For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

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chipperd
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For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by chipperd » Fri Dec 15, 2017 6:00 am

Hi All,
Wondering if I can cull some experience from those who have already retired.
For those of us slobs still working in the coal mines, we are all trying to guestimate how much we will need to have the retirement lifestyle we desire. Hoping those who have come before can post how close your post-retirement spending comes to your pre-retirement estimate of the amount you thought you would spend in retirement? (hope that makes sense). If you don't' mind, could you also include where your estimate was off, in which category and direction, and by roughly what percentage?
Thanks in advance for sharing your experiences.
Chipperd

The Wizard
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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by The Wizard » Fri Dec 15, 2017 6:30 am

Well stated question.
I retired in 2013. I track and project my monthly income closely but, same as when working, I don't really track or categorize my expenditures.

I did put together a detailed spreadsheet just prior to retirement itemizing all my BASIC expenses: food, clothing, utility bills, property taxes, equipment replacement, vehicle replacement, but NOT major recreational travel.
My retirement income to start with was roughly double those basic expenses which gives me lots of flexibility in managing the non-basic recreational expenditures.

Also, I've managed to increase my monthly retirement income by around 30% in the last four years. This due to starting spousal SS, to annuitizing an additional sum, and to market increases improving some of my annuity income. So the old slush fund is in increasingly better shape...
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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by basspond » Fri Dec 15, 2017 7:02 am

Seems ours is very close. Some movement between categories like more entertainment/travel and less food/eating out since I have more time to cook, organize, look for sales, and of course senior discounts!

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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by Grasshopper » Fri Dec 15, 2017 7:18 am

We retired in 2006 ages 54/50 I have used Quicken for years and knew where every penny went. We downsized to a quiet rural place and thought our budget was in place. Well 2007 came and went along with a big pot of our money. But our expenses were low and we came out of it in great condition. When I turned 62 I collected SS because of a medical scare, and have used that money source for travel ever since. Bottom line we are spending 33% more for expenses all travel. We have always had private health insurance since retiring, today Ms G is on a grandfathered PPO while I have Medicare. I know HI is a budget killer for some, that is why I added it. :beer

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Sheepdog
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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by Sheepdog » Fri Dec 15, 2017 7:21 am

I have tracked our spending since retiring in 1998 using Microsoft Money software..
We lived in the same house during this period. We took vacations regularly, purchased automobiles regularly, enjoyed life. We did donate more to charities as we aged, though.

Our annual in retirement spending and charitable donations history, not including income taxes:, 1998 thru December 15, 2017. I didn't include taxes in this report as they were much less after retirement. We lived in the same paid for house the entire time.

1998 last year employed, $57,831
1999-2003 (5 years average) $57,850 (1 auto purchased)
2004-2008 (5 years average) $59,019 (0 auto purchased)
2009-2013 (5 years average) $67,514 (2 autos purchased)
2014-thru December 14, 2017 (4 years average) $63,802 (0 auto purchased)
(I show autos purchased as they affect the averages so much.)

I was surprised at the small increase of spending. Our personal inflation rate was considerably lower than the CPI, Our standard of living has not changed. Expenses in retirement can be quite different than when employed because of discretionary spending (more or less), but I don't think ours were.
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wabbott
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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by wabbott » Fri Dec 15, 2017 7:31 am

For several years prior to our retirements in 2009 and 2015, we tracked our spending on a spreadsheet in several categories - gas, groceries, Walmart, clothes, travel lodging, restaurants, household. We weren't as meticulous as was John D. Rockefeller, but it did give us a decent history of where the money goes. Our spending hasn't increased appreciably since we retired. The spending history gave us quite a bit of confidence in our decision making.

Last year we enrolled in ACA, so we knew our income HAD to be kept below $64K, and our spending would have to correspond to that. It looks like we'll be pretty close to our estimates for the year.

History, data, history, data, history. When you spend it, write it down. Every time.

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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by Shallowpockets » Fri Dec 15, 2017 7:54 am

As you can see by the posts above, many Bogleheads track their expenses and seen to move into retirement with more certainty than those who just wing it. I am always amazed at the lack of figuring your expenses as reflected in many posts on BH. How much do I need? A frequent question. It is a simple thing. Perhaps the BH philosophy of 3 funds and let it ride without looking at it are part and parcel of hands off of everything. So much so that tracking expenses seems like such a chore.
Enough said.
We are in the same boat as others have said here. Retired now almost two years. We are very close to pre retirement expenses. We live frugally and had a lot of padding baked in. Our travel expenses have increased a bit due to being able to travel more, or longer. But since travel was almost 30% of our annual spending we could mix and match as needed if it was too much. However, it is not too much. Just this last year we bumped up our acceptance of some higher airfare and higher hotels just because we could. The expense comfort level was high.
Our annual expenses for two hover around 40k total. No debt, no mortgage, no car payments.
My desire was to be able to live solely off my SS if possible. And it is. Any extra is easy to pay as the market has paid me back waaaay more than a few more thousand a year in spending.
To answer your question, our retirement expense is very close to our pre retirement expense.
At the end of the day, it is so very important to track your own expenses as a basis for the future. Although the mantra is that past performance is no indicater of the future it certainly helps to have a benchmark. For this particular question, the past is prologue. And, unless YOU do it, you can never go back and get that information.
It also is a big help to have your S.O. on board with the expenses and the plan.
Last edited by Shallowpockets on Fri Dec 15, 2017 8:05 am, edited 1 time in total.

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midareff
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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by midareff » Fri Dec 15, 2017 8:00 am

I'd say the original estimates were quite accurate. If anything I over estimated clothes.. retired life in South Florida is T's and shorts. We eat out more, but that was expected and over the years things creep.. condo maintenance goes up 2% or 3% a year, MEDICAL, the 900 pound GORILLA in the room goes up more, as does drugs. Doesn't seem to be anything like decent dental insurance ..... so if you need an extraction, implant and a crown figure $5K minimum, out of pocket, at least in this neck of the woods. Our discretionary has been all travel the last few years and I don't see that changing. The more discretionary, the more travel.

EDIT NOTE: A buck a year on Netflix, $2 or $3 on cable, a $1.50 on electric, 2% on condo dues.... none of which means much, at least to me. Car insurance has crept up and will be re-quoted prior to delivery of new ride early next year. Condo insurance is the same for the last 5 years. Medical insurance seems to be going up at least 2X the CPI-U, maybe more. I have Medicare for me + AARP Plan F and my former employer's coverage (top level) for my wife. Medical + dental costs have run from $16K to $29K (mostly dental) with this year coming in about $18.5K. .. which is about what I expect without a significant dental problem for either of us. I retired in April of 2012, the bull was young and no one knew what to expect. I'm basically six years retired now and the bull is much older, and still no one knows what to expect. I do know that I have roughly 60% more money than when I retired and have maintained a conservative AA and WR throughout. The WR is higher the last two years and we are enjoying travel as frequently as the cash flow permits.
Last edited by midareff on Fri Dec 15, 2017 4:23 pm, edited 1 time in total.

The Wizard
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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by The Wizard » Fri Dec 15, 2017 8:28 am

Shallowpockets wrote:
Fri Dec 15, 2017 7:54 am
...At the end of the day, it is so very important to track your own expenses as a basis for the future...
Well, yes and no.
It's quite possible to do a one-minute ballpark to figure expenses and go with that.
Example: gross salary is $100k and you're putting $30k into 401(k) and Roth IRA. Therefore your expenses are $70k. Get that much income in retirement and you should be good.

But nothing wrong with a more detailed analysis to help you understand your options better...
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UpperNwGuy
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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by UpperNwGuy » Fri Dec 15, 2017 8:47 am

I retired from the Federal government in 2013 and had a fairly detailed estimate. Actual expenses tracked fairly closely to that estimate for the first two years except for a few surprises (delayed receipt of a large one-time payment for unused vacation days, delayed receipt of my full pension while OPM's legal department struggled to understand my 2001 divorce decree, unplanned college tuition payments for my youngest child who took forever to accumulate enough credits to graduate). More recently, I find myself living comfortably on my now-stable pension and still find enough to invest and to travel.
Last edited by UpperNwGuy on Fri Dec 15, 2017 8:51 am, edited 1 time in total.

MikeG62
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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by MikeG62 » Fri Dec 15, 2017 8:52 am

Retired two full years now.

Our spending "in retirement" is higher than our "pre-retirement" spending, and the increase is due to travel and entertainment (which we have ramped significantly in retirement).

If you are asking is our spending in retirement higher than we thought it would be, I'd say the answer is still yes and due to T&E, but to a lesser degree than compared to our pre-retirement spending.

Spending on other line items is pretty close.
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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by scrabbler1 » Fri Dec 15, 2017 9:32 am

When I was putting together my ER plan back in 2007-08, I looked at my expenses to guess what would change in my spreadsheet. I eliminated two items, the FICA taxes and the commutation expenses, both going to zero (YAY!). But in return, I used those savings to pay the added health insurance premiums due to having to buy my own policy instead of being in a group policy. These changed roughly canceled each other out. My other expenses changed slightly, not enough to matter in my projections.

Since I retired 9 years ago at age 45, there has been a general upward creep in expenses. But the only big wild card the whole time has been health insurance premiums. In 2010 and 2011, they rose 50% before I went underinsured for a few years until the ACA went into full effect with the exchanges in 2014. My premiums rose again, as expected, but with recent increases I will be paying nearly what I paid in 2010 following the first of 2 big increases. Still, that's not too bad.

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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by Ruger » Fri Dec 15, 2017 10:01 am

I tracked all my expenses before I retired, and I still track them.
I have found my spending really hasn't changed much since I retired. I do travel a bit more now, but since my income still
exceedes my expenses I'm doing fine.

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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by book lover » Fri Dec 15, 2017 10:24 am

My wife and I have tracked our expenses for twenty seven years and each year we have had an average inflation rate of 1.5%. Since semi retirement, things have changed very little except our health insurance premium has went up substantially in order to get a decent network under an A.C.A. plan. In terms of expenses, we are 70/30 fixed vs discretionary which has remained consistent. When we were first married, I read a book that recommended that you treat your finances like a business which meant tracking income and expenses and along with discovering the Bogleheads has been a tremendous help.

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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by vested1 » Fri Dec 15, 2017 10:35 am

Edited to add that income matches spending for the most part. Our net income in retirement after taxes matches our baseline pre-retirement income after taxes, with our tax rate somewhat lowered in retirement with the absence of FICA and Medicare taxes. This allows for the same level of spending, but requires more discipline because of my self-imposed fixed income strategy (so far) with an eye to taxes during our delay of SS. During working years our income varied on my paycheck, due to wide variations of overtime. This allowed more spur of the moment purchases when larger paychecks arrived at the bank. Now most of our purchases are planned more carefully, with exceptions being those unforeseen.

As an example, we just got back from an extended "vacation" to the big island, only to find that our fairly new dryer had given up the ghost. Reserves allowed the replacement of the dryer, and still kept us within our planned income level for tax purposes. We ate out more while working because my wife and both worked and sometimes couldn't face the chore of cooking and cleaning up the mess. Our travel has been basically the same, and luckily we are both frugal in nature. Our income has been 90k since I joined my wife in retirement. My wife has a 100% survivor 30k pension, which we are eternally grateful for.

I have always said that we use a variable withdrawal strategy, but our withdrawals have been level as stated earlier, and far below portfolio earnings since I retired almost two years ago. Next year our fixed income will increase by over 36k with the initial filing of my wife's and my own restricted SS at 65/66 respectively, so portfolio withdrawals will drop to a lower level, while still increasing income by perhaps 10k. At my age 70, discounting COLA increases in SS our income should result in around 130k total income from all sources with RMD's only as withdrawals. Only COLA on SS will increase our fixed income. I suspect the added income will not change our spending habits much, other than the purchase of new vehicles. We are on the same page on that one too, with her driving a 10 year old car and me driving an 18 year old truck, both of which are running great. We are fortunate that my wife has a great employer sponsored health care plan, which covers us both at low cost, even with me on Medicare, allowing me to avoid Part D.
Last edited by vested1 on Fri Dec 15, 2017 12:58 pm, edited 1 time in total.

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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by dwickenh » Fri Dec 15, 2017 10:38 am

Just retired 18 months ago and have kept spread sheet on fixed costs of 30,504 which includes healthcare. Total with discretionary is 50,260 including several nice vacations and traveling to kids on the west coast. I am not taking SS at this time, and we will splurge more on discretionary spending when we take SS in about 2-3 years. So far no income tax expenses thanks to livesoft.
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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by White Coat Investor » Fri Dec 15, 2017 10:41 am

chipperd wrote:
Fri Dec 15, 2017 6:00 am
Hi All,
Wondering if I can cull some experience from those who have already retired.
For those of us slobs still working in the coal mines, we are all trying to guestimate how much we will need to have the retirement lifestyle we desire. Hoping those who have come before can post how close your post-retirement spending comes to your pre-retirement estimate of the amount you thought you would spend in retirement? (hope that makes sense). If you don't' mind, could you also include where your estimate was off, in which category and direction, and by roughly what percentage?
Thanks in advance for sharing your experiences.
Chipperd
I'm not retired by any definition, but I can tell you this about my early 70s parents- they didn't spend any of their RMD this year. Took it out, paid the taxes, and reinvested in taxable. Pension + SS was plenty for them this year. I can't even talk them into spending more. This is the first year that has happened. I wonder if they're already into the slow-go years (you know, go-go, slow-go, no-go).
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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by VictoriaF » Fri Dec 15, 2017 11:08 am

I retired in September 2014, 3 years and 3 months ago. I have been tracking my expenses for the past 20 years, including the years in retirement. Before I retired, I have created an approximate budget for the retirement years, when I would be living off my assets and having more opportunities to spend money. My retirement budget is higher than my budget in pre-retirement years.

My main concern was that I would not be spending enough on the activities and things that matter to me. Thus, I started with a generous budget allocation to travel. In the past three years I significantly under-spent my travel budget even as I've spent 33% of time in the years 2015 and 2016 sleeping outside home, and 23% in 2017. Most of this time I spent in Europe. There are several reasons for under-spending my travel budget. First, I take advantage of travel rewards associated with credit cards. I fly in Economy and thus accumulating enough miles and points is easy. Second, when I travel in Europe I stay in hostels and other no-star accommodations. I like the atmosphere in these places better than in posh hotels, and it would have taken me too much effort to earn enough points, for example, for a 15-day stay in Barcelona, Prague, or Karlovy Vary. Third, I have made friends in different parts of Europe, and some of my travels and stays are very inexpensive or free. Forth, in 2015 and 2016, I spent six weeks each walking the Camino de Santiago, and the expenses on the Camino are very low.

In 2018, I want to reduce my travel to 20% or less so that I could spend more time on my blog and book. I will have new expenses for hosting, software, applications, editing, design, and other services. I am trying to condition myself to pay for high-quality products and services and not economize on quality.

In the future, I expect two types of increases in my expenses:

1. My aged apartment building will eventually be sold, and I will have to move to another apartment. I hope it does not happen soon. But whenever it happens, I want to stay in the same neighborhood and in a same size apartment. In today's market, I would be spending additional $5,000 per year on rent in a similar apartment. In the future, it will be more. Nevertheless, living here is an integral part of my quality of life and I will pay for it.

2. I may get ill and require expensive treatments. I don't know whether and when that may happen and how much it would cost. I do all I can to protect my health and to be able to afford treatments. Even after I qualify for Medicare, I will keep my Federal Employee Health Benefit (FEHB) to have access to authorized care. However, there may be experimental and other non-covered treatments that I may have to spend for out of pocket. I can't plan for such unknowns and try to focus on my physical and intellectual strength to make good choices as the need arises.

Victoria
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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by Ged » Fri Dec 15, 2017 11:30 am

I've been retired for 5 years now. Non-discretionary spending has been very close to estimates. We've spent more on discretionary items (travel and home remodeling) than I expected, but mostly that's due to a wealth effect from the stock market sequence of returns being better than expected.

Since my state has recently passed tax legislation that reduces taxation of retirement income I am optimistic that we will continue to have better finances than expected.

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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by flyingaway » Fri Dec 15, 2017 11:52 am

VictoriaF wrote:
Fri Dec 15, 2017 11:08 am
I retired in September 2014, 3 years and 3 months ago. I have been tracking my expenses for the past 20 years, including the years in retirement. Before I retired, I have created an approximate budget for the retirement years, when I would be living off my assets and having more opportunities to spend money. My retirement budget is higher than my budget in pre-retirement years.

My main concern was that I would not be spending enough on the activities and things that matter to me. Thus, I started with a generous budget allocation to travel. In the past three years I significantly under-spent my travel budget even as I've spent 33% of time in the years 2015 and 2016 sleeping outside home, and 23% in 2017. Most of this time I spent in Europe. There are several reasons for under-spending my travel budget. First, I take advantage of travel rewards associated with credit cards. I fly in Economy and thus accumulating enough miles and points is easy. Second, when I travel in Europe I stay in hostels and other no-star accommodations. I like the atmosphere in these places better than in posh hotels, and it would have taken me too much effort to earn enough points, for example, for a 15-day stay in Barcelona, Prague, or Karlovy Vary. Third, I have made friends in different parts of Europe, and some of my travels and stays are very inexpensive or free. Forth, in 2015 and 2016, I spent six weeks each walking the Camino de Santiago, and the expenses on the Camino are very low.

In 2018, I want to reduce my travel to 20% or less so that I could spend more time on my blog and book. I will have new expenses for hosting, software, applications, editing, design, and other services. I am trying to condition myself to pay for high-quality products and services and not economize on quality.

In the future, I expect two types of increases in my expenses:

1. My aged apartment building will eventually be sold, and I will have to move to another apartment. I hope it does not happen soon. But whenever it happens, I want to stay in the same neighborhood and in a same size apartment. In today's market, I would be spending additional $5,000 per year on rent in a similar apartment. In the future, it will be more. Nevertheless, living here is an integral part of my quality of life and I will pay for it.

2. I may get ill and require expensive treatments. I don't know whether and when that may happen and how much it would cost. I do all I can to protect my health and to be able to afford treatments. Even after I qualify for Medicare, I will keep my Federal Employee Health Benefit (FEHB) to have access to authorized care. However, there may be experimental and other non-covered treatments that I may have to spend for out of pocket. I can't plan for such unknowns and try to focus on my physical and intellectual strength to make good choices as the need arises.

Victoria
Victoria:

Although I am not a fan of expensive hotels, I do stay in full service hotels when I travel alone. (My wife wants much better hotels). I was thinking about staying in hostels, but there are mainly many very young travelers in their 20s. How do you feel when the hostels are full of 20 somethings? (I am 53). Did you get your own room in hostels?

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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by curmudgeon » Fri Dec 15, 2017 1:18 pm

We've only been retired about 8 months, so it is still early to really know how things will shake out. I spent some time with Fidelity and Schwab retirement planning tools, including working through the detailed budget planning tool. While we don't generally track expenses tightly, we do have a pretty good sense of how money is flowing through the household.

We made a basic expenses estimate, which has tracked fairly well. We are probably a bit under the estimate on utilities (moved this year) and over on eating out/entertainment, but not enough to matter. We have a large discretionary budget for travel, but that's more of a default planning ceiling than a true spending expectation; we didn't hit it in 2017, but we might get close in 2018.

In addition to the "operating expense" spending, we have some home improvement expenses that I think of as being effectively part of the cost of the house we just moved to. For the most part, these are one-time.

There are a number of "big ticket" items for which I have rough budget lines, but which come in irregular ways. Some of these are somewhat predictable, others not. Roof replacement, major dental work, new cars, medical insurance if ACA falls apart. I think this is where it could be easy to be wrong on estimates. We have quite a bit of flexibility, but if too many of these come in one year, we will probably cut down the travel budget for that year or the next.

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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by VictoriaF » Fri Dec 15, 2017 1:51 pm

flyingaway wrote:
Fri Dec 15, 2017 11:52 am
VictoriaF wrote:
Fri Dec 15, 2017 11:08 am
...Second, when I travel in Europe I stay in hostels and other no-star accommodations. I like the atmosphere in these places better than in posh hotels, and it would have taken me too much effort to earn enough points, for example, for a 15-day stay in Barcelona, Prague, or Karlovy Vary.
Victoria:

Although I am not a fan of expensive hotels, I do stay in full service hotels when I travel alone. (My wife wants much better hotels). I was thinking about staying in hostels, but there are mainly many very young travelers in their 20s. How do you feel when the hostels are full of 20 somethings? (I am 53). Did you get your own room in hostels?
flyingaway,

I ignore the age of other hostel occupants and they seem to ignore mine(*). Generally speaking, I consider dividing people by age quite unfortunate. Older groups commonly focus on disease-related topics, which makes them not only boring but also psychologically harmful. Younger groups commonly glamorize pop culture and electronics, which excludes or harms more thoughtful youths. I just do what I want to do and people treat whatever I do as normal. This is not limited to staying in hostels. For example, when I do improv and standup comedy, most other participants are one-two generations younger. When I am in an improv scene where the audience has to provide a relationship, and someone yells "mother-daughter," I try to become a "daughter" or a mother superior.

When I am staying in hostels, I do try to get a private room, which is usually possible. Sometimes, I have to pay a higher rate, which is fine with me. For example, when I was in Barcelona in August, I stayed in a hostel that was across a square from my conference hotel. The hostel had only double private rooms and I paid a double rate for it. I could have found a slightly cheaper accommodation, but that would be farther from the conference, and most importantly, I would not have had access to full kitchen facilities (refrigerator, stove, cooking gear, dishes). Also it was fun chatting with other people coming to Barcelona from all over the world.

In some places, private rooms are not available, and in those cases I am trying to stay in a room with as many people as possible This is counter-intuitive, but if you are in a dorm room for 4 people, and 2 or 3 other people travel as a group, they set the rules. Even one person can act as a primadonna and spoil the stay for everybody else. But when you have 10-12 people, the community upholds the rules. For example, when I visit NYC, I stay at the HI hostel on the Upper West Side in a large room.

Victoria

(*) Some years ago I was working on a project with one of our interns. I said something about his or my age, and he responded "Why do old people always talk about age?" Since then I avoid mentioning age. I have noticed that when older people claim that they feel younger it has a strong connotation of lamenting about their age. The best thing to do is to ignore the age, whatever it is, and do what you like.
Last edited by VictoriaF on Fri Dec 15, 2017 2:24 pm, edited 2 times in total.
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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by GerryL » Fri Dec 15, 2017 2:18 pm

I had lots of data on which to base my planned retirement budget, including Quicken spending categories and the simple "amount of each paycheck that didn't go to savings or taxes." Then I upped the total a bit to cover increased travel in early retirement years. Then I upped it again when my financial plan said that I was very likely to reach the age of 96 with more money than I had when the paychecks stopped.

So, as we reach the end of 2017 (3.5 years into retirement) I find that I am closer to the original spending estimate than to the enhanced one. And that is after two international trips instead of the originally planned single international trip a year. Bottom line: The estimates based on years of spending data realistically reflect my spending habits.

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Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by MathWizard » Fri Dec 15, 2017 4:02 pm

The Wizard wrote:
Fri Dec 15, 2017 8:28 am
Shallowpockets wrote:
Fri Dec 15, 2017 7:54 am
...At the end of the day, it is so very important to track your own expenses as a basis for the future...
Well, yes and no.
It's quite possible to do a one-minute ballpark to figure expenses and go with that.
Example: gross salary is $100k and you're putting $30k into 401(k) and Roth IRA. Therefore your expenses are $70k. Get that much income in retirement and you should be good.

But nothing wrong with a more detailed analysis to help you understand your options better...

Two issue that disrupt this are employer benefits (particularly health care) and taxes (though FICA will go away).

2015
Posts: 2187
Joined: Mon Feb 10, 2014 2:32 pm

Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by 2015 » Fri Dec 15, 2017 4:05 pm

Deflation! Due to assiduous tax-bracket planning and management, taxes have plunged to about $600/year in retirement. I'll save $4600 on my healthcare expenses next year thanks to figuring out the Rubik's cube mechanics of the ACA and, barring no change to the ACA, save another $4K in 2019 and $1K in 2020. I'll save $250 next year on homeowners/umbrella when I change insurer as a result of shopping. Just shopped separate auto insurer I've been with for about 20 years and learned I can save $100/year, so that's about to happen. Weekly recreational spending has been down by an average of about $40/week (due to work-related savings on commuting/gas/drycleaning, etc.). Internet expenses fell to $42/month from about $60 as a result of getting rid of the superfluous landline. Saving about $120/month from not having to buy daily Mochas as a way to anesthetize working. And, of course, my roughly 200 non-fiction business books I read per year are all absolutely free courtesy of the fantastic LA County Library system.

So...I'm buying lots of little toys (my new Moto G5+ phone!). Travelling has also increased substantially--next year will be the most I've ever been away from home due to travel in my life. 2017 has been an awesome year and 2018 will be even better.

chipperd
Posts: 345
Joined: Sat Sep 24, 2011 5:58 am

Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by chipperd » Fri Dec 15, 2017 4:17 pm

Thanks all for your responses; fantastic wisdom and info here. Much appreciated and keep 'em coming.
Chipperd

SGM
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Joined: Wed Mar 23, 2011 4:46 am

Re: For those in retirement, how close is your post retirement spending to your pre-retirement estimate?

Post by SGM » Fri Dec 15, 2017 4:26 pm

My health care costs are much higher than expected due to IRMAA fees. For part D alone these fees goes up in 2018 by 35% to 58%. My IRMAA payments are way higher than the part D insurance payment. Similar numbers are attached to Part B IRMAA fees.

Taxes have not gone down in retirement despite lowering my taxable account over a period of 5 years by converting all my traditional funds to Roth accounts. This will still have been a good move as I won't have large RMDs at age 70 1/2.

We have made expensive improvements to two houses but the portfolio has grown greatly due to the bull market. So I am not complaining.

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