When I did my numbers, I put the fixed costs…not the discretionary ones. Like I said…it’s nice for us to know that our fixed costs are within a reasonable range so that we can bump up on the discretionary things like travel more, eating out more, and buying more clothes!
I did my health care estimate based on on Medicare plus supplement costs. DH will be 65 soon…and I already am.
Little things add up. For example…our gym membership is about $60 per month per person. As of July 1, I will have Silver Sneakers which will pay for that. DH will join the Silver Sneakers crowd in October. That’s $120 a month we can use on something else!
I agree that there is limited benefit in terms of seeing someone else’s budget. And it may trigger something that you didn’t consider.
But something that could be more useful (though it will vary too) is for those who are retired, what expenses did you think would decrease but didn’t (either as much as you expected or at all), what expenses did you expect would increase but didn’t (either as much or at all) and what expenses did you not really anticipate at all?
And I remember looking at Vanguard retirement calculators which indicated that people in my income bracket need something like 85-90% of pre-retirement income in retirement. And the lowest you could adjust the calculator was something like 60%. To me that is crazy. I could get below 60% without much effort (just looking at mortgage, college savings, taxes (won’t be self employed anymore) and retirement savings). But its like Valvoline telling me to change my oil every week. Or shampoo manufacturers telling me to wash my hair twice every time. Though I think they do a disservice because they scare a lot of people away from ever starting to save for retirement because the goal seems so unobtainable for so many.
Hmmm. Those are good questions, @saillakeerie, and probably a better way to approach @sherpa’s concerns. I’m going to think about this for a while before I respond.
I have noticed an interesting change in my/my husbands’ behaviors. We are by nature scrimpers and savers, and I do still look for deals and bargains (and get annoyed with myself when I forget to apply a discount or a coupon where I could have), but in the bigger picture, we’ve become more relaxed about what we spend, don’t mind treating ourselves to some finer things or comforts, and don’t get as bothered if we waste some $. We find that we spend more on gifts for our family members now, etc. An example is that we needed some brickwork done at our house. I could have gotten more quotes and price compared, but in the scheme of things, I wanted it done and off my plate, so used a person recommended by a friend. I think the price was high, and I might have gotten it for less, but I now allow myself to think that time is money, and I place value on my time.
While I will always fear that “we don’t have enough”, I am more comfortable thinking that we no longer need to squirrel it away for that future rainy day. The only caveat is healthcare. It is the biggest cause of financial ruin for families. I will be able to get on Medicare (should I choose to) soon, but will stay on DH’s insurance as long as he is working. He would love to retire, but isn’t close enough to Medicare age and the healthcare options in the private sector in our state stink. Its disappointing that we are back in the situation of feeling tethered to our employer/healthcare.
We became parents later in life and will still have a kid in college when most people are starting to enjoy retirement. Our biggest problem with planning expenses will be calculating college expenses. Daughter is working hard in high school to earn a shot at a good University. She’s hoping to go to WashU or Vanderbilt. Unfortunately I don’t think our family will be eligible for any financial aid. We are trying to figure out if full pay at these kinds of schools is worth the return on investment.
Good news and bad news. Good news: There are 1,643 threads discussion this very issue on this site. From that past 3 years alone. Bad news: they all reach the same conclusion – it depends.
@saillakeerie I wish DH and I could have a nice clear cut way to calculate our expenses after retirement but daughter’s choice of college will be the wild card for sure. We are very fortunate to be among those with a decent retirement pension so we know things should work out.
I can look at the general picture as @colorado_mom has stated. We can track our cash withdrawals and our checks. We almost exclusively use Discover Card, and have a year end summary with various purchase categories.
We are heavily insured; I will keep paying the fixed payments on H’s term insurance policies while remaining a flat rate; many policies have dividends taking care of things and our financial planner has ideas for investing cash values…We are glad to have our LTC policies.
We are working to 65, so we will buy a Medicare supplement. Will probably buy dental insurance…I think it will be cost effective for us.
H would have thermostat set with more uncomfortable temperatures…I told him in the summer the downstairs thermostat has to be no higher than 76 and sometimes I need it at 75. I take Tamoxifen as a cancer survivor and run hot. In the winter we have our home set at 70. Our house has 2 X 6 walls and very energy efficient. 2900 sq ft, and we also live with TVA power (lowest electric costs in the country); just got downstairs and upstairs HVAC replaced and new units run very efficiently. So costs of utilities/trash etc is $100 - $250/mo. We also have low property taxes. Won’t downsize here, but if we move out of the area we will. Previously our winter months with gas were more expensive than the summer months, but now with more efficient units we are seeing lower monthly energy costs.
I think many people will shift spending from work travel costs and wardrobe to entertainment/personal travel pretty easily.
From what I read, if one manages their spending the first few months of retirement and find their comfort spot - where they do what they want while being assured that their money won’t run out.
I just picked up “The Essential Tax Guide” 2018 edition - it will pay for itself I think ($10). It has a state by state tax burdents, which is interesting. I know some states are beneficial for military retirement not taxed, etc. Doesn’t hurt to know what is good for one’s individual circumstances. However living where one wants to live can outweigh some of the negatives with costs.
H retired 5 years ago. We had considerable angst about how we would do financially. I did a rough calculation of our fixed income & expenses for the 2 years prior to his retirement and how the income & expenses would change upon retirement.
We have been pleasantly surprised my calculations were fairly accurate in the 5 years since H retired. Most expenses (including our medical since H’s former employer allows us to retain H’s subsidized medical plan) didn’t change much, including our modest clothing expenses.
Hope this is helpful—it did set my mind at ease to consider our finances in this manner before H retired to see we wouldn’t suddenly having major unexpected changes to lifestyle.
Expenses that went away or decreased:
College —we finished all payments prior to retirement
Mortgage—finished
Electricity—installed solar heater and photovoltaic so went from >$100 to $18/month and is supposed to last 30 years
401k—H is no longer eligible to contribute
State taxes—significantly reduced because no tax on pension income
Life insurance—one policy is paid in full and gives us a return of premium that we use to defray premium costs on term policy
Expenses that increased :
Discretionary Travel—much more time to travel on longer trips
Support for loved ones—largely discretionary
Discretionary Gifts and Donations
Discretionary Dining Out
Discretionary Entertainment (movies, theater, etc)
Medicare B (started part B upon retirement but premiums are partly offset by no longer having premiums)
Cell phone increased to $120/month for 4 lines—was lower than higher now is set
Income that decreased:
Changing from salary to pension—insert $$ amounts
Income that increased:
Taking Required Minimum Distributions from all retirement accounts that require RMDs at age 70–sums can be projected based on balance and age
Others may get SSecurity—I will get it in another decade, H gets his pension (see above). I’m hoping my SS will pay my Medicare B premiums
Any other streams of income that increase
Oh jeez, I am afraid to run the expense numbers. Our property tax bill is huge and it goes up every year, so that’s not stable. My sister is thinking of retiring to Sequim, (warmer, dry, nice retirement place, less expensive). Our coffee and wine bill probably exceeds most of the food expense estimates I’m seeing here. I’m not ready to look at all this yet!
Oh yeah, we used to jump on those deals too. They do the hard sell on us, and as soon as we tell them we are airline employees, get good travel deals everywhere, they instantly stop trying. They know we are way too cheap and impossible to sell to.
No big surprises post-retirement but I think that is because I based my budgeting on post-tax actual annual expenditures rather than on a percentage of pre-retirement income. As our income increased, we’ve always lived well below our means and saved aggressively so I knew that our income at the time wasn’t needed for retirement. Another reason why it will greatly vary from individual to individual.
I do miss corporate dental coverage. No dental plan combined with being at an age where old dental work is past its useful life has resulted in more $$ spent on dental than I anticipated. I have looked at various individual dental insurance plans but they never make financial sense to me given all the limitations and caps on what they cover once I crunch the numbers.
One huge benefit to retirement has been the ability to finally get at least 7-8 hours of sleep a night after decades and greatly reduced stress. Truly priceless.
This is a bit off topic but has anyone watched “Queen of Versailles”? It’s a documentary on the family of Westgate(one of the world’s largest Timeshare companies) CEO and how they were weathering the downturn in 2009. It’s fairly interesting, something like the “Lifestyles of the Rich and Famous”.
More like “Lifestyles of the Rich and Famous” meets “Real Housewives” meets “Botched” hybrid. It was interesting in a voyeuristic, “don’t want to watch the car crash but can’t look away”, “are there really people like that?” kind of way.
To us, kids’ college tuition & expenses were a huge unknown, as well as whether they wanted grad school and costs associated with that. This is one of the reasons H waited until we finished paying college bills AND finished mortgage before retiring. We felt too insecure with too many unknowns and are very risk averse. We were pleasantly surprised H’s job remained until he was ready to retire, as there were always threats of cutting positions and many positions were cut during his many decades working. By the end, he was doing the work of many, many people whose positions were cut, as many people on this forum are also doing.
I wish DH and I could have a nice clear cut way to calculate our expenses after retirement but daughter’s choice of college will be the wild card for sure. We are very fortunate to be among those with a decent retirement pension so we know things should work out.