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I accidentally posted this first in personal finance, so sorry if you are seeing it twice. I couldn't figure out how to delete the first post.
If you have been retired at least 3 years, I have a question for you: Prior to retirement, what monthly dollar amount did you expect to spend in retirement, and how close have your actual monthly expenditures been in practice? I'm interested not because your amount has anything to do with my expected expenses, but as information about the accuracy of planning this sort of thing. Using our current expenditures, I've attempted to estimate the expenditure number as closely as possible, but there are a lot of expenses that will end as we cross the rainbow retirement bridge. Even accounting for those, discretionary expenditures like travel are still a big unknown.
There are some old threads along these lines, but I'm looking for more recent information. If you are not comfortable giving a number (which I thought might keep answers brief), then perhaps a percentage--e.g. "within 5 percent."
I can't speak to it...but I've heard several on here recommend that you figure out your budget several years before and then try living on that amount for a couple years to see if it is realistic.
I spent the first year eliminating most unnecessary expenses ( cable tv, eating out which I did a lot, stopped "retail therapy" if bored, etc,) & economizing the rest (eg., better cellphone plan, all led bulbs, try buying only when on sale) without being punitive or miserly, to get a baseline of my necessary expenses & see how much I needed on a subsistence level & then on a modest boost up from that. I use an online budget program & log every expense bar none. The second year I loosened up when I had a better idea of where the money was going & how 4-5% + taking social security later on might work.
But I've taken 2 European vacations that I used frequent flier points for & stayed with relatives or in B&Bs. Third year now I am self-funding myself almost at the same level I would be at 68 collecting SS + 3% withdrawals.
This works for me now & in 2 years when I turn 68 I will decide to take SS or go on self-funding, but at a higher level, same as taking SS @ 70yo + 4% withdrawal. I've increased the wd level each year & am pretty comfortable now plus I know how much I need to survive if things go bad. I'm still learning & making some mistakes but I want to be able to put this into an automatic funding mode when I get to my 70's.
If you have been retired at least 3 years, I have a question for you: Prior to retirement, what monthly dollar amount did you expect to spend in retirement, and how close have your actual monthly expenditures been in practice?
Retired since 2009, 76 y/o in two months. Today, nine years into retirement, I'm spending about 15% more a year than I did nine years ago - or, on average, 1.6% more per year. I love this low-inflation environment. However, that won't last much longer.
For me, nothing whatsoever changed in retirement. Same house and maintenance costs, same car and maintenance costs, same utilities and property taxes with expected annual increases, etc. Biggest change for me was an increase in health insurance costs - until I found a unique Medicare plan which has added money to my bottom line and from which I pay nonMedicare expenses.
Just figure you'll need in retirement at least as much as you were spending when you worked plus 6% for a cushion. I always add 6% to budget line-items, whether I spend it or not. If you plan to do a lot of traveling, add another $10-$15k or more. Traveling can be really expensive. Friend of mine took a European trip three years ago for $25k.
I'm actually far more financially comfortable in retirement than when I worked. I do, however, have an Excel budget which I redo annually. Because market has been so great last few years, I've increased withdrawals from retirement accounts to about 5% - but I really only need 3% - and could do without that if really I had to although home maintenance might need to take a back seat.
Last edited by Ariadne22; 01-31-2018 at 09:31 PM..
Have been retired for 7 years. With the exception of buying a vacation home in Las Vegas and its accompanying associated costs, my budget is the same as prior to retirement. I do not plan on spending any more than that.
May loosen the purse strings a bit in some 3-1/2 years when I collect SS benefits at 62. However, will most likely roll those dollars into existing accounts. Old habits are hard to break.
If you have been retired at least 3 years, I have a question for you: Prior to retirement, what monthly dollar amount did you expect to spend in retirement, and how close have your actual monthly expenditures been in practice? I'm interested not because your amount has anything to do with my expected expenses, but as information about the accuracy of planning this sort of thing. Using our current expenditures, I've attempted to estimate the expenditure number as closely as possible, but there are a lot of expenses that will end as we cross the rainbow retirement bridge. Even accounting for those, discretionary expenditures like travel are still a big unknown.
There are some old threads along these lines, but I'm looking for more recent information. If you are not comfortable giving a number (which I thought might keep answers brief), then perhaps a percentage--e.g. "within 5 percent."
OK, I'll bite.
I retired at 53 about five years ago. We had not tracked our expenses for 25+ years but I made some rough guestimates and made a budget on that.
We have been running 5-7% under budget despite some major events - cross country move, sale of home, renovation of new home etc. Fortunately, MOST of our expenses have been decreasing each year which has helped to offset the ever increasing medical premiums that we pay each year.
We don't live on an austerity budget and we travel 8-10 weeks a year.
we saved and invested all our live better than we did when we were consumed raising a family and saving .
we didn't see retirement as a step backwards as far as cutting back or economizing . quite contrary we looked at retirement as our reward for getting this far.
3 years in we spend more than we did working , we expected that since our time is no longer consumed by a job and can do and go any where we like
I am only two years into retirement and the wife is in her first year now so I cant tell you what year three is yet but I can tell you that like Ariadne22 said of her time, nothing has really changed. We still have the same house and maintenance costs. We traded saving for retirement to spending in retirement. My income is still the same net wise. We are both young I am 60 and DW is 59.8. We live comfortably but did make the change of a paid off mortgage so that expense is gone. But truly we really haven't changed very much as far as our spending habits. We just spend as we see fit. We are lucky that our income will increase as we get older. Currently we are living on some savings, and two pensions. Both of us will wait until at leas FRA for SS payments and I might go to 70 but that will depend on how taxes will affect us on if I will wait or take it then. Until then we will spend down 1/4 of our savings.
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