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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.
We will be traveling like today but will stay at motels vs. hotels
We will spend less money on entertainment
We will use more coupons and discounts
Etc. Etc.
I just view it as the price we are going to have to pay to have the privilege of being retired, not working and a penalty for not saving and investing as much as I should have during my 20s to 50s.
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 .
Last edited by mathjak107; 09-02-2015 at 07:16 AM..
My cash flow projects to have 50% of what I have now. I ran the numbers at age 50/51, didn't like what I saw, and have spent the last 6 years changing course. I now own a paid-for and completely remodeled home that will consume less than 10% of my cash flow as a retiree counting property taxes, insurance, utilities, and ongoing property maintenance. I dramatically increased my savings rate to address the retirement income/cash flow side. I'm doing "catch-up" on my 401(k) at $24K per year. I'm saving as much of my paycheck as I can.
For the most part, I'm now living on what I project to have as my retirement cash flow. If I do that for 8 more years, I should be OK when I stop working at age 65. It won't be a glorious 1%-er lifestyle but I should be able to continue doing what I do with my life now without an enormous lifestyle change.
I am spending MORE now that I am retired. There is more time to travel and more time for entertainment such as movies and live concerts. I derived no savings from stopping work, as I was lucky enough to have a short commute and I did not have to wear three-piece suits to work so I can continue to wear the same clothes I always wore. I do not enjoy cooking so I eat out the same amount. I did not move to a lower cost of living area because I love living where I was/am.
Your plan to spend about half of what you are spending now in retirement, sounds like the 'plans' of many to "eat less and exercise more... tomorrow!" In theory, everything always works-out, but, reality is another matter. The fact that you haven't done your "I will's" before, while saving for retirement, is a pretty strong indicator that you are unlikely to suddenly change your entire lifestyle and spending tendencies after retirement.
Why wait until after retirement to 'test-out your reduced spending retirement plan?' Now is the time to see if you can actually reduce your spending by that much ... while you still have the income and flexibility to make adjustments.
We live comfortably on about two-thirds of our pre-retirement income, but, aren't actually spending less. We were already living well within our means prior to retirement. Plus, we eliminated mortgages, reduced second-home investments and increased retirement savings (plus cut a few other unnecessary expenses prior to retirement. We didn't really make any post-retirement spending cuts - Actually, health insurance, LTC insurance, life insurance and travel expenses increased.
I live pretty frugally now and save more than 50% of my take home and I actually think I'm spending about the same as in my college days so when I retire my retirement income from small pension and SS and 401K distribution is guaranteed to be the same if not more than my take-home so if I don't save anymore in retirement I think I'll have an 100% income boost when I retire.
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