kiled us. I figure in another 5-10 years it will drop back to normal.

Agree on the astronomical increase in home repairs. The TWO A/C units I had replaced were at least 50% more than they would have been just 3 years ago. Brutal.

 

[a60dan]

Approaching 2 years retired at age 61.

Our spending has been under plan by maybe 10%. I track it in mint.com, but not to the penny in each category.

A friend told me about the “Essential Plan” here in NY, and we’re managing our taxable income to qualify. As we transition to Medicare in 2025 & 2026, our medical expenses have nowhere to go but up *

We want a single story house and are weighing the options including adding a bedroom/bathroom/laundry room to make the current place work.

If money were no object, we’d get a second place in Florida and consider changing residency.

I expect our expenses to rise and my father tells me my income will go up when he “kicks the bucket” . I’m not planning on that income and told him today that despite his refusal to go to the doctor, I think he may live forever

 

[Rocky mtn high]

Spending in line- except travel pro 100% more.