Has your spending gone up or down in retirement? (pensions, crying, 2015)
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I spend much less. No more 100 mile a day commute!
Plus I've found you learn to live on what you have. What's hard for me is doing the house remodel at a snails pace. I wish I could just do it all at once!
You can plan your expenses in retirement all you want, but only after 2-3 years of being retired do you really know what you need in retirement. We are spending about the same as I did 15 years ago when I retired. We have everything we need and buy what ever we want so life is good. Even after 15 years of retirement, our expenses and spending tastes are changing. Our income is increasing and our expenses are decreasing so retirement spending is not set in concrete when you retire.
That's what I see happening for me so I would have to start forcing myself to spend more which is a nice problem to have. Much better than the "too much debt" problem in my mid-30s.
My budget for my upcoming retirement is about fifty percent of what I am spending today. My wife and I are cutting back on spending big time in retirement.
We will not spend as much on rent, we are going to move to a cheaper town.
We will not be spending as much on out to eat meals.
OK, you can spend a lot less in retirement. Somehow, I think that expecting that your expenses post-retirement will be 50% less is very optimistic unless you are making some very major cuts in overhead. For example, you are selling your 3000 sq ft home in SoCal and purchasing a 1200 sq ft bungalow in NW Arkansas and the like.
I have seen a lot of my friends decide to retire (usually early) and come up with an austerity budget that matches their nest egg and the like. The problem with that approach is that living like a pauper when you are on a king's budget gets very old after a couple of years. After a while, eating only beans and rice gets old. And staying home 52 weeks a year when you are used to traveling four or five times a year is a drag.
I agree with EscortRider in that it is not easy to cutback after retirement.
Unless you did a lot of spending before retirement I think you might find that you have the opportunity to spend more in retirement. I am not counting retirement savings, ss taxes and similar items as spending in my comparison.
we are higher in retirement . with us time cost money and one thing we have plenty of now is time . we are going and doing things every day . that walk in the park or stroll around the lake wears thin real quick with us .
also healthcare costs soared with retirement .
i am on cobra on an exchange plan since i am to young for medicare , my wife is on medicare . that is now all paid with after tax dollars and is almost 12k .
throw in our ny state partnership long term care insurance and we are talking 16,500 in after tax dollars . when working medical was all pretax and cheaper than on my own and now that difference is a huge chunk of additional dough ..
we eat out more , see the grand kids more and take them places as well as do a lot of travel . for now our budget is much higher than while we were consumed working .
How do you figure out the post tax amount of health care?
I expect our spending will go up the first few years after my retirement sometimes next year.
Similar to mathjak's situation, I will need Cobra health insurance until I reaches Medicare age. I expect to pay about the same what he is paying which is around $12K/year.
We plan to travel a lot so our travel expenses may become triple or quadruple.
We definitely will relocate so there will be a lot of expenses to search for a new home, buy it, move across the country etc.
We have already incurred significant expenses in fixing up our old house to get it in good sale condition.
We are delaying collecting our SS until my husband turns 70. I will collect spousal benefit at 66 and delay collecting my own benefit until 70.
We will have just a fraction of our current income in the first few years of my retirement. My husband has a tiny pension & I plan to receive my 'residual' previous pension plan (the portion I earned before the company discontinued the plan) as an enhanced fixed annuity (returns about 7.5%) when I turn 65. This means that most of our living expenses in the early retirement years will come out of our savings.
So if I am to plot a projected spending curve for our retirement years, it will a 'smile' shape with high spending in the beginning (the go-go years) and end (the no-go years) and low spending in the middle years (the slow-go years).
I think the most uncertain part of my spending projection is the no-go years. If one or both of us come down with some significant health problems requiring expensive medical care and/or nursing home, the spending will go sky high. I have been doing quite a bit of reading on LTC insurance cost vs. benefit tradeoff but not quite convinced that it is the way to go so the plan is to stay self-insured for now.
How do you figure out the post tax amount of health care?
it is paid out of our pockets with after tax money . not sure of your question . it isn't like when working and the money paid in for health insurance is never taxed and comes off the top .
My working income was twice what my retirement income is, but a large percentage of my working income went to paying off mortgages and building my savings. So, even with a 50% reduction in gross income, my lifestyle and expenses are about the same as when I worked. I paid off my mortgages, moved to a state with no state income tax and have stopped aggressively saving.
Income today is what it was when I worked (take-home after savings). Now I worry about money (making ends meet) not at all - but sure did during my working years and was an aggressive saver. I live today exactly the way I did when I worked - same house, etc (no desire whatsoever to move). - except I spend much less on auto and clothes. Always watched my spending on the stupid stuff carefully when I worked, still do. Pays off, however, because now when a big outlay is required - home repair, etc. - the money is there. Somehow, it's easier than it used to be.
Could/should travel more - but since I did a lot of traveling when I was younger - don't have a big yen for it, anymore - and I am not an early riser - which is necessary for travelers. Of course, should my income double - that could change.
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