How much do you spend annually in retirement?

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delamer
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Re: How much do you spend annually in retirement?

Post by delamer »

GoneCamping wrote: Wed Apr 07, 2021 10:49 am It's all relative and relatively speaking it seems like many here don't know how extremely fortunate they are. $100,000 annual income, $20,000 cruises are not high on the hog? Relative to what? The very wealthiest perhaps but here in the U.S. and even more so the world as a whole, definitely not. $100k puts one in the top 10% in the U.S. That's pretty high on the hog in my eyes but that phrase may have distinctly different meanings to different people.
On the contrary, many of us do appreciate how fortunate we are. My grandparents were all immigrants to this country who came here with nothing about 100 years ago.

The fact that I can take a $20,000 trip to visit one of the countries they came from is nothing short of miraculous.

As someone said earlier in the thread, “high on the hog” means someone who spends more than you. Or, I’d add, on things that you don’t value.
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jeffyscott
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Re: How much do you spend annually in retirement?

Post by jeffyscott »

mikejuss wrote: Wed Apr 07, 2021 10:01 am An adjacent question to the one that started this thread: how did you calculate--preretirement--what your spending in retirement would look like?
For about 5 years I did a calculation using our income and subtracting things that would go away in retirement and adjusted for the things that would change significantly. For us this calculation was:

income
-payroll tax
-health insurance, life insurance, and pension contribution deductions
-savings
-income tax
=net other spending
+car replacement allowance
+retirement income taxes
+retirement health care costs
=minimum retirement income (result was ~$50K for us)
+20% safety factor = desired retirement income (~$60K for us)

Over our first 4 years or so of retirement, this estimate has turned out to be pretty accurate. Our actual spending (excluding taxes on Roth conversions, but including the full cost of a new car) has been lower, but that is mostly just because the estimate included hitting max out of pocket for health care each year and that has happened in only one year and in the other out of pocket medical costs were low.
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delamer
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Re: How much do you spend annually in retirement?

Post by delamer »

jeffyscott wrote: Wed Apr 07, 2021 11:29 am
mikejuss wrote: Wed Apr 07, 2021 10:01 am An adjacent question to the one that started this thread: how did you calculate--preretirement--what your spending in retirement would look like?
For about 5 years I did a calculation using our income and subtracting things that would go away in retirement and adjusted for the things that would change significantly. For us this calculation was:

income
-payroll tax
-health insurance, life insurance, and pension contribution deductions
-savings
-income tax
=net other spending
+car replacement allowance
+retirement income taxes
+retirement health care costs
=minimum retirement income (result was ~$50K for us)
+20% safety factor = desired retirement income (~$60K for us)

Over our first 4 years or so of retirement, this estimate has turned out to be pretty accurate. Our actual spending (excluding taxes on Roth conversions, but including the full cost of a new car) has been lower, but that is mostly just because the estimate included hitting max out of pocket for health care each year and that has happened in only one year and in the other out of pocket medical costs were low.
I followed a similar process.

If you have significant commuting costs, those would be another reduction in expenses.

And, of course, if you are changing homes or paying off a mortgage, those are important.
jhawktx
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Re: How much do you spend annually in retirement?

Post by jhawktx »

If $50,000 is living high on the hog, we are living well above the tallest hog.
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thursdaysd
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Re: How much do you spend annually in retirement?

Post by thursdaysd »

MathWizard wrote: Wed Apr 07, 2021 11:11 am The bulk of your retirement should be after 65.

For MFJ, the cost per person for Medicare part B is $148.50/month each, so $3564 for a couple.
This is an 80/20 plan, and does not cover things like dental, eyeglasses, hearing aids.
For myself and my wife, adding a (very nice) medigap plan that also covers prescriptions brings us to
a bit over $11K/yr. I also assume 2% inflation in health care costs over standard inflation,
but that still averages less than $20K/yr. Medicare Advantage plans would cost even less.
Not sure what you mean by "the bulk of your retirement should be after 65". I retired from my megacorp at 53. I did part-time contract work (some of it for the megacorp) for four more years, but I haven't worked since I turned 57. But if you mean you shouldn't withdraw from your portfolio until you turn 65, I still haven't made significant withdrawals and I'm in my 70s (they will start when I move to a CCRC in a couple of years).

Prospective retirees should bear in mind that the cost of Medicare, in terms of what is withheld from SS, depends on your income. My cost went up noticeably when I started RMDs. The cost of my Medigap plan has also increased, year by year. And anyone can have an unexpected accident or diagnosis that will temporarily or permanently increase medical costs.
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MathWizard
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Re: How much do you spend annually in retirement?

Post by MathWizard »

thursdaysd wrote: Wed Apr 07, 2021 1:56 pm
MathWizard wrote: Wed Apr 07, 2021 11:11 am The bulk of your retirement should be after 65.

For MFJ, the cost per person for Medicare part B is $148.50/month each, so $3564 for a couple.
This is an 80/20 plan, and does not cover things like dental, eyeglasses, hearing aids.
For myself and my wife, adding a (very nice) medigap plan that also covers prescriptions brings us to
a bit over $11K/yr. I also assume 2% inflation in health care costs over standard inflation,
but that still averages less than $20K/yr. Medicare Advantage plans would cost even less.
Not sure what you mean by "the bulk of your retirement should be after 65". I retired from my megacorp at 53. I did part-time contract work (some of it for the megacorp) for four more years, but I haven't worked since I turned 57. But if you mean you shouldn't withdraw from your portfolio until you turn 65, I still haven't made significant withdrawals and I'm in my 70s (they will start when I move to a CCRC in a couple of years).

Prospective retirees should bear in mind that the cost of Medicare, in terms of what is withheld from SS, depends on your income. My cost went up noticeably when I started RMDs. The cost of my Medigap plan has also increased, year by year. And anyone can have an unexpected accident or diagnosis that will temporarily or permanently increase medical costs.
I was answering arf1410's post:
help me understand that one... I've been told to budget about $20k per year for health care ...
in that health care should not be $20K/yr. forever, maybe before age 65, but not after.

Unless there is some reason to expect an early demise, even fully retiring at 57, there is only 8 years until 65, and
you should expect to live much more than 8 years after 65. I plan for 85 for me and 100 for my wife. (I'm only planning
for about 5 years more than the average in our family histories.)

No, I did not imply that one should not draw from a portfolio before age 65. What would one live one then, unless
one has a pension .

My plans have me withdrawing more from my portfolio before age 70 so that I can delay claiming SS, and to do
some travelling before we can't or no longer enjoy travel.

We will also have very low RMDs, as I plan on converting most of the tax deferred to Roth.
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SmileyFace
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Re: How much do you spend annually in retirement?

Post by SmileyFace »

investnoob wrote: Wed Apr 07, 2021 10:18 am The answers lead me to believe that any retirement spending over what I spend is "high on the hog." Anything less than that isn't. Interesting.
Similar to the fact that everyone going slower than me on the road driving is a slow-poke while everyone going faster is plain-old-crazy :)

For many $50K pays for taxes and medical expenses - then you have to eat.
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thursdaysd
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Re: How much do you spend annually in retirement?

Post by thursdaysd »

I was answering arf1410's post:

help me understand that one... I've been told to budget about $20k per year for health care ...

in that health care should not be $20K/yr. forever, maybe before age 65, but not after.
Again, this varies. I was fortunate to have both a pension and retiree medical, although the retiree medical is now just a $3,000/year contribution. Therefore my medical expenses are now considerably above what they were before 65, as I am on the "open market", plus I now need to take an expensive medication. My costs were $10,000 last year, not including the megacorp's $3,000, and that's as a single. I was already out of the drug plan "donut hole" and paying 5% of retail, in March.
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Marseille07
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Re: How much do you spend annually in retirement?

Post by Marseille07 »

help me understand that one... I've been told to budget about $20k per year for health care ...
This is very concerning. How accurate is this estimate? I took a quick look at ACA and I'm seeing premium pricing around 300/mo~500/mo w/o any subsidies. Do we really need to budget 20k/year? That'll derail planning for lots of people if true.
backpacker61
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Re: How much do you spend annually in retirement?

Post by backpacker61 »

bg5 wrote: Tue Apr 06, 2021 1:10 pm My gut tells me that $50,000 annually would be living "high on the hog" assuming all debts are paid off.
Not retired, but my "spreadsheet estimate" came to ~ 56K$/yr (house & vehicle paid off, MCOL area). This assumes a retirement before 65 and purchasing health insurance on an exchange.

Be sure to budget for replacing vehicles, house maintenance, and other large items that come up periodically.
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TheNightsToCome
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Re: How much do you spend annually in retirement?

Post by TheNightsToCome »

MathWizard wrote: Wed Apr 07, 2021 11:11 am
arf1410 wrote: Tue Apr 06, 2021 3:45 pm
iamblessed wrote: Tue Apr 06, 2021 3:42 pm
We live on 22k so 50k is high on the hog here in the Midwest.
help me understand that one... I've been told to budget about $20k per year for health care ...
Pre-Medicare is expensive.

The bulk of your retirement should be after 65.
For MFJ, the cost per person for Medicare part B is $148.50/month each, so $3564 for a couple.
This is an 80/20 plan, and does not cover things like dental, eyeglasses, hearing aids.
For myself and my wife, adding a (very nice) medigap plan that also covers prescriptions brings us to
a bit over $11K/yr. I also assume 2% inflation in health care costs over standard inflation,
but that still averages less than $20K/yr. Medicare Advantage plans would cost even less.
Thanks for the post-Medicare age data.
Marseille07
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Re: How much do you spend annually in retirement?

Post by Marseille07 »

Thank you. I'm sensing 20k/year is probably too high, but 10k/year is very much real. Sigh, another cause of OMY...
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MP123
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Re: How much do you spend annually in retirement?

Post by MP123 »

Marseille07 wrote: Wed Apr 07, 2021 2:53 pm
help me understand that one... I've been told to budget about $20k per year for health care ...
This is very concerning. How accurate is this estimate? I took a quick look at ACA and I'm seeing premium pricing around 300/mo~500/mo w/o any subsidies. Do we really need to budget 20k/year? That'll derail planning for lots of people if true.
ACA premiums are age based in almost all states, unlike employer provided insurance.

$300-500/mo unsubsidized might be about right for age 35-ish, but by late 50s early 60s will be much much higher, easily over $1000-1200 per person.

Don't plan on paying young people's premiums for the rest of your life, because you'll be a year older next year, and the next...

You can get full rate tables from most insurer's websites to help plan ahead.
Marseille07
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Re: How much do you spend annually in retirement?

Post by Marseille07 »

MP123 wrote: Wed Apr 07, 2021 7:25 pm
Marseille07 wrote: Wed Apr 07, 2021 2:53 pm
help me understand that one... I've been told to budget about $20k per year for health care ...
This is very concerning. How accurate is this estimate? I took a quick look at ACA and I'm seeing premium pricing around 300/mo~500/mo w/o any subsidies. Do we really need to budget 20k/year? That'll derail planning for lots of people if true.
ACA premiums are age based in almost all states, unlike employer provided insurance.

$300-500/mo unsubsidized might be about right for age 35-ish, but by late 50s early 60s will be much much higher, easily over $1000-1200 per person.

Don't plan on paying young people's premiums for the rest of your life, because you'll be a year older next year, and the next...

You can get full rate tables from most insurer's websites to help plan ahead.
That's kind of scary. Then maybe 20k/year per person estimate isn't that crazy after all. I'll call it 15k/year, thank you.
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MP123
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Re: How much do you spend annually in retirement?

Post by MP123 »

Marseille07 wrote: Wed Apr 07, 2021 7:35 pm
MP123 wrote: Wed Apr 07, 2021 7:25 pm
Marseille07 wrote: Wed Apr 07, 2021 2:53 pm
help me understand that one... I've been told to budget about $20k per year for health care ...
This is very concerning. How accurate is this estimate? I took a quick look at ACA and I'm seeing premium pricing around 300/mo~500/mo w/o any subsidies. Do we really need to budget 20k/year? That'll derail planning for lots of people if true.
ACA premiums are age based in almost all states, unlike employer provided insurance.

$300-500/mo unsubsidized might be about right for age 35-ish, but by late 50s early 60s will be much much higher, easily over $1000-1200 per person.

Don't plan on paying young people's premiums for the rest of your life, because you'll be a year older next year, and the next...

You can get full rate tables from most insurer's websites to help plan ahead.
That's kind of scary. Then maybe 20k/year per person estimate isn't that crazy after all. I'll call it 15k/year, thank you.
Also, ACA plans have high out of pocket maximums. Hopefully you won't hit them every year but in a bad year (or a few) you might need to pay at least $8-17k in addition to your premiums.

Its very hard to plan, and there are all sorts of possible future changes, but it's not cheap.
Marseille07
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Re: How much do you spend annually in retirement?

Post by Marseille07 »

MP123 wrote: Wed Apr 07, 2021 7:59 pm Also, ACA plans have high out of pocket maximums. Hopefully you won't hit them every year but in a bad year (or a few) you might need to pay at least $8-17k in addition to your premiums.

Its very hard to plan, and there are all sorts of possible future changes, but it's not cheap.
Right, though won't there be some subsidies to lower the cost later? I haven't looked too closely as to who qualifies for how much (probably depends on the plan / state).

I've budgeted 30K/year for travel, if SHTF I guess I'd need to slash travel for medical cost - which is probably reasonable, because travel cost & medical cost should have an inverse relationship.
Normchad
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Re: How much do you spend annually in retirement?

Post by Normchad »

Marseille07 wrote: Wed Apr 07, 2021 2:53 pm
help me understand that one... I've been told to budget about $20k per year for health care ...
This is very concerning. How accurate is this estimate? I took a quick look at ACA and I'm seeing premium pricing around 300/mo~500/mo w/o any subsidies. Do we really need to budget 20k/year? That'll derail planning for lots of people if true.
My wife and I are both 52. An ACA silver plan is $2K/month for us before any subsidies. Deductibles and co-pays are in top,of that.

We’ve priced it in a few different markets, and the prices have been consistent everywhere we’ve looked.

I’ve heard (but not verified) that these prices go up quickly with age. So if you priced it as a 40 year old,you might get a much lower price.
Marseille07
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Re: How much do you spend annually in retirement?

Post by Marseille07 »

Normchad wrote: Wed Apr 07, 2021 8:24 pm
Marseille07 wrote: Wed Apr 07, 2021 2:53 pm
help me understand that one... I've been told to budget about $20k per year for health care ...
This is very concerning. How accurate is this estimate? I took a quick look at ACA and I'm seeing premium pricing around 300/mo~500/mo w/o any subsidies. Do we really need to budget 20k/year? That'll derail planning for lots of people if true.
My wife and I are both 52. An ACA silver plan is $2K/month for us before any subsidies. Deductibles and co-pays are in top,of that.

We’ve priced it in a few different markets, and the prices have been consistent everywhere we’ve looked.

I’ve heard (but not verified) that these prices go up quickly with age. So if you priced it as a 40 year old,you might get a much lower price.
Thank you for sharing the numbers. Maybe I really need to budget 20k/year just to be on the safe side. I'll think about it with respect to my travel budget.
JS-Elcano
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Re: How much do you spend annually in retirement?

Post by JS-Elcano »

22twain wrote: Tue Apr 06, 2021 5:46 pm We're retired, late 60s / early 70s, in a small town in the South, with a paid-off house.

Last year we spent a total of about $53K, of which:

$8K income tax (fed + state)
$12K donations (charitable + political)
$7K Medicare premiums
$9K housing-related (utilities, property tax, insurance, maintenance)
$3K food (no eating out because of Covid)
$14K everything else (cars, new computers, hobbies, etc.)

If it hadn't been for Covid, we would have spent more for eating out and travel.

Only one of us is collecting Social Security and taking RMDs from tax-deferred accounts. After the other one starts in a few years, our tax bill will probably increase to about $30K.
3k for food. I don't know how you do this for two people. If I buy fresh vegetables, fruit, fish, meat, butter, eggs, cheese and a bottle of wine, that's $150 per week for one person while keeping an eye on the budget, not free-wheeling. $7200 per year. How do you keep it to 3K? If you don't mind, what does a weekly shopping list look like for you?
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celia
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Re: How much do you spend annually in retirement?

Post by celia »

I've seen a lot of Bogleheads who will have to withdrawn RMDs over $100K when they turn 72, unless they do HUGE Roth conversions before then. That doesn't mean they have to spend the RMD, but that they have to withdraw and pay taxes on it. Are taxes considered an expense? What about the extra taxes due because of a Roth conversions or an RMD?

Some people save on their RMD taxes by donating $100K per spouse to charity instead of putting it in their taxable account. Are charitable donations considered spending?

Even for a retiree with no health issues, Medicare premiums are $148/mo, supplemental insurance ~$200/mo, drug plan ~$50/mo for each of them (costs are partly dependent on where you live). So that alone is $9,552 for a couple who doesn't need to see a doctor. Then there are surcharges on Medicare premiums (Part B and Part D) for those with MAGI over $176K two year previously (aka IRMAA). Are Medicare premiums and surcharges counted as an expense?
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Re: How much do you spend annually in retirement?

Post by rossington »

celia wrote: Wed Apr 07, 2021 8:49 pm I've seen a lot of Bogleheads who will have to withdrawn RMDs over $100K when they turn 72, unless they do HUGE Roth conversions before then. That doesn't mean they have to spend the RMD, but that they have to withdraw and pay taxes on it. Are taxes considered an expense? What about the extra taxes due because of a Roth conversions or an RMD?

Some people save on their RMD taxes by donating $100K per spouse to charity instead of putting it in their taxable account. Are charitable donations considered spending?

Even for a retiree with no health issues, Medicare premiums are $148/mo, supplemental insurance ~$200/mo, drug plan ~$50/mo for each of them (costs are partly dependent on where you live). So that alone is $9,552 for a couple who doesn't need to see a doctor. Then there are surcharges on Medicare premiums (Part B and Part D) for those with MAGI over $176K two year previously (aka IRMAA). Are Medicare premiums and surcharges counted as an expense?
I know these are rhetorical questions but yes...if it is outgoing $$, it is an expense.
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Re: How much do you spend annually in retirement?

Post by stoptothink »

JS-Elcano wrote: Wed Apr 07, 2021 8:38 pm
22twain wrote: Tue Apr 06, 2021 5:46 pm We're retired, late 60s / early 70s, in a small town in the South, with a paid-off house.

Last year we spent a total of about $53K, of which:

$8K income tax (fed + state)
$12K donations (charitable + political)
$7K Medicare premiums
$9K housing-related (utilities, property tax, insurance, maintenance)
$3K food (no eating out because of Covid)
$14K everything else (cars, new computers, hobbies, etc.)

If it hadn't been for Covid, we would have spent more for eating out and travel.

Only one of us is collecting Social Security and taking RMDs from tax-deferred accounts. After the other one starts in a few years, our tax bill will probably increase to about $30K.
3k for food. I don't know how you do this for two people. If I buy fresh vegetables, fruit, fish, meat, butter, eggs, cheese and a bottle of wine, that's $150 per week for one person while keeping an eye on the budget, not free-wheeling. $7200 per year. How do you keep it to 3K? If you don't mind, what does a weekly shopping list look like for you?
We're at ~$4k/yr for a family of 4. We eat much differently than most families (wife and I intermittent fast, almost no processed food or "snacks", no alcohol, no expensive cuts of meat, ~3 dozen eggs a week (5 dozen is ~$5), lots and lots of bags of frozen veggies, 25lbs. bags of oat groats/brown rice, wife makes homemade sourdough bread and pancakes for kids, etc.); I'm similarly interested in what people who spend $150/week for an individual for just groceries (and say they are keeping an eye on budget) are eating at home? We shop about every 10-12 days and I'm not sure we've ever spent $150 in a single stop at the grocery store.

Is this Whole Foods, free range, organic, etc. or are you having a ribeye or Chilean sea bass filet every night for dinner?
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Re: How much do you spend annually in retirement?

Post by Marmot »

Marseille07 wrote: Wed Apr 07, 2021 2:53 pm
help me understand that one... I've been told to budget about $20k per year for health care ...
This is very concerning. How accurate is this estimate? I took a quick look at ACA and I'm seeing premium pricing around 300/mo~500/mo w/o any subsidies. Do we really need to budget 20k/year? That'll derail planning for lots of people if true.
We pay 20k a year for mega Corp retiree medical insurance. That being said it is good medical insurance as those thing go. Our choice, we could go ACA, but I could also drive a pinto.
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Marseille07
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Re: How much do you spend annually in retirement?

Post by Marseille07 »

stoptothink wrote: Thu Apr 08, 2021 7:35 am
JS-Elcano wrote: Wed Apr 07, 2021 8:38 pm
22twain wrote: Tue Apr 06, 2021 5:46 pm We're retired, late 60s / early 70s, in a small town in the South, with a paid-off house.

Last year we spent a total of about $53K, of which:

$8K income tax (fed + state)
$12K donations (charitable + political)
$7K Medicare premiums
$9K housing-related (utilities, property tax, insurance, maintenance)
$3K food (no eating out because of Covid)
$14K everything else (cars, new computers, hobbies, etc.)

If it hadn't been for Covid, we would have spent more for eating out and travel.

Only one of us is collecting Social Security and taking RMDs from tax-deferred accounts. After the other one starts in a few years, our tax bill will probably increase to about $30K.
3k for food. I don't know how you do this for two people. If I buy fresh vegetables, fruit, fish, meat, butter, eggs, cheese and a bottle of wine, that's $150 per week for one person while keeping an eye on the budget, not free-wheeling. $7200 per year. How do you keep it to 3K? If you don't mind, what does a weekly shopping list look like for you?
We're at ~$4k/yr for a family of 4. We eat much differently than most families (wife and I intermittent fast, almost no processed food or "snacks", no alcohol, no expensive cuts of meat, ~3 dozen eggs a week (5 dozen is ~$5), lots and lots of bags of frozen veggies, 25lbs. bags of oat groats/brown rice, wife makes homemade sourdough bread and pancakes for kids, etc.); I'm similarly interested in what people who spend $150/week for an individual for just groceries (and say they are keeping an eye on budget) are eating at home? We shop about every 10-12 days and I'm not sure we've ever spent $150 in a single stop at the grocery store.

Is this Whole Foods, free range, organic, etc. or are you having a ribeye or Chilean sea bass filet every night for dinner?
For those spending 150/wk, yeah. I don't know what they're complaining really, they're choosing to buy expensive foods.
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Re: How much do you spend annually in retirement?

Post by jeffyscott »

rossington wrote: Thu Apr 08, 2021 3:12 am
celia wrote: Wed Apr 07, 2021 8:49 pm I've seen a lot of Bogleheads who will have to withdrawn RMDs over $100K when they turn 72, unless they do HUGE Roth conversions before then. That doesn't mean they have to spend the RMD, but that they have to withdraw and pay taxes on it. Are taxes considered an expense? What about the extra taxes due because of a Roth conversions or an RMD?

Some people save on their RMD taxes by donating $100K per spouse to charity instead of putting it in their taxable account. Are charitable donations considered spending?

Even for a retiree with no health issues, Medicare premiums are $148/mo, supplemental insurance ~$200/mo, drug plan ~$50/mo for each of them (costs are partly dependent on where you live). So that alone is $9,552 for a couple who doesn't need to see a doctor. Then there are surcharges on Medicare premiums (Part B and Part D) for those with MAGI over $176K two year previously (aka IRMAA). Are Medicare premiums and surcharges counted as an expense?
I know these are rhetorical questions but yes...if it is outgoing $$, it is an expense.
Yes, but they are optional expenses or the timing is optional. And none of these expenses would have any impact on the OP's implied question, treating the "high on the hog" as hyperbole: "Can you live comfortably in retirement on $50K per year, assuming no debt?" (And I think the assumption is also that you own your home, that you are not paying rent out of that $50K...at least that was my assumption.)

I don't have to pay taxes on Roth conversions, if I don't do the conversions. Presumably one is doing the conversions in order to pay less tax now, rather than more tax later. Perhaps a better way to ask the, approximately equivalent after-tax, question would be something like: "Can you live comfortably on $45,000 per year, excluding income taxes?".

You can choose not to donate, if you want/need to use the money for something else, in order to attain you desired level on the hog.

You can choose less costly Medicare coverage, I think in many places you can get all the coverage for just the $148 per month in a Medicare advantage plan (assuming not subject to IRMAA and if you are living on $50K as the OP suggests, then you are not). But then maybe having Cadillac (or should the phrase now be "Tesla") coverage is part of being high on that old hog?
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Marseille07
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Re: How much do you spend annually in retirement?

Post by Marseille07 »

Marmot wrote: Thu Apr 08, 2021 7:54 am
Marseille07 wrote: Wed Apr 07, 2021 2:53 pm
help me understand that one... I've been told to budget about $20k per year for health care ...
This is very concerning. How accurate is this estimate? I took a quick look at ACA and I'm seeing premium pricing around 300/mo~500/mo w/o any subsidies. Do we really need to budget 20k/year? That'll derail planning for lots of people if true.
We pay 20k a year for mega Corp retiree medical insurance. That being said it is good medical insurance as those thing go. Our choice, we could go ACA, but I could also drive a pinto.
This is a good choice in my opinion. I will look if my company offers something like this and how much it might be.
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jeffyscott
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Re: How much do you spend annually in retirement?

Post by jeffyscott »

Marseille07 wrote: Thu Apr 08, 2021 8:01 am
Marmot wrote: Thu Apr 08, 2021 7:54 am
Marseille07 wrote: Wed Apr 07, 2021 2:53 pm
help me understand that one... I've been told to budget about $20k per year for health care ...
This is very concerning. How accurate is this estimate? I took a quick look at ACA and I'm seeing premium pricing around 300/mo~500/mo w/o any subsidies. Do we really need to budget 20k/year? That'll derail planning for lots of people if true.
We pay 20k a year for mega Corp retiree medical insurance. That being said it is good medical insurance as those thing go. Our choice, we could go ACA, but I could also drive a pinto.
This is a good choice in my opinion. I will look if my company offers something like this and how much it might be.
I also have the option to keep former employer coverage, it's free to me for a few years but after that (assuming not yet on Medicare) would be $1500-$1800 per month for family ($650-750 single) for HDHP. The non-HDHP would be even more, of course. So our insurance premiums for two would be about $20K and then there is $3000 deductible and $5000 max OOP to consider.

I will likely reach Medicare before the free ride ends and that reduces the premiums to around $1000-1200, not sure if we will do that or ACA for my spouse at that time (or maybe Medicare will be available at lower age by then).
The two greatest enemies of the equity fund investor are expenses and emotions. ― John C. Bogle
Marseille07
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Re: How much do you spend annually in retirement?

Post by Marseille07 »

jeffyscott wrote: Thu Apr 08, 2021 8:21 am
Marseille07 wrote: Thu Apr 08, 2021 8:01 am
Marmot wrote: Thu Apr 08, 2021 7:54 am
Marseille07 wrote: Wed Apr 07, 2021 2:53 pm
help me understand that one... I've been told to budget about $20k per year for health care ...
This is very concerning. How accurate is this estimate? I took a quick look at ACA and I'm seeing premium pricing around 300/mo~500/mo w/o any subsidies. Do we really need to budget 20k/year? That'll derail planning for lots of people if true.
We pay 20k a year for mega Corp retiree medical insurance. That being said it is good medical insurance as those thing go. Our choice, we could go ACA, but I could also drive a pinto.
This is a good choice in my opinion. I will look if my company offers something like this and how much it might be.
I also have the option to keep former employer coverage, it's free to me for a few years but after that (assuming not yet on Medicare) would be $1500-$1800 per month for family ($650-750 single) for HDHP. The non-HDHP would be even more, of course. So our insurance premiums for two would be about $20K and then there is $3000 deductible and $5000 max OOP to consider.

I will likely reach Medicare before the free ride ends and that reduces the premiums to around $1000-1200, not sure if we will do that or ACA for my spouse at that time (or maybe Medicare will be available at lower age by then).
Thank you for sharing the numbers. Keeping former employer coverage seems like a great way to go, if such an option is available. I hadn't explored this previously and will definitely do so.
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CyclingDuo
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Re: How much do you spend annually in retirement?

Post by CyclingDuo »

stoptothink wrote: Thu Apr 08, 2021 7:35 am
JS-Elcano wrote: Wed Apr 07, 2021 8:38 pm
22twain wrote: Tue Apr 06, 2021 5:46 pm We're retired, late 60s / early 70s, in a small town in the South, with a paid-off house.

Last year we spent a total of about $53K, of which:

$8K income tax (fed + state)
$12K donations (charitable + political)
$7K Medicare premiums
$9K housing-related (utilities, property tax, insurance, maintenance)
$3K food (no eating out because of Covid)
$14K everything else (cars, new computers, hobbies, etc.)

If it hadn't been for Covid, we would have spent more for eating out and travel.

Only one of us is collecting Social Security and taking RMDs from tax-deferred accounts. After the other one starts in a few years, our tax bill will probably increase to about $30K.
3k for food. I don't know how you do this for two people. If I buy fresh vegetables, fruit, fish, meat, butter, eggs, cheese and a bottle of wine, that's $150 per week for one person while keeping an eye on the budget, not free-wheeling. $7200 per year. How do you keep it to 3K? If you don't mind, what does a weekly shopping list look like for you?
We're at ~$4k/yr for a family of 4. We eat much differently than most families (wife and I intermittent fast, almost no processed food or "snacks", no alcohol, no expensive cuts of meat, ~3 dozen eggs a week (5 dozen is ~$5), lots and lots of bags of frozen veggies, 25lbs. bags of oat groats/brown rice, wife makes homemade sourdough bread and pancakes for kids, etc.); I'm similarly interested in what people who spend $150/week for an individual for just groceries (and say they are keeping an eye on budget) are eating at home? We shop about every 10-12 days and I'm not sure we've ever spent $150 in a single stop at the grocery store.

Is this Whole Foods, free range, organic, etc. or are you having a ribeye or Chilean sea bass filet every night for dinner?
The BLS data breaks it down into two categories (look up what BLS considers a household, as it is not just families of 4). One category is Food Away from Home for the entire year. Two is Food at Home for the entire year. $4K is within the realm of the Food at Home category, and is close to the average household food at home costs of $4643 (2019 latest year available):

https://www.bls.gov/opub/reports/consum ... 9/home.htm

However, the Food Away from Home average is $3526 for combination of the Food Category to be $8169 (2019 latest year available).

Your $4k for a family of four per year is below the realm of what the USDA even calls a thrifty plan. Perhaps a new category needs to be made known as super-thrifty. :beer

USDA breaks it down into thrifty, low-cost, moderate-cost, and liberal plan for individuals, couples, children, families of 4 etc... .

These are the latest plan totals at the time of this writing for a family of two, defined as a male and female between ages 19 and 50:

•Thrifty plan: $402.80 per month.

•Low-cost plan: $517.50 per month.

•Moderate-cost plan: $640.20 per month.

•Liberal plan: $800.70 per month.


That's just for a family or traditional couple ages between 19-50. At least focusing on a couple is perhaps more the norm in going with the OP's quest for how much one spends in retirement since we tend to think of the children being grown and out of the house come retirement age for the majority of us.

Nerd Wallet had an article last month regarding monthly/annual spend on groceries for Americans here:
https://www.nerdwallet.com/article/fina ... ss%20often.

Our household (of 2) is well into the Liberal Plan according to USDA, but we are foodies and love to cook. We also exercise hard and fuel the tanks for all of that. Plus, we like wine (although we have cut back on the amount and price we used to spend on it).

Latest monthly average spend on food costs from the USDA (month of February, 2021) is here:

https://fns-prod.azureedge.net/sites/de ... eb2021.pdf

Historical data is here:

https://www.fns.usda.gov/cnpp/usda-food ... ly-reports

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
delamer
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Re: How much do you spend annually in retirement?

Post by delamer »

celia wrote: Wed Apr 07, 2021 8:49 pm I've seen a lot of Bogleheads who will have to withdrawn RMDs over $100K when they turn 72, unless they do HUGE Roth conversions before then. That doesn't mean they have to spend the RMD, but that they have to withdraw and pay taxes on it. Are taxes considered an expense? What about the extra taxes due because of a Roth conversions or an RMD?

Some people save on their RMD taxes by donating $100K per spouse to charity instead of putting it in their taxable account. Are charitable donations considered spending?

Even for a retiree with no health issues, Medicare premiums are $148/mo, supplemental insurance ~$200/mo, drug plan ~$50/mo for each of them (costs are partly dependent on where you live). So that alone is $9,552 for a couple who doesn't need to see a doctor. Then there are surcharges on Medicare premiums (Part B and Part D) for those with MAGI over $176K two year previously (aka IRMAA). Are Medicare premiumsand surcharges counted as an expense?
A $100K RMD at age 72 means a $2.6 million IRA/401(k). Undoubtedly there are some on the forum who will have that amount, but I doubt that it’s very many. At that level of wealth or higher, in general, there’s a big component of taxable assets not subject to RMDs.

All the items you mentioned are expenses. But some are one-time or limited-time expenses, like Roth conversions. Others are core expenses to ensure basic health care, like Medicare and supplemental insurance premiums. And charitable giving is a discretionary expense; it can be varied without affecting lifestyle.

There are core expenses needed to cover costs of your basic needs — food, shelter, clothing, medical care, transportation. There are comfort expenses that are either more costly versions of your basic needs (Acura instead of Honda) or enjoyable activities (vacations, hobbies, etc,) or generosity to others. And then there are life-is-short expenses for indulgences. People’s income and personal preferences will determine where the lines get drawn between these expenses.

And there are always taxes.
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fishandgolf
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Re: How much do you spend annually in retirement?

Post by fishandgolf »

CyclingDuo wrote: Thu Apr 08, 2021 9:16 am
These are the latest plan totals at the time of this writing for a family of two, defined as a male and female between ages 19 and 50:

•Thrifty plan: $402.80 per month.

•Low-cost plan: $517.50 per month.

•Moderate-cost plan: $640.20 per month.

•Liberal plan: $800.70 per month.


That's just for a family or traditional couple ages between 19-50. At least focusing on a couple is perhaps more the norm in going with the OP's quest for how much one spends in retirement since we tend to think of the children being grown and out of the house come retirement age for the majority of us.

Our household (of 2) is well into the Liberal Plan according to USDA, but we are foodies and love to cook. We also exercise hard and fuel the tanks for all of that. Plus, we like wine (although we have cut back on the amount and price we used to spend on it).
CyclingDuo
DW and I are well into the Liberal Plan also. Very similar life style. We both walk ~5.0 miles every day...yes....every day! Love food....have a Traeger smoker and love cooking with it. Yep.....we like wine but usually buy the Black Box stuff.....$16.00 - $18.00 per box. Each box is equivalent to four (4) 750ML bottles.....that's <$5.00 per btl.....and it's really great wine! :sharebeer
quantAndHold
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Re: How much do you spend annually in retirement?

Post by quantAndHold »

Marseille07 wrote: Wed Apr 07, 2021 2:53 pm
help me understand that one... I've been told to budget about $20k per year for health care ...
This is very concerning. How accurate is this estimate? I took a quick look at ACA and I'm seeing premium pricing around 300/mo~500/mo w/o any subsidies. Do we really need to budget 20k/year? That'll derail planning for lots of people if true.
To calculate this for yourself, go onto your state’s ACA website, and plug in your location and look at the plans. A good proxy for your expenses would be the cost of the premiums, plus the full deductible. ACA plan premiums vary widely across the country. Also remember that as you age, the ACA premiums go up.

For me, in one of the lower cost areas (Southern California), a low cost bronze plan has $700/month premiums, and has a $7000 deductible. I go back and forth between keeping income low to get subsidies, and doing Roth conversions, so I don’t get nailed when I have to start taking RMD’s. I’m also super healthy, so I don’t spend the full deductible most years.

My wife’s Medicare is much cheaper.
Yes, I’m really that pedantic.
Marseille07
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Re: How much do you spend annually in retirement?

Post by Marseille07 »

quantAndHold wrote: Thu Apr 08, 2021 10:18 am
Marseille07 wrote: Wed Apr 07, 2021 2:53 pm
help me understand that one... I've been told to budget about $20k per year for health care ...
This is very concerning. How accurate is this estimate? I took a quick look at ACA and I'm seeing premium pricing around 300/mo~500/mo w/o any subsidies. Do we really need to budget 20k/year? That'll derail planning for lots of people if true.
To calculate this for yourself, go onto your state’s ACA website, and plug in your location and look at the plans. A good proxy for your expenses would be the cost of the premiums, plus the full deductible. ACA plan premiums vary widely across the country. Also remember that as you age, the ACA premiums go up.

For me, in one of the lower cost areas (Southern California), a low cost bronze plan has $700/month premiums, and has a $7000 deductible. I go back and forth between keeping income low to get subsidies, and doing Roth conversions, so I don’t get nailed when I have to start taking RMD’s. I’m also super healthy, so I don’t spend the full deductible most years.

My wife’s Medicare is much cheaper.
I see. So in your example, you'd estimate like 700/mo * 12 + 7000 = 15.4K? I think this is an excellent way to evaluate the plans. Will try it later today, thank you.
jebmke
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Re: How much do you spend annually in retirement?

Post by jebmke »

quantAndHold wrote: Thu Apr 08, 2021 10:18 am To calculate this for yourself, go onto your state’s ACA website, and plug in your location and look at the plans. A good proxy for your expenses would be the cost of the premiums, plus the full deductible. ACA plan premiums vary widely across the country. Also remember that as you age, the ACA premiums go up.
Also have to account for some things that are (typically) not covered by insurance. Dental, eye care and hearing aides can rack up significant out of pocket outlays for some.
When you discover that you are riding a dead horse, the best strategy is to dismount.
james22
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Re: How much do you spend annually in retirement?

Post by james22 »

Six months into retirement, I've been very surprised to find that I've not the time for some spending.

I'd planned on a boat, and thought about a (light sport) plane, but realize now I don't know if I've time to really enjoy them.

Too busy doing other things (running, biking, golfing, reading, etc.), most free.

Single, without dependents, I'd like to spend (enjoy) it all.

But withdrawing at only a little over 1% rate so far.

Nice, I guess, the diminished returns I get from spending, but surprising.

I can always choose the more expensive past time, but when equally fun, not much reason to.

Probably should have retired earlier.

At least I'll be able to afford any expensive life-extending technology. Or a wife.

Point is, maybe more difficult than you think to budget your discretionary expenses ahead of time.

Might get tired of travel, for example, and that expense goes away.

Conversely, might get hooked on an expensive hobby (racing) and blow your budget.
stoptothink
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Re: How much do you spend annually in retirement?

Post by stoptothink »

CyclingDuo wrote: Thu Apr 08, 2021 9:16 am
stoptothink wrote: Thu Apr 08, 2021 7:35 am
JS-Elcano wrote: Wed Apr 07, 2021 8:38 pm
22twain wrote: Tue Apr 06, 2021 5:46 pm We're retired, late 60s / early 70s, in a small town in the South, with a paid-off house.

Last year we spent a total of about $53K, of which:

$8K income tax (fed + state)
$12K donations (charitable + political)
$7K Medicare premiums
$9K housing-related (utilities, property tax, insurance, maintenance)
$3K food (no eating out because of Covid)
$14K everything else (cars, new computers, hobbies, etc.)

If it hadn't been for Covid, we would have spent more for eating out and travel.

Only one of us is collecting Social Security and taking RMDs from tax-deferred accounts. After the other one starts in a few years, our tax bill will probably increase to about $30K.
3k for food. I don't know how you do this for two people. If I buy fresh vegetables, fruit, fish, meat, butter, eggs, cheese and a bottle of wine, that's $150 per week for one person while keeping an eye on the budget, not free-wheeling. $7200 per year. How do you keep it to 3K? If you don't mind, what does a weekly shopping list look like for you?
We're at ~$4k/yr for a family of 4. We eat much differently than most families (wife and I intermittent fast, almost no processed food or "snacks", no alcohol, no expensive cuts of meat, ~3 dozen eggs a week (5 dozen is ~$5), lots and lots of bags of frozen veggies, 25lbs. bags of oat groats/brown rice, wife makes homemade sourdough bread and pancakes for kids, etc.); I'm similarly interested in what people who spend $150/week for an individual for just groceries (and say they are keeping an eye on budget) are eating at home? We shop about every 10-12 days and I'm not sure we've ever spent $150 in a single stop at the grocery store.

Is this Whole Foods, free range, organic, etc. or are you having a ribeye or Chilean sea bass filet every night for dinner?
The BLS data breaks it down into two categories (look up what BLS considers a household, as it is not just families of 4). One category is Food Away from Home for the entire year. Two is Food at Home for the entire year. $4K is within the realm of the Food at Home category, and is close to the average household food at home costs of $4643 (2019 latest year available):

https://www.bls.gov/opub/reports/consum ... 9/home.htm

However, the Food Away from Home average is $3526 for combination of the Food Category to be $8169 (2019 latest year available).

Your $4k for a family of four per year is below the realm of what the USDA even calls a thrifty plan. Perhaps a new category needs to be made known as super-thrifty. :beer

USDA breaks it down into thrifty, low-cost, moderate-cost, and liberal plan for individuals, couples, children, families of 4 etc... .

These are the latest plan totals at the time of this writing for a family of two, defined as a male and female between ages 19 and 50:

•Thrifty plan: $402.80 per month.

•Low-cost plan: $517.50 per month.

•Moderate-cost plan: $640.20 per month.

•Liberal plan: $800.70 per month.


That's just for a family or traditional couple ages between 19-50. At least focusing on a couple is perhaps more the norm in going with the OP's quest for how much one spends in retirement since we tend to think of the children being grown and out of the house come retirement age for the majority of us.

Nerd Wallet had an article last month regarding monthly/annual spend on groceries for Americans here:
https://www.nerdwallet.com/article/fina ... ss%20often.

Our household (of 2) is well into the Liberal Plan according to USDA, but we are foodies and love to cook. We also exercise hard and fuel the tanks for all of that. Plus, we like wine (although we have cut back on the amount and price we used to spend on it).

Latest monthly average spend on food costs from the USDA (month of February, 2021) is here:

https://fns-prod.azureedge.net/sites/de ... eb2021.pdf

Historical data is here:

https://www.fns.usda.gov/cnpp/usda-food ... ly-reports

CyclingDuo
Our food away from home category is <$100/yr. I haven't eaten at a restaurant in over 4yrs, my wife does maybe once every other month with a friend, my kids can't count on one hand how many times they've been in a restaurant in their life. But yes, I absolutely know families of similar size to ours who spend several times more a month just eating out. I remember when my brother looked at his CC end-of-year statement and realized that they were averaging over $1500/month at restaurants for a family of 4.
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LilyFleur
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Re: How much do you spend annually in retirement?

Post by LilyFleur »

Marseille07 wrote: Wed Apr 07, 2021 7:35 pm
MP123 wrote: Wed Apr 07, 2021 7:25 pm
Marseille07 wrote: Wed Apr 07, 2021 2:53 pm
help me understand that one... I've been told to budget about $20k per year for health care ...
This is very concerning. How accurate is this estimate? I took a quick look at ACA and I'm seeing premium pricing around 300/mo~500/mo w/o any subsidies. Do we really need to budget 20k/year? That'll derail planning for lots of people if true.
ACA premiums are age based in almost all states, unlike employer provided insurance.

$300-500/mo unsubsidized might be about right for age 35-ish, but by late 50s early 60s will be much much higher, easily over $1000-1200 per person.

Don't plan on paying young people's premiums for the rest of your life, because you'll be a year older next year, and the next...

You can get full rate tables from most insurer's websites to help plan ahead.
That's kind of scary. Then maybe 20k/year per person estimate isn't that crazy after all. I'll call it 15k/year, thank you.
My health insurance premiums run around $22,000 a year. I'm single, 61, with a chronic health care condition. So you see my pension which is around $50,000 doesn't cover everything. I still help my young adult children some; they are in graduate school. I took a part-time gig (self-employment, so I can deduct my health-care premiums), and work 16 to 20 hours a week just to pay for my health-care. I plan to start SS next year at age 62 so I will have to be careful about not earning too much but if I spill into the penalty rage just a bit it won't be too bad. In 2019, I did a $100,000 Roth conversion, and I may also do a substantial one again this year since I will start SS next year. The projected RMD calculations on my 401k were going to bump me into higher tax brackets than I'd ever been in before (single tax brackets are steep). I think my actual spend is around $72,000 (including property taxes but not state and federal income taxes). There is a $25,000 special assessment in my development this year, due in a month. My health care bill was lower when I was on COBRA... I'm hoping my job lasts until I start Medicare.
BigoteGato
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Re: How much do you spend annually in retirement?

Post by BigoteGato »

Marseille07 wrote: Wed Apr 07, 2021 2:53 pm
help me understand that one... I've been told to budget about $20k per year for health care ...
This is very concerning. How accurate is this estimate? I took a quick look at ACA and I'm seeing premium pricing around 300/mo~500/mo w/o any subsidies. Do we really need to budget 20k/year? That'll derail planning for lots of people if true.

I recently retired. Medicare costs are shocking. Part B alone is $475.20 for each of us. All in, with gap, drug, and COBRA for dental/vision we are above $21K/year for both of us.
BG
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22twain
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Re: How much do you spend annually in retirement?

Post by 22twain »

JS-Elcano wrote: Wed Apr 07, 2021 8:38 pm 3k for food. I don't know how you do this for two people. If I buy fresh vegetables, fruit, fish, meat, butter, eggs, cheese and a bottle of wine, that's $150 per week for one person while keeping an eye on the budget, not free-wheeling. $7200 per year. How do you keep it to 3K? If you don't mind, what does a weekly shopping list look like for you?
As I mentioned in another post, we buy most of our groceries at Aldi, with its generic brands. Someone else mentioned frozen veggies; we use a lot of those, too. We use fresh veggies mostly for simple side-salads. We don't eat much beef. Right now in the refrigerator there's a vacuum-packed sirloin tip steak for less than $8, which will probably be two dinners for the two of us. Chicken is usually frozen pre-cooked strips. A couple of days ago we used half a package of fresh pork cutlets (don't remember what it cost), and froze the rest for later. Last night we had Aldi's "shrimp and crab ravioli." We make chili regularly. Baked potatoes (sometimes mashed), rice, pasta. A while ago, Aldi had a special on their vacuum-packed smoked salmon, and we stocked up. Sometimes she makes an omelet or bakes a quiche.

Last fall she found a special on frozen turkeys, so she bought two of them, for Thanksgiving and Christmas. We have a separate freezer so we had enough room to store both of them for a few days. I think we finished the last of the leftover turkey soup/stew last week. :beer

We're not foodies, so preparation is simple. We usually eat dinner out of big bowls while reclining on the couch watching TV. Breakfast is oatmeal with frozen blueberries. Lunch for me (at home) is usually a cheese sandwich and an apple.
Last edited by 22twain on Thu Apr 08, 2021 2:22 pm, edited 1 time in total.
It's "Roth", not "ROTH". Senator William Roth was a person, not an acronym.
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LilyFleur
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Re: How much do you spend annually in retirement?

Post by LilyFleur »

jeffyscott wrote: Thu Apr 08, 2021 7:59 am
rossington wrote: Thu Apr 08, 2021 3:12 am
celia wrote: Wed Apr 07, 2021 8:49 pm I've seen a lot of Bogleheads who will have to withdrawn RMDs over $100K when they turn 72, unless they do HUGE Roth conversions before then. That doesn't mean they have to spend the RMD, but that they have to withdraw and pay taxes on it. Are taxes considered an expense? What about the extra taxes due because of a Roth conversions or an RMD?

Some people save on their RMD taxes by donating $100K per spouse to charity instead of putting it in their taxable account. Are charitable donations considered spending?

Even for a retiree with no health issues, Medicare premiums are $148/mo, supplemental insurance ~$200/mo, drug plan ~$50/mo for each of them (costs are partly dependent on where you live). So that alone is $9,552 for a couple who doesn't need to see a doctor. Then there are surcharges on Medicare premiums (Part B and Part D) for those with MAGI over $176K two year previously (aka IRMAA). Are Medicare premiums and surcharges counted as an expense?
I know these are rhetorical questions but yes...if it is outgoing $$, it is an expense.
Yes, but they are optional expenses or the timing is optional. And none of these expenses would have any impact on the OP's implied question, treating the "high on the hog" as hyperbole: "Can you live comfortably in retirement on $50K per year, assuming no debt?" (And I think the assumption is also that you own your home, that you are not paying rent out of that $50K...at least that was my assumption.)

I don't have to pay taxes on Roth conversions, if I don't do the conversions. Presumably one is doing the conversions in order to pay less tax now, rather than more tax later. Perhaps a better way to ask the, approximately equivalent after-tax, question would be something like: "Can you live comfortably on $45,000 per year, excluding income taxes?".

You can choose not to donate, if you want/need to use the money for something else, in order to attain you desired level on the hog.

You can choose less costly Medicare coverage, I think in many places you can get all the coverage for just the $148 per month in a Medicare advantage plan (assuming not subject to IRMAA and if you are living on $50K as the OP suggests, then you are not). But then maybe having Cadillac (or should the phrase now be "Tesla") coverage is part of being high on that old hog?
Health conditions become more prevalent as we age.

If expensive eye treatments in order to preserve my vision so I don't go blind (and have to pay for all the expenses that would accompany that), I'm all in for "high on the hog" Tesla health insurance. Higher premiums for the platinum plan means that more of my health-care expenses are deductible from my self-employment. By not going with a bronze plan, I pay a lot less out of pocket, which would not be an above-the-line tax deduction. A chronic health-care condition pretty much ensures that you will be going to the doctor(s) quite a bit throughout every year. Comparing life-and-death health-care situations (some of us would die without daily medications) with driving a Tesla is a false equivalency. As far as I know, a Tesla doesn't make a life-or-death difference to anyone's life.
Last edited by LilyFleur on Thu Apr 08, 2021 12:03 pm, edited 1 time in total.
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LilyFleur
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Re: How much do you spend annually in retirement?

Post by LilyFleur »

delamer wrote: Thu Apr 08, 2021 9:51 am
celia wrote: Wed Apr 07, 2021 8:49 pm I've seen a lot of Bogleheads who will have to withdrawn RMDs over $100K when they turn 72, unless they do HUGE Roth conversions before then. That doesn't mean they have to spend the RMD, but that they have to withdraw and pay taxes on it. Are taxes considered an expense? What about the extra taxes due because of a Roth conversions or an RMD?

Some people save on their RMD taxes by donating $100K per spouse to charity instead of putting it in their taxable account. Are charitable donations considered spending?

Even for a retiree with no health issues, Medicare premiums are $148/mo, supplemental insurance ~$200/mo, drug plan ~$50/mo for each of them (costs are partly dependent on where you live). So that alone is $9,552 for a couple who doesn't need to see a doctor. Then there are surcharges on Medicare premiums (Part B and Part D) for those with MAGI over $176K two year previously (aka IRMAA). Are Medicare premiumsand surcharges counted as an expense?
A $100K RMD at age 72 means a $2.6 million IRA/401(k). Undoubtedly there are some on the forum who will have that amount, but I doubt that it’s very many. At that level of wealth or higher, in general, there’s a big component of taxable assets not subject to RMDs.

All the items you mentioned are expenses. But some are one-time or limited-time expenses, like Roth conversions. Others are core expenses to ensure basic health care, like Medicare and supplemental insurance premiums. And charitable giving is a discretionary expense; it can be varied without affecting lifestyle.

There are core expenses needed to cover costs of your basic needs — food, shelter, clothing, medical care, transportation. There are comfort expenses that are either more costly versions of your basic needs (Acura instead of Honda) or enjoyable activities (vacations, hobbies, etc,) or generosity to others. And then there are life-is-short expenses for indulgences. People’s income and personal preferences will determine where the lines get drawn between these expenses.

And there are always taxes.
Perhaps. However, there is a very large group of retirees whose main assets are their 401k and their paid-for home. Many of them are in the million-dollar club because of the tax-free earnings over the years in their 401k.
Marseille07
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Re: How much do you spend annually in retirement?

Post by Marseille07 »

Thanks LilyFleur and BigoteGato. I'm sensing that 15K~25K per person is very much within the realm of possibility. I wish we had a single-payer healthcare system.
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celia
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Re: How much do you spend annually in retirement?

Post by celia »

Marseille07 wrote: Thu Apr 08, 2021 10:26 am
quantAndHold wrote: Thu Apr 08, 2021 10:18 am To calculate this for yourself, go onto your state’s ACA website, and plug in your location and look at the plans. A good proxy for your expenses would be the cost of the premiums, plus the full deductible. ACA plan premiums vary widely across the country. Also remember that as you age, the ACA premiums go up.

For me, in one of the lower cost areas (Southern California), a low cost bronze plan has $700/month premiums, and has a $7000 deductible. I go back and forth between keeping income low to get subsidies, and doing Roth conversions, so I don’t get nailed when I have to start taking RMD’s. I’m also super healthy, so I don’t spend the full deductible most years.

My wife’s Medicare is much cheaper.
I see. So in your example, you'd estimate like 700/mo * 12 + 7000 = 15.4K? I think this is an excellent way to evaluate the plans. Will try it later today, thank you.
Don’t forget that this is for one person.
jsapiandante
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Re: How much do you spend annually in retirement?

Post by jsapiandante »

I'm not retired yet. Still long ways away, actually. But I've been keeping track of our expenses the past 5 years and outside of our mortgage and discretionary expenses, we can get by quite easily on 30k per year for a family of 3 with some room to spare if things get really bad. We also live in a HCOL. Granted, I'm expecting our budget to increase as my son gets older (he's almost 4 years old). Our food budget has actually been increasing a bit since he's starting to eat more. What helped keep our food budget down is meal planning. We have been doing this since our son was born to manage our time better. My wife makes a menu on Sundays for the whole week (breakfast, lunch, and dinner) and I cook all the meals that day. It usually consists of 6 servings each of 3 main courses that we rotate between lunch and dinner. Breakfast is a rotation of oatmeal, cereal, and eggs and toast. We eat out once or twice a week if we consume all our food. Not only has this kept our grocery budget around $300-400 per month, but we've actually had zero waste since we implemented this system more than 3 years ago. Our utilities is $200-250 per month (this includes high speed internet and Netflix). Our property tax is what eats up our yearly spend at ~$9.5k per year now (it was $7k when we first moved in 6 years ago).
RetiredAL
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Re: How much do you spend annually in retirement?

Post by RetiredAL »

We have been retired 5 years. We have been doing quite fine on around 75-80K a year, not counting the year the roof was replaced. UHCOL area of CA but our mortgage has been long paid off. Our medicare part B, supplemental, and drug insurance costs are on par with my employment years medical insurance payroll deductions + deductibles + co-pays.
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celia
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Re: How much do you spend annually in retirement?

Post by celia »

Marseille07 wrote: Thu Apr 08, 2021 10:26 am
quantAndHold wrote: Thu Apr 08, 2021 10:18 am To calculate this for yourself, go onto your state’s ACA website, and plug in your location and look at the plans. A good proxy for your expenses would be the cost of the premiums, plus the full deductible. ACA plan premiums vary widely across the country. Also remember that as you age, the ACA premiums go up.

For me, in one of the lower cost areas (Southern California), a low cost bronze plan has $700/month premiums, and has a $7000 deductible. I go back and forth between keeping income low to get subsidies, and doing Roth conversions, so I don’t get nailed when I have to start taking RMD’s. I’m also super healthy, so I don’t spend the full deductible most years.

My wife’s Medicare is much cheaper.
I see. So in your example, you'd estimate like 700/mo * 12 + 7000 = 15.4K? I think this is an excellent way to evaluate the plans. Will try it later today, thank you.
Don’t forget that this is for one person.
Marseille07
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Re: How much do you spend annually in retirement?

Post by Marseille07 »

celia wrote: Thu Apr 08, 2021 1:09 pm
Marseille07 wrote: Thu Apr 08, 2021 10:26 am
quantAndHold wrote: Thu Apr 08, 2021 10:18 am To calculate this for yourself, go onto your state’s ACA website, and plug in your location and look at the plans. A good proxy for your expenses would be the cost of the premiums, plus the full deductible. ACA plan premiums vary widely across the country. Also remember that as you age, the ACA premiums go up.

For me, in one of the lower cost areas (Southern California), a low cost bronze plan has $700/month premiums, and has a $7000 deductible. I go back and forth between keeping income low to get subsidies, and doing Roth conversions, so I don’t get nailed when I have to start taking RMD’s. I’m also super healthy, so I don’t spend the full deductible most years.

My wife’s Medicare is much cheaper.
I see. So in your example, you'd estimate like 700/mo * 12 + 7000 = 15.4K? I think this is an excellent way to evaluate the plans. Will try it later today, thank you.
Don’t forget that this is for one person.
Yes, thank you. I'm still at the point of estimating, but my ballpark now is 10~15K per person.
delamer
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Re: How much do you spend annually in retirement?

Post by delamer »

LilyFleur wrote: Thu Apr 08, 2021 11:58 am
delamer wrote: Thu Apr 08, 2021 9:51 am
celia wrote: Wed Apr 07, 2021 8:49 pm I've seen a lot of Bogleheads who will have to withdrawn RMDs over $100K when they turn 72, unless they do HUGE Roth conversions before then. That doesn't mean they have to spend the RMD, but that they have to withdraw and pay taxes on it. Are taxes considered an expense? What about the extra taxes due because of a Roth conversions or an RMD?

Some people save on their RMD taxes by donating $100K per spouse to charity instead of putting it in their taxable account. Are charitable donations considered spending?

Even for a retiree with no health issues, Medicare premiums are $148/mo, supplemental insurance ~$200/mo, drug plan ~$50/mo for each of them (costs are partly dependent on where you live). So that alone is $9,552 for a couple who doesn't need to see a doctor. Then there are surcharges on Medicare premiums (Part B and Part D) for those with MAGI over $176K two year previously (aka IRMAA). Are Medicare premiumsand surcharges counted as an expense?
A $100K RMD at age 72 means a $2.6 million IRA/401(k). Undoubtedly there are some on the forum who will have that amount, but I doubt that it’s very many. At that level of wealth or higher, in general, there’s a big component of taxable assets not subject to RMDs.

All the items you mentioned are expenses. But some are one-time or limited-time expenses, like Roth conversions. Others are core expenses to ensure basic health care, like Medicare and supplemental insurance premiums. And charitable giving is a discretionary expense; it can be varied without affecting lifestyle.

There are core expenses needed to cover costs of your basic needs — food, shelter, clothing, medical care, transportation. There are comfort expenses that are either more costly versions of your basic needs (Acura instead of Honda) or enjoyable activities (vacations, hobbies, etc,) or generosity to others. And then there are life-is-short expenses for indulgences. People’s income and personal preferences will determine where the lines get drawn between these expenses.

And there are always taxes.
Perhaps. However, there is a very large group of retirees whose main assets are their 401k and their paid-for home. Many of them are in the million-dollar club because of the tax-free earnings over the years in their 401k.
By age 72, those retirees with 401(k)s will have to start withdrawals that most of them will pay taxes on. Especially those in the $1 million club.

So while some retirees will pay very little (or even $0), most will need an expense line to cover federal/state/local income taxes. And that’s even if they reinvest the RMD.
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LilyFleur
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Re: How much do you spend annually in retirement?

Post by LilyFleur »

delamer wrote: Thu Apr 08, 2021 3:28 pm
LilyFleur wrote: Thu Apr 08, 2021 11:58 am
delamer wrote: Thu Apr 08, 2021 9:51 am
celia wrote: Wed Apr 07, 2021 8:49 pm I've seen a lot of Bogleheads who will have to withdrawn RMDs over $100K when they turn 72, unless they do HUGE Roth conversions before then. That doesn't mean they have to spend the RMD, but that they have to withdraw and pay taxes on it. Are taxes considered an expense? What about the extra taxes due because of a Roth conversions or an RMD?

Some people save on their RMD taxes by donating $100K per spouse to charity instead of putting it in their taxable account. Are charitable donations considered spending?

Even for a retiree with no health issues, Medicare premiums are $148/mo, supplemental insurance ~$200/mo, drug plan ~$50/mo for each of them (costs are partly dependent on where you live). So that alone is $9,552 for a couple who doesn't need to see a doctor. Then there are surcharges on Medicare premiums (Part B and Part D) for those with MAGI over $176K two year previously (aka IRMAA). Are Medicare premiumsand surcharges counted as an expense?
A $100K RMD at age 72 means a $2.6 million IRA/401(k). Undoubtedly there are some on the forum who will have that amount, but I doubt that it’s very many. At that level of wealth or higher, in general, there’s a big component of taxable assets not subject to RMDs.

All the items you mentioned are expenses. But some are one-time or limited-time expenses, like Roth conversions. Others are core expenses to ensure basic health care, like Medicare and supplemental insurance premiums. And charitable giving is a discretionary expense; it can be varied without affecting lifestyle.

There are core expenses needed to cover costs of your basic needs — food, shelter, clothing, medical care, transportation. There are comfort expenses that are either more costly versions of your basic needs (Acura instead of Honda) or enjoyable activities (vacations, hobbies, etc,) or generosity to others. And then there are life-is-short expenses for indulgences. People’s income and personal preferences will determine where the lines get drawn between these expenses.

And there are always taxes.
Perhaps. However, there is a very large group of retirees whose main assets are their 401k and their paid-for home. Many of them are in the million-dollar club because of the tax-free earnings over the years in their 401k.
By age 72, those retirees with 401(k)s will have to start withdrawals that most of them will pay taxes on. Especially those in the $1 million club.

So while some retirees will pay very little (or even $0), most will need an expense line to cover federal/state/local income taxes. And that’s even if they reinvest the RMD.
Exactly. I am grateful to this forum for helping me to see how important tax planning is for retirement.
UpperNwGuy
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Re: How much do you spend annually in retirement?

Post by UpperNwGuy »

bg5 wrote: Tue Apr 06, 2021 1:10 pm I know that there are alot of variables such as cost of living but I am curious what people spend annually in retirement.

My gut tells me that $50,000 annually would be living "high on the hog" assuming all debts are paid off.
That's crazy talk! $50,000 is nothing in a high cost of living area. I spend nearly double that amount (including taxes). You must live in a very low cost of living area.
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