Retirees spending question

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Mr.BB
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Retirees spending question

Post by Mr.BB »

For those who have retired ,do you find that you spend less or more money then before you retired?
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chipperd
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Re: Retirees spending question

Post by chipperd »

Roughly the same
Chip
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Re: Retirees spending question

Post by Chip »

19 years of retirement. 15-20% higher spending. This doesn't count income taxes, which are much lower.

There is more time to do things that cost money.

Edit: Clarify re income taxes.
Last edited by Chip on Mon Sep 28, 2020 4:03 am, edited 1 time in total.
flaccidsteele
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Re: Retirees spending question

Post by flaccidsteele »

Mr.BB wrote: Sun Sep 27, 2020 12:06 pm For those who have retired ,do you find that you spend less or more money then before you retired?
More. My daughter is in elementary school and I’m spending more as they get older
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
Gnirk
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Re: Retirees spending question

Post by Gnirk »

We had been spending more because of travel and dining out. We are now spending less because of Covid.
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celia
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Re: Retirees spending question

Post by celia »

We now spend a little less than the 5 years prior to retirement (no commuting, office clothes, eating lunches out) and much less than 10 years prior to retirement (when there was a mortgage, kids in private schools and college).
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Re: Retirees spending question

Post by jebmke »

Less. My income taxes are a fraction of what I paid when I was working.
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22twain
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Re: Retirees spending question

Post by 22twain »

Our lifestyle expenses (housing, food, cars, hobbies, travel) so far are about the same, except for reduced (eliminated!) travel due to the pandemic.

Medical expenses went up by abour $7K per year when we switched from low-cost employer-sponsored health insurance to Medicare.

Our income taxes dropped significantly, then increased part-way when one of us started taking RMDs and collecting Social Security at age 70. After the other one starts SS and RMDs in a few years, taxes will be about the same as when we were still working.

Work-related expenses (commuting, clothing, two-martini lunches, etc.) were not an issue for us, as small-town small-college professors who lived within walking distance of campus.
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MikeG62
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Re: Retirees spending question

Post by MikeG62 »

Considerably more due to (1) travel and entertainment and (2) health care costs.

I’d add as well that while working we lived well below our means (saving for retirement). In retirement, we are living up to the level of our means.
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JoeRetire
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Re: Retirees spending question

Post by JoeRetire »

Mr.BB wrote: Sun Sep 27, 2020 12:06 pm For those who have retired ,do you find that you spend less or more money then before you retired?
About the same so far.
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Chuck107
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Re: Retirees spending question

Post by Chuck107 »

.....
Last edited by Chuck107 on Sun Oct 04, 2020 6:13 pm, edited 1 time in total.
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Broken Man 1999
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Re: Retirees spending question

Post by Broken Man 1999 »

I took my pension in 2015, DW took her SS same year.

For the last few years, we have spent more, due to remodeling projects. The most expensive ones are completed, and even though we had a bath remodel this year, we spent substantially less than in 2018 and 2019.

So, more spending for a couple of years; around $30K less this year and probably trending down some more in 2021.

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Toons
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Re: Retirees spending question

Post by Toons »

As Father Time
Tick Tocks,
Less is spent. :happy
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Chip
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Re: Retirees spending question

Post by Chip »

jebmke wrote: Sun Sep 27, 2020 2:57 pm Less. My income taxes are a fraction of what I paid when I was working.
I should qualify my post. My 15-20% higher spending number is without considering income taxes.
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Sheepdog
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Re: Retirees spending question

Post by Sheepdog »

Twenty two years retired. I have maintained our spending history. This spending history includes everything, taxes and donations included, but taxes have been very low or non existent since the 4th year after retiring. Donations were more the last 5 years, but vacation spending was more in the first 15 years.

5 year period average spending: (retired 1998)
1999-2003 57,850
2004-2008 59,020
2009-2013 67,514
2014-2019 70,800 (note 6 years average)
Last edited by Sheepdog on Mon Sep 28, 2020 6:02 am, edited 1 time in total.
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Wanderingwheelz
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Re: Retirees spending question

Post by Wanderingwheelz »

flaccidsteele wrote: Sun Sep 27, 2020 12:42 pm
Mr.BB wrote: Sun Sep 27, 2020 12:06 pm For those who have retired ,do you find that you spend less or more money then before you retired?
More. My daughter is in elementary school and I’m spending more as they get older
If you have earned income, you’re not retired. I can recall reading a post of yours where you described how you maintain a blog that earns income. Perhaps I’m mistaken, so my apologies in advance if I am.

I’m going to retire at the end of the year, but my wife has a career that she loves and earns a high income. So, I don’t consider myself retired in the typical sense of the word. We just made the choice to reduce our household income for more time to do the things we have been putting off.
flaccidsteele
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Re: Retirees spending question

Post by flaccidsteele »

Wanderingwheelz wrote: Mon Sep 28, 2020 6:01 am
flaccidsteele wrote: Sun Sep 27, 2020 12:42 pm
Mr.BB wrote: Sun Sep 27, 2020 12:06 pm For those who have retired ,do you find that you spend less or more money then before you retired?
More. My daughter is in elementary school and I’m spending more as they get older
If you have earned income, you’re not retired. I can recall reading a post of yours where you described how you maintain a blog that earns income. Perhaps I’m mistaken, so my apologies in advance if I am.

I’m going to retire at the end of the year, but my wife has a career that she loves and earns a high income. So, I don’t consider myself retired in the typical sense of the word. We just made the choice to reduce our household income for more time to do the things we have been putting off.
I have passive income from rental property

I do not maintain a blog nor do I have non-passive income

I retired in my 40s. Kids get more expensive as they age, so my costs in retirement are going up; offset by the lack of travel because of the virus crisis
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
Wanderingwheelz
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Re: Retirees spending question

Post by Wanderingwheelz »

flaccidsteele wrote: Mon Sep 28, 2020 7:22 am
Wanderingwheelz wrote: Mon Sep 28, 2020 6:01 am
flaccidsteele wrote: Sun Sep 27, 2020 12:42 pm
Mr.BB wrote: Sun Sep 27, 2020 12:06 pm For those who have retired ,do you find that you spend less or more money then before you retired?
More. My daughter is in elementary school and I’m spending more as they get older
If you have earned income, you’re not retired. I can recall reading a post of yours where you described how you maintain a blog that earns income. Perhaps I’m mistaken, so my apologies in advance if I am.

I’m going to retire at the end of the year, but my wife has a career that she loves and earns a high income. So, I don’t consider myself retired in the typical sense of the word. We just made the choice to reduce our household income for more time to do the things we have been putting off.
I have passive income from rental property

I do not maintain a blog nor do I have non-passive income

I retired in my 40s. Kids get more expensive as they age, so my costs in retirement are going up; offset by the lack of travel because of the virus crisis
Is your wife retired too?

I recall you saying you maintain a site with 50,000 followers that you regularly post FIRE content for, and I was mistakenly assuming you were culling a stream of income for your time and energy spent. I shouldn’t have assumed anything.
flaccidsteele
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Re: Retirees spending question

Post by flaccidsteele »

Wanderingwheelz wrote: Mon Sep 28, 2020 8:20 am
flaccidsteele wrote: Mon Sep 28, 2020 7:22 am
Wanderingwheelz wrote: Mon Sep 28, 2020 6:01 am
flaccidsteele wrote: Sun Sep 27, 2020 12:42 pm
Mr.BB wrote: Sun Sep 27, 2020 12:06 pm For those who have retired ,do you find that you spend less or more money then before you retired?
More. My daughter is in elementary school and I’m spending more as they get older
If you have earned income, you’re not retired. I can recall reading a post of yours where you described how you maintain a blog that earns income. Perhaps I’m mistaken, so my apologies in advance if I am.

I’m going to retire at the end of the year, but my wife has a career that she loves and earns a high income. So, I don’t consider myself retired in the typical sense of the word. We just made the choice to reduce our household income for more time to do the things we have been putting off.
I have passive income from rental property

I do not maintain a blog nor do I have non-passive income

I retired in my 40s. Kids get more expensive as they age, so my costs in retirement are going up; offset by the lack of travel because of the virus crisis
Is your wife retired too?

I recall you saying you maintain a site with 50,000 followers that you regularly post FIRE content for, and I was mistakenly assuming you were culling a stream of income for your time and energy spent. I shouldn’t have assumed anything.
I post on social media just like I post here

Gaining followers on social media is easy. Post content that the market wants, and people follow. Apparently the marketplace likes my content on financial literacy and financial freedom 🤷‍♂️

If you consider posting here a job, then I suppose we’re both working

Bogleheads tactics are simple but not broadly known or followed

Wife is retired. But doesn’t like social media. Prefers to watch Amazon Prime and Netflix since we can’t travel
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
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jeffyscott
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Re: Retirees spending question

Post by jeffyscott »

Excluding income taxes, probably about the same. Definitely less right now, but probably close to the same in normal times.

With no mortgage and not spending a lot on a regular basis either before or after retirement, when we have large, lumpy expenses they dominate all other spending. Before retirement we had a year where we replaced HVAC and all flooring in the house, post retirement we bought a new car. I am not considering those as representative of regular, normal spending for the years in which they happened to occur.

I don't think it makes sense to include income taxes. Our income taxes now include the taxes on Roth conversions, which are basically paying taxes now for the pre-tax contributions made to retirement accounts while working.
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WoodSpinner
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Re: Retirees spending question

Post by WoodSpinner »

OP,

I retired at 58 and my wife at 57.

We are spending more, largely due to travel, RVing and TAXES!

Roth conversions are the largest driver of our tax rates at this point.

2020 has been a strange year, travel is down due to Covid-19 and all the fires (I am in N. California) and my wife’s family just had to evacuate AGAIN! Gifting to family is up this year to roughly balance expenses.

We have been very fortunate.....

WoodSpinner
smitcat
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Re: Retirees spending question

Post by smitcat »

flaccidsteele wrote: Mon Sep 28, 2020 7:22 am
Wanderingwheelz wrote: Mon Sep 28, 2020 6:01 am
flaccidsteele wrote: Sun Sep 27, 2020 12:42 pm
Mr.BB wrote: Sun Sep 27, 2020 12:06 pm For those who have retired ,do you find that you spend less or more money then before you retired?
More. My daughter is in elementary school and I’m spending more as they get older
If you have earned income, you’re not retired. I can recall reading a post of yours where you described how you maintain a blog that earns income. Perhaps I’m mistaken, so my apologies in advance if I am.

I’m going to retire at the end of the year, but my wife has a career that she loves and earns a high income. So, I don’t consider myself retired in the typical sense of the word. We just made the choice to reduce our household income for more time to do the things we have been putting off.
I have passive income from rental property

I do not maintain a blog nor do I have non-passive income

I retired in my 40s. Kids get more expensive as they age, so my costs in retirement are going up; offset by the lack of travel because of the virus crisis
Does your wife work now?
rich126
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Re: Retirees spending question

Post by rich126 »

Looking at the responses it seems like those that spend more, it is largely because of having additional money available to do so and on discretionary items and not stuff that was needed. Which makes sense and you might as well do it while you can.
flaccidsteele
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Re: Retirees spending question

Post by flaccidsteele »

smitcat wrote: Mon Sep 28, 2020 10:34 am
flaccidsteele wrote: Mon Sep 28, 2020 7:22 am
Wanderingwheelz wrote: Mon Sep 28, 2020 6:01 am
flaccidsteele wrote: Sun Sep 27, 2020 12:42 pm
Mr.BB wrote: Sun Sep 27, 2020 12:06 pm For those who have retired ,do you find that you spend less or more money then before you retired?
More. My daughter is in elementary school and I’m spending more as they get older
If you have earned income, you’re not retired. I can recall reading a post of yours where you described how you maintain a blog that earns income. Perhaps I’m mistaken, so my apologies in advance if I am.

I’m going to retire at the end of the year, but my wife has a career that she loves and earns a high income. So, I don’t consider myself retired in the typical sense of the word. We just made the choice to reduce our household income for more time to do the things we have been putting off.
I have passive income from rental property

I do not maintain a blog nor do I have non-passive income

I retired in my 40s. Kids get more expensive as they age, so my costs in retirement are going up; offset by the lack of travel because of the virus crisis
Does your wife work now?
No

NB:Market timing the credit crisis set us free to retire in our 40s

NB2: I have 50k followers on social media because I’ve demonstrated that financial freedom is as simple as my sig
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
smitcat
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Re: Retirees spending question

Post by smitcat »

flaccidsteele wrote: Mon Sep 28, 2020 11:19 am
smitcat wrote: Mon Sep 28, 2020 10:34 am
flaccidsteele wrote: Mon Sep 28, 2020 7:22 am
Wanderingwheelz wrote: Mon Sep 28, 2020 6:01 am
flaccidsteele wrote: Sun Sep 27, 2020 12:42 pm

More. My daughter is in elementary school and I’m spending more as they get older
If you have earned income, you’re not retired. I can recall reading a post of yours where you described how you maintain a blog that earns income. Perhaps I’m mistaken, so my apologies in advance if I am.

I’m going to retire at the end of the year, but my wife has a career that she loves and earns a high income. So, I don’t consider myself retired in the typical sense of the word. We just made the choice to reduce our household income for more time to do the things we have been putting off.
I have passive income from rental property

I do not maintain a blog nor do I have non-passive income

I retired in my 40s. Kids get more expensive as they age, so my costs in retirement are going up; offset by the lack of travel because of the virus crisis
Does your wife work now?
No

NB:Market timing the credit crisis set us free to retire in our 40s

NB2: I have 50k followers on social media because I’ve demonstrated that financial freedom is as simple as my sig
That is great - then you have plenty of time to do all sorts of activities, no reason for covid to slow you down.
flaccidsteele
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Re: Retirees spending question

Post by flaccidsteele »

smitcat wrote: Mon Sep 28, 2020 11:30 am
flaccidsteele wrote: Mon Sep 28, 2020 11:19 am
smitcat wrote: Mon Sep 28, 2020 10:34 am
flaccidsteele wrote: Mon Sep 28, 2020 7:22 am
Wanderingwheelz wrote: Mon Sep 28, 2020 6:01 am

If you have earned income, you’re not retired. I can recall reading a post of yours where you described how you maintain a blog that earns income. Perhaps I’m mistaken, so my apologies in advance if I am.

I’m going to retire at the end of the year, but my wife has a career that she loves and earns a high income. So, I don’t consider myself retired in the typical sense of the word. We just made the choice to reduce our household income for more time to do the things we have been putting off.
I have passive income from rental property

I do not maintain a blog nor do I have non-passive income

I retired in my 40s. Kids get more expensive as they age, so my costs in retirement are going up; offset by the lack of travel because of the virus crisis
Does your wife work now?
No

NB:Market timing the credit crisis set us free to retire in our 40s

NB2: I have 50k followers on social media because I’ve demonstrated that financial freedom is as simple as my sig
That is great - then you have plenty of time to do all sorts of activities, no reason for covid to slow you down.
It hasn’t. Child won’t let us slow down. Kid has activities! But as far as the topic of this thread is concerned, expenses are rising in retirement because of this
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
ychuck46
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Re: Retirees spending question

Post by ychuck46 »

Retired for six years now. We spend less. You'll be amazed how much living you can fit in (traveling, entertainment, eating out, etc) at a lower cost than when you were working and perhaps less inclined to look for the absolute best deals. Plus we have zero debt now that a home equity line we took out is paid off. Bottom line - our expenses are lower and our financial assets are growing, even with all our travels during the year.
marcopolo
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Re: Retirees spending question

Post by marcopolo »

Our day to day living expenses have gone up some due to moving to a much higher cost of living place (Hawaii).
Travel and entertainment costs were higher until Covid.
The biggest hit was a one-time expense of building a house here and moving.

All the increased spending is actually a little below what we planned so far.
Once in a while you get shown the light, in the strangest of places if you look at it right.
rixer
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Re: Retirees spending question

Post by rixer »

I spend more. I was always saving money before retirement but that ship has sailed. Of course this year has been different because of covid.
chuckb84
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Re: Retirees spending question

Post by chuckb84 »

About 80% of what we were spending pre retirement. We moved to a lower cost area, got a bigger/better house for less money :) and we're done with supporting our kids in college. Although we're spending 20% less, it feels like we have more disposable income....because we do!
lws
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Re: Retirees spending question

Post by lws »

Less. Much less.
DetroitRick
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Re: Retirees spending question

Post by DetroitRick »

No, adjusted for inflation I'm spending nearly the same. I was a conservative spender pre-retirement (although not by Boglehead standards) and still am. That being said, total spending now is roughly the same as my last 5 working years (inflation-adjusted, of course).

While total is similar, the mix is slightly different:
Less: clothing (still had to cover suits before retirement, way different now), charitable giving (flexes with income), home repair (I do more myself), lunch costs (eating out then, eating in now).
More: medical including insurance (not a lot, but we got older), groceries by a little bit (because I travelled more pre-retirement), entertainment-related.

My commuting-related costs were trivial in the last half of my career (coincidentally lived really close to work, opposite of first half of my career), so no change now as I drive about the same.
Had a widely generous travel and entertainment allowance during later working years, but reduced that activity in retirement anyway. Increase in my personal portion is fairly small.
Other stuff is more situational - major home improvements, new vehicle, trips. Varies without pattern from year-to-year. Same as pre-retirement.

Saving for retirement went way down, for obvious reasons. While we still do occasional IRA contributions now (a bit of earned income), but nothing like 401(k) contributions while working.

Edited to add - forgot a BIG one that decreased. Taxes. Because of lower income and no FICA, more flexibility in income recognition (IRA vs. Roth, Savings vs. IRA), more time for tax planning, and the simple fact that marginal rates have declined for me.
michaeljc70
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Re: Retirees spending question

Post by michaeljc70 »

Sheepdog wrote: Mon Sep 28, 2020 5:53 am Twenty two years retired. I have maintained our spending history. This spending history includes everything, taxes and donations included, but taxes have been very low or non existent since the 4th year after retiring. Donations were more the last 5 years, but vacation spending was more in the first 15 years.

5 year period average spending: (retired 1998)
1999-2003 57,850
2004-2008 59,020
2009-2013 67,514
2014-2019 70,800 (note 6 years average)
How much of the increased spending can be attributed to healthcare? I could see that potentially being much of it....according to the BLS medical care is up 98% from 1999 to 2019. Medicare probably shields you from much of that, but premiums for supplements increase as you get older and of course you tend to need more healthcare as you get older.
alibaba123
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Re: Retirees spending question

Post by alibaba123 »

To those that have retired, do you find that the often-cited inflation number of ~2% is accurate?
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vitaflo
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Re: Retirees spending question

Post by vitaflo »

Sheepdog wrote: Mon Sep 28, 2020 5:53 am Twenty two years retired. I have maintained our spending history. This spending history includes everything, taxes and donations included, but taxes have been very low or non existent since the 4th year after retiring. Donations were more the last 5 years, but vacation spending was more in the first 15 years.

5 year period average spending: (retired 1998)
1999-2003 57,850
2004-2008 59,020
2009-2013 67,514
2014-2019 70,800 (note 6 years average)
Adjusted for inflation (using CPI for middle year of 5 year period):
1999-2003 85,094
2004-2008 76,017
2009-2013 77,759
2014-2019 76,221

So, like other posters, more at first, then less and pretty even moving forward.
MikeG62
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Re: Retirees spending question

Post by MikeG62 »

alibaba123 wrote: Tue Sep 29, 2020 9:26 am To those that have retired, do you find that the often-cited inflation number of ~2% is accurate?
It is hard to say since some items are difficult to track in that manner (such as spend on groceries or clothing or restaurants pr T&E). You can do it only for certain expense categories like real estate taxes, home utilities, cable/internet, cell phone, insurance, health insurance premiums, landscaper, etc. However, that leaves a lot of dollars where it cannot be tracked so easily. A large % of our spend is discretionary so it's difficult for us and I track spend pretty granularly.

We are following a WD strategy which assumes we increase our spend budget by the prior years rate of inflation. However, in years where we underspend the budget (typically due to underspend on T&E) I have not been putting in the inflationary increase for the upcoming year. Just adds a bit more conservatism to our modeling.
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TravelforFun
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Re: Retirees spending question

Post by TravelforFun »

Retired last year and we've been spending more mostly due to upgrading the home and catching up with various personal projects. That's what happens when you have more time. Luckily, our portfolio has grown instead of shrunk.

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2pedals
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Re: Retirees spending question

Post by 2pedals »

vitaflo wrote: Tue Sep 29, 2020 9:38 am
Sheepdog wrote: Mon Sep 28, 2020 5:53 am Twenty two years retired. I have maintained our spending history. This spending history includes everything, taxes and donations included, but taxes have been very low or non existent since the 4th year after retiring. Donations were more the last 5 years, but vacation spending was more in the first 15 years.

5 year period average spending: (retired 1998)
1999-2003 57,850
2004-2008 59,020
2009-2013 67,514
2014-2019 70,800 (note 6 years average)
Adjusted for inflation (using CPI for middle year of 5 year period):
1999-2003 85,094
2004-2008 76,017
2009-2013 77,759
2014-2019 76,221

So, like other posters, more at first, then less and pretty even moving forward.
Thanks for sharing. what is # of people in household, 2?
MathIsMyWayr
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Re: Retirees spending question

Post by MathIsMyWayr »

jebmke wrote: Sun Sep 27, 2020 2:57 pm Less. My income taxes are a fraction of what I paid when I was working.
Income taxes are a part of expenses, but I would not call taxes spending. Taxes are largely beyond my control.
Rudedog
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Re: Retirees spending question

Post by Rudedog »

Much less. Driving less, eating out less, kids out on their own, mortgage paid off, don't buy new clothes, think carefully about most purchases. We need to get rid of cable TV, specifically Comcast, but wife won't agree to it. Biggest expenses are property taxes and health insurance premiums.
IowaFarmBoy
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Re: Retirees spending question

Post by IowaFarmBoy »

I've been retired three months so very limited experience. In our planning, our main goal was to maintain our current standard of living. I increased our planned expenses to allow for increased health care costs and also to allow some splurges, especially during the first five or so years. I also put together an alternate budget that tried to estimate what we would need if we really need to minimize our spending for some reason.

With Covid, we aren't traveling and our restaurant (carryout) spend is way down. I feel like we are spending closer to the minimized budget and we aren't really feeling deprived. This has given me a lot more confidence in our ability to adjust expenses if needed due to poor market performance.
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FrugalInvestor
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Re: Retirees spending question

Post by FrugalInvestor »

Closing in on two decades of retirement. In early retirement we spent about the same. During the '08-'09 downturn we spent a lot less. As things improved we ramped back up to about the same again. For the last few years we've been spending more and giving more to charity (through a Donor Advised Fund). We will begin drawing Social Security and taking RMDs in the next couple of years and plan to ramp up our spending for as long as our health permits.

FYI, during most of our working years we lived well beneath our means and saved a very high percentage of our income, so spending the same as we did while working represented a comfortable but far from opulent lifestyle.
Have a plan, stay the course and simplify, but most importantly....Ignore the Noise!
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