Did you overestimate your retirement spending?

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Rexindex
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Did you overestimate your retirement spending?

Post by Rexindex »

I am interested in hearing from those who are retired.

Specifically, in all your years of saving and preparation, did you overestimate the amount of money you would need in your retirement? I am wondering if you're spending in retirement is about the amount that you anticipated, or less?

I am also interested in those who have seen their retirement expenses decline or rise as they got older.

In hindsight, did you overestimate because you were concerned your money would not be sufficient to last your retirement years?

I am always amazed at the wide range of income people on Bogle heads tend to anticipate for their retirement needs. I tend to think that because most people on this site are so conscientious that they do not run out of retirement money and tend to over save.
Last edited by Rexindex on Sun Feb 15, 2015 7:29 pm, edited 1 time in total.
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Toons
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Re: Did you overestimate your retirement spending?

Post by Toons »

I have found expenses to be far less in retirement than I anticipated.
Health Insurance being the largest yearly expense. :happy
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The Wizard
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Re: Did you overestimate your retirement spending?

Post by The Wizard »

Two years retired thus far.
No, I didn't overestimate my spending, especially not my base spending.
I did plan to travel a bit more than is happening, but that's correctable...
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celia
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Re: Did you overestimate your retirement spending?

Post by celia »

Retired. Our expenses vary a lot from year to year depending on the things we decide to do or don't do--remodeling, travel, health, etc.

When we were working, our budget broke down into 4 roughly equal areas: housing, kids/education, saving for retirement, everything else. The first three are "paid off". So we can live inexpensively if we need to but now choose different goals each year to persue. We still put money into savings and still live on less than our "income".
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bluetree
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Re: Did you overestimate your retirement spending?

Post by bluetree »

I'm also curious about this, since one of the principles published here is to live below your means while you are saving for retirement.

What does this mean during retirement... live at your means instead of below?

I've also read that the major expense (for most people) during retirement is healthcare. So, what do bogleheads propose in terms of having a healthy lifestyle (regular exercise and eating healthy) in the hopes that this would reduce healthcare costs later in life. Is any of this part of the boglehead philosophy?
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VictoriaF
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Re: Did you overestimate your retirement spending?

Post by VictoriaF »

I am less than six months into retirement and still defining my new life. I am finding many opportunities to save money that I have not considered before. For example, free think tank events are more interesting than paid lectures, and many of them serve refreshments or even free meals and drinks. My county's park system, school system and library system have numerous programs that are either heavily discounted or free.

I budgeted a large amount for annual travel. However, in 2015, it will be difficult for me to spend it. My el Camino walk will be very inexpensive even including the new gear I am buying for it.

Another area of savings is accumulation of travel rewards that reduce (or eliminate) the cost of airfares. I am still new at this, but if I play it right, my travel expenses will be significantly lower than what I've budgeted.

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Cyclesafe
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Re: Did you overestimate your retirement spending?

Post by Cyclesafe »

I over-estimated because I find that I have the time and inclination to do my own home remodeling / maintenance, taxes, housework, wills/trusts, investments, vacation organizing, working out, cooking - everything accept perhaps growing my own food, dentistry, medical exams, and auto maintenance. My wife still cuts my hair and I cut my own toe nails, if only because I'm proud to say I can still reach my feet.

For 2015, my health insurance (for some reason) doubled to $14k and my deductible tripled to $10k so it is now by far my biggest necessary expense.
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Padlin
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Re: Did you overestimate your retirement spending?

Post by Padlin »

Only 2 years into retirement and I figured it pretty well so far. Ask again in 10-15 years.
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GerryL
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Re: Did you overestimate your retirement spending?

Post by GerryL »

bluetree wrote:I'm also curious about this, since one of the principles published here is to live below your means while you are saving for retirement.

What does this mean during retirement... live at your means instead of below?
I am just 7 months into retirement and have always lived well below my means. Looking back the last 6 months, I see that I am spending less than I had planned for -- but I had intentionally overestimated, just in case. My plan now is to evaluate the excess (non-spent amount) each year and then plan my splurges accordingly. Right now I am planning a 3-4 week stay in Paris and expect to spend more than I had ever anticipated on a vacation. In other words, I will spend more time enjoying my trip and less time scrounging for bargains. It will be interesting to see how well I adapt.
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celia
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Re: Did you overestimate your retirement spending?

Post by celia »

bluetree wrote:I'm also curious about this, since one of the principles published here is to live below your means while you are saving for retirement.

What does this mean during retirement... live at your means instead of below?
Many retirees try to live on less income in the early years of retirement and not touch their IRAs and 401Ks (except those who are trying to "flatten" their taxable income/tax rate by doing Roth conversions). They want their retirement savings to continue to grow before touching it and have fewer years when they need to withdraw from it, by starting later.
I've also read that the major expense (for most people) during retirement is healthcare. So, what do bogleheads propose in terms of having a healthy lifestyle (regular exercise and eating healthy) in the hopes that this would reduce healthcare costs later in life. Is any of this part of the boglehead philosophy?
I suppose they promote regular exercise and eating healthy, but the topics posted here have to be finance-related.
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Ged
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Re: Did you overestimate your retirement spending?

Post by Ged »

Perhaps, but it's pretty clear to me that my legacy will be very helpful to my children for a variety of reasons so I don't mind it.
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joe8d
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Re: Did you overestimate your retirement spending?

Post by joe8d »

Yes, I did.
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Glenn
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Re: Did you overestimate your retirement spending?

Post by Glenn »

Retired 5 years and, so far, spending significantly less than expected. Good news, although it means I could have retired a couple years earlier!
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Sheepdog
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Re: Did you overestimate your retirement spending?

Post by Sheepdog »

I went into retirement not expecting any changes in spending. Why would we? That was the plan to be the same. We were already traveling domestically and internationally on occasion. We were still going to buy autos on a regular basis, and maintain our home. We were going to continue to eat out, attend theater and sporting events, and we did all those thing and we are still doing them after 16 years retired. We expected higher medical expenses, but it hasn't been worse than we expected. We did not overestimate or underestimate .. What about the next 5 years? Heck if I know but we aren't changing our estimates.....yet. :?:
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plannerman
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Re: Did you overestimate your retirement spending?

Post by plannerman »

No.

We have been retired for 16 years and are now spending at least twice as much in real terms as I had planned on.

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cheese_breath
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Re: Did you overestimate your retirement spending?

Post by cheese_breath »

I over estimated many of my expenses primarily because inflation has been less that I expected 18 years ago. OTOH I underestimated my medical insurance premiums because for the first two years I was able to purchase through my employer's group plan which included many, many young people. Consequently the premiums were very low. However after a couple years they broke us retirees out into a separate plan which increased the premiums astronomically because we were all old. Thankfully DW and I are both on Medicare now with lower premiums.
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scrabbler1
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Re: Did you overestimate your retirement spending?

Post by scrabbler1 »

I retired 6 years ago at age 45. The most volatile expense has been health insurance. The premium for the individual policy I had lined up in 2009 before I retired rose 20% in 2010 and 25% in 2011, or 50% combined. That was going to bust my budget but thankfully the ACA had already passed by then so I switched to a low-costs, bare-bones policy to get me through the rest of 2011, all of 2012, and all of 2013. I knew it was not ACA-compliant, not that I was going to keep it in 2014. I was able to return to a broader policy in 2014 so my premium rose again to about what the original policy was in 2009. The rate increase for 2015 was a reasonable 7%, keeping my SWR low.

I had a spike in short-term cap gains in 2010 so my tax bills rose that year before falling in 2011 and remaining fairly stable since them. But that expense increases only because of added income.
HIinvestor
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Re: Did you overestimate your retirement spending?

Post by HIinvestor »

We are still living below our means and are more than fine with RMDs and pension. The net rental income we receive is all available for savings. Some expenses have been a bit more than projected--we thought both kids would be financially independent by now--we were 50% correct. Travel expenses and budget has been very fluid and what we have been doing for fun, as well as lots of dining out. Medicare premiums have been higher than projected, but only because MAGI was higher.

H has only been fully retired less than 2 years and we are grateful we mostly have our good health. Not many surprise expenses. Healthcare premiums have been stable, with employer continuing to provide a significant %.
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