Retirement expense projection. Anyone else willing to share?

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Topic Author
nomorework
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Joined: Wed Apr 04, 2012 4:16 pm

Retirement expense projection. Anyone else willing to share?

Post by nomorework »

I understand that this is a SWAG
2 active adults monthly expense in 2023 dollars Age Mid 50s
approx. $6027 monthly

Housing
Mortgage $0
HOA 30
Home Insurance 300
Property Tax 0 Fla disabled vet
Electric 300
Gas 75
Water / trash 120
Lawn/pest care 200
Cell Phone 150
Internet 100
Cable 100

Food, entertainment, and activities
Groceries 800 $200/wk
Dining 800 $200/wh
Travel Flights 267 4 trips x $400 flight
Travel Lodging 583 4 weeks@$350/night
Travel food 125 4 weeks x $300 day
Travel excursions 333 4 weeks@ $1000 wk
Amazon/subscript 50
Wife hair/nails 200

Transportation (2 vehicles 1 with payments)
Car Payment/ Maint 750 ($40K @4.5% for 60months)
Auto Insurance 120
Fuel 140


Healthcare
Health Insurance 30 (Tricare disabled vet)
Supplements 50
Co-Pays 50

Loans 0

Gifts /donations
Birthdays 33 $400 Annual
Holidays 33 $400 Annual

Total $5,740

5% margin /error $287.00

Grand total $6,027
JimmyD
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Re: Retirement expense projection. Anyone else willing to share?

Post by JimmyD »

How about income tax?
Tom_T
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Re: Retirement expense projection. Anyone else willing to share?

Post by Tom_T »

Are you asking if you missed something?
Topic Author
nomorework
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Re: Retirement expense projection. Anyone else willing to share?

Post by nomorework »

JimmyD wrote: Tue Nov 22, 2022 10:56 am How about income tax?
Ahh. Thank you
Topic Author
nomorework
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Re: Retirement expense projection. Anyone else willing to share?

Post by nomorework »

Tom_T wrote: Tue Nov 22, 2022 10:59 am Are you asking if you missed something?
Feel free to point out anything. More curious as to what others are projecting.
Tom_T
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Re: Retirement expense projection. Anyone else willing to share?

Post by Tom_T »

nomorework wrote: Tue Nov 22, 2022 11:01 am
Tom_T wrote: Tue Nov 22, 2022 10:59 am Are you asking if you missed something?
Feel free to point out anything. More curious as to what others are projecting.
That is going to be highly personal. Some people would be amazed that you spend either that much or that little. :)
Exchme
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Re: Retirement expense projection. Anyone else willing to share?

Post by Exchme »

Where is your allowance for maintenance/remodeling on the house? There is always something breaking/wearing out at our place. Those are lumpy, but large when they happen.
delamer
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Re: Retirement expense projection. Anyone else willing to share?

Post by delamer »

Check your math. For travel lodging, I get $817/month for 4 weeks at $350/night.

Clothing is missing. Possibly charity, if you are so minded.

Lumpy expenses like car replacement, roof replacement, etc. should be accounted for unless you have a separate sinking fund for those.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Xrayman69
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Re: Retirement expense projection. Anyone else willing to share?

Post by Xrayman69 »

JimmyD wrote: Tue Nov 22, 2022 10:56 am How about income tax?
Home maintenance and clothing?
Topic Author
nomorework
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Re: Retirement expense projection. Anyone else willing to share?

Post by nomorework »

Exchme wrote: Tue Nov 22, 2022 11:10 am Where is your allowance for maintenance/remodeling on the house? There is always something breaking/wearing out at our place. Those are lumpy, but large when they happen.
Thoughts are to keep some sort of emergency/break-fix fund in cash.
Topic Author
nomorework
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Re: Retirement expense projection. Anyone else willing to share?

Post by nomorework »

delamer wrote: Tue Nov 22, 2022 11:13 am Check your math. For travel lodging, I get $817/month for 4 weeks at $350/night.

Clothing is missing. Possibly charity, if you are so minded.

Lumpy expenses like car replacement, roof replacement, etc. should be accounted for unless you have a separate sinking fund for those.
Good Catch. These are planned as approx 5 night weeks, not 7

I do need clothes :-)
Parkinglotracer
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Re: Retirement expense projection. Anyone else willing to share?

Post by Parkinglotracer »

Dental care?
delamer
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Re: Retirement expense projection. Anyone else willing to share?

Post by delamer »

nomorework wrote: Tue Nov 22, 2022 11:19 am
delamer wrote: Tue Nov 22, 2022 11:13 am Check your math. For travel lodging, I get $817/month for 4 weeks at $350/night.

Clothing is missing. Possibly charity, if you are so minded.

Lumpy expenses like car replacement, roof replacement, etc. should be accounted for unless you have a separate sinking fund for those.
Good Catch. These are planned as approx 5 night weeks, not 7

I do need clothes :-)
For 5 nights, you are right. As you noted, I was assuming 7.

Remember that there are actually 52 weeks in a year. It might make a difference when you are comparing expenses and income.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
LittleMaggieMae
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Re: Retirement expense projection. Anyone else willing to share?

Post by LittleMaggieMae »

Will you have a rental car when traveling? Using Uber/lyft?

Do you have hobbies or pets? When you are not traveling - what kind of things do you do when you are home? Just sit and watch TV? Do you have hobbies? Or do you entertain friends at home or do you take something (food, drinks) when you go to other people's homes or to a community gathering?

Do you spend on Holiday gifts or holiday parties at your home? Do you decorate your home/front yard for the holidays (there's lots thru out the year). Do you give birthday gifts? Do you have family/friend gift giving events in the future - weddings? new babies? graduations? other life milestones that often mean giving a gift.

Do you add to your landscaping every year? (I have a friend who spends about 2K on annual flowers and the service that maintains her garden every year - even with an HOA that takes care of the lawn and trees).

How often will you replace your cell phone(s), laptop(s), tablet(s), other household tech?

Also - does "grocery" include personal care stuff - soap, shampoo, razors, whatever? And household cleaning products? And TP and Paper towels? Did you just estimate the $800 a month or did you look thru your CC bills to see how much you were spending at stores that sell groceries? :)
Last edited by LittleMaggieMae on Tue Nov 22, 2022 11:42 am, edited 1 time in total.
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squirrel1963
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Re: Retirement expense projection. Anyone else willing to share?

Post by squirrel1963 »

We kept track of our expenses since 2015-2019, and we averaged about $60K per year, so with a ballpark adjustment for inflation we think our expenses will be about $70K per year in 2023 dollars.
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Watty
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Re: Retirement expense projection. Anyone else willing to share?

Post by Watty »

nomorework wrote: Tue Nov 22, 2022 10:32 am Car Payment/ Maint 750 ($40K @4.5% for 60months)
Unless you get an ultra low interest rate it makes more sense to pay cash for your cars since in retirement since a lot of your money will be invested in bonds.

You will still need to budget for periodically replacing your car and for maintenance.

A few other things;

Unless I missed it you also did not have a budget for major home repairs like when you need a new roof or some unpredictable repair.

Dental bills and hearing aids.
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HMSVictory
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Re: Retirement expense projection. Anyone else willing to share?

Post by HMSVictory »

Exchme wrote: Tue Nov 22, 2022 11:10 am Where is your allowance for maintenance/remodeling on the house? There is always something breaking/wearing out at our place. Those are lumpy, but large when they happen.
Roof, HVAC system, windows, siding, ect ect ect ect - gets pricey quick when they need to be done.
Stay the course!
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MikeWillRetire
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Re: Retirement expense projection. Anyone else willing to share?

Post by MikeWillRetire »

What I see missing:
dentist, eyeglasses, clothes, haircuts, hobbies/entertainment, replacement costs for tv's/computers/tools/housewares, and house maintenance.
Outer Marker
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Re: Retirement expense projection. Anyone else willing to share?

Post by Outer Marker »

nomorework wrote: Tue Nov 22, 2022 10:32 am I understand that this is a SWAG
This is key. I don't think it's possible accurately predict expenses with that level of granularity. I'd look back over the last 2-3 years of spending from your bank statements and credit cards, average those out, and add in a generous fudge factor, plus extras, like travel, you'll be doing more of. I expect my spending to rise in retirement when I have more time for leisure activities.
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David Jay
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Re: Retirement expense projection. Anyone else willing to share?

Post by David Jay »

Outer Marker wrote: Tue Nov 22, 2022 12:46 pm
nomorework wrote: Tue Nov 22, 2022 10:32 am I understand that this is a SWAG
This is key. I don't think it's possible accurately predict expenses with that level of granularity. I'd look back over the last 2-3 years of spending from your bank statements and credit cards, average those out, and add in a generous fudge factor, plus extras, like travel, you'll be doing more of. I expect my spending to rise in retirement when I have more time for leisure activities.
I used 100% of my pre-retirement take-home (i.e. no Retirement contributions) as my budget. That ended up giving us a nice discretionary fund in place of commuting expenses, work lunches, etc.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
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nomorework
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Re: Retirement expense projection. Anyone else willing to share?

Post by nomorework »

LittleMaggieMae wrote: Tue Nov 22, 2022 11:36 am Will you have a rental car when traveling? Using Uber/lyft?

Do you have hobbies or pets? When you are not traveling - what kind of things do you do when you are home? Just sit and watch TV? Do you have hobbies? Or do you entertain friends at home or do you take something (food, drinks) when you go to other people's homes or to a community gathering?

Do you spend on Holiday gifts or holiday parties at your home? Do you decorate your home/front yard for the holidays (there's lots thru out the year). Do you give birthday gifts? Do you have family/friend gift giving events in the future - weddings? new babies? graduations? other life milestones that often mean giving a gift.

Do you add to your landscaping every year? (I have a friend who spends about 2K on annual flowers and the service that maintains her garden every year - even with an HOA that takes care of the lawn and trees).

How often will you replace your cell phone(s), laptop(s), tablet(s), other household tech?

Also - does "grocery" include personal care stuff - soap, shampoo, razors, whatever? And household cleaning products? And TP and Paper towels? Did you just estimate the $800 a month or did you look thru your CC bills to see how much you were spending at stores that sell groceries? :)
Lots of really good stuff here!
Outer Marker
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Re: Retirement expense projection. Anyone else willing to share?

Post by Outer Marker »

David Jay wrote: Tue Nov 22, 2022 1:12 pm
Outer Marker wrote: Tue Nov 22, 2022 12:46 pm
nomorework wrote: Tue Nov 22, 2022 10:32 am I understand that this is a SWAG
This is key. I don't think it's possible accurately predict expenses with that level of granularity. I'd look back over the last 2-3 years of spending from your bank statements and credit cards, average those out, and add in a generous fudge factor, plus extras, like travel, you'll be doing more of. I expect my spending to rise in retirement when I have more time for leisure activities.
I used 100% of my pre-retirement take-home (i.e. no Retirement contributions) as my budget. That ended up giving us a nice discretionary fund in place of commuting expenses, work lunches, etc.
That's a very good rule of thumb. In fact, it's what I do in my own head when thinking about how much retirement income I'll need. OP was coming at it from the expense side. Glad you brought up approaching from the income side.
SnowBog
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Re: Retirement expense projection. Anyone else willing to share?

Post by SnowBog »

nomorework wrote: Tue Nov 22, 2022 11:17 am
Exchme wrote: Tue Nov 22, 2022 11:10 am Where is your allowance for maintenance/remodeling on the house? There is always something breaking/wearing out at our place. Those are lumpy, but large when they happen.
Thoughts are to keep some sort of emergency/break-fix fund in cash.
But you still need to replenish that fund...

IIRC a rule of thumb is 1-2% of the value of your home as annual repair/maintenance.

Think there's similar for cars, but we just factor in keeping a car payment. When car is paid off, that's the amount budgeted for repairs. If/when repairs get too expensive, we'll replace car.
SnowBog
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Re: Retirement expense projection. Anyone else willing to share?

Post by SnowBog »

For context: mid-40's, planning on being able to retire within 10 years when child is in college. Planning for extra expenses at retirement (most notably healthcare [will need to use a private/ACA plan], extra travel [kid in college + retirement travel], home remodeling), which will decrease within 5-10+ years from retirement.

Our budget is based off current spending - but more "big bucket", adjusted for what we think will be more/less in retirement. Reflected in current dollars (but our model adjusts for inflation).
  • Auto & Transport (insurance, gas, oil change, maintenance, etc.): $500
  • Bills & Utilities (electric, gas, water & sewer, trash, internet, cell, etc.): $600
  • Entertainment (streaming, movies, shows, etc.): $200
  • Food & Dining (groceries & dining out - inclusive of meals traveling): $1,900
  • Health & Fitness (budgeting for unsubsidized "family" ACA plan + other health/fitness costs [vision/dental/etc.]): $3,900
  • Home (lawncare, maintenance, plus $100k of remodeling over 10 years [subject to change]): $1,333
  • Personal Care (hair, nails, etc.): $400
  • Pets (higher due to medical issues - won't be forever...): $500
  • Shopping (clothing, household, gifts, gadgets, electronics, etc. - as well as home + umbrella insurance): $1,200
  • Property Tax: $500
  • Travel (airfare, lodging, rental, etc.): $2,367
  • Uncategorized [aka cash/buffer]: $200
Monthly projected expenses:
  • First 10 years (above): $13,600 ($3,750 essential expenses + $3,900 healthcare + $5,950 discretionary)
  • Years 11 [child launched] - age 64 [pre-Medicare]: $9,600 ($3,750 essential expenses + $2,700 healthcare + $3,150 discretionary)
  • Age 65+ [Medicare]: $8,800 ($3,750 essential expenses + $1,900 healthcare + $3,150 discretionary)
Notes:
  • Taxes and charity are intentionally excluded from above. Both will depend on how much "income" we have/generate in any given year.
  • Healthcare is an outsized expense, may be less if we engineer income for ACA subsidy (impacts plans for Roth conversions) and/or if spouse is eligible to purchase "retiree" healthcare. The initial need is a "family" plan, might end up better to have 2 single plans and child covered through college plan.
  • If we reach Financial Independence before planned retirement, might pre-fund/execute home remodel with excess savings and remove from retirement budget ($833/month for first 10 years).
  • "Discretionary" expenses will be gated by Variable Percentage Withdrawal (VPW), we'll control expenses if/as needed, and use any "excess" withdrawals to cover the "unknowns" / poor estimates of expenses 20+ years out...

dcabler
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Re: Retirement expense projection. Anyone else willing to share?

Post by dcabler »

Rather than going bottoms up with detail, I've gone tops down starting with my gross salary and removing everything that won't be a part of retirement spending such as 401K withholdings, SS withholdings, monthly savings into my taxable account, various other odds and ends that are withheld from my paycheck & replacing a couple of things (private health insurance then Medicare, etc). Requires some tax software to deal with those items that are before tax vs. those that are after tax.

Anyway, if my withdrawals, including tax, cover this then I'm good to go and likely with decent buffer. And I'm good to go. :sharebeer

cheers.
kiwi123
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Re: Retirement expense projection. Anyone else willing to share?

Post by kiwi123 »

When i went through this, i found my actual was about 20-30% higher than my spreadsheet. Taxes, travel, car maintenance and replacement, and sports/hobbies seemed to be the main delta.

My approx. $6k/mo on the spreadsheet ended up being closer to $8k/mo in reality.
flyingaway
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Re: Retirement expense projection. Anyone else willing to share?

Post by flyingaway »

If you have money, you can spend more, otherwise spend less.
We spend about $70,000 to $100,000 a year in retirement.
clarkdfw
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Re: Retirement expense projection. Anyone else willing to share?

Post by clarkdfw »

I have been retired just over 2 years. Single (divorced). I am spending very close to the same amount I was before retirement.
count damoney
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Re: Retirement expense projection. Anyone else willing to share?

Post by count damoney »

My thought process is similar to Snowbog. I've got 2 houses and all my insurance (car, home, auto, umbrella) is in 1 bill.
Here is my best guess. (I like toys :happy motorcycle, atv, boat, smokers/grills, etc)
Taxes are probably a little heavy as I anticipate having different retirement buckets to be able to manipulate taxable income somewhat.
Sorry for the formatting

Annual Monthly
House 2 Prop Tax $4,000 $333.33
House 2 Internet $600 $50.00
House 2 Elec/Gas $1,560 $130.00
House 2 Water $500 $41.67
House 1 Prop Tx $5,000 $416.67
House 1 Internet $940 $78.33
House 1 Water $600 $50.00
House 1 Elec/Gas $3,900 $325.00
Insurance $6,000 $500.00
Gasoline $3,600 $300.00
Cell phone $1,500 $125.00
Food/Household/Clothes $7,800 $1,000.00
Medical/Wellness $12,000 $1,000.00
Taxes $25,000 $2,083.33
Total Fixed $73,000 $6,083.33

Eating out $10,400
Vacations $25,000
Toys/Hobbies $10,000
Home Imp $25,000
$$ to kids $10,000
Car sinking fund $8,000
Total Discrentionary $88,400


Total $161,400 $13,450
Wannaretireearly
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Re: Retirement expense projection. Anyone else willing to share?

Post by Wannaretireearly »

I had bottoms up guesstimated 10-12k a month, until this past blowout year :oops:

I think the top down approach will have me at around 15k a month :greedy

Reality is it changes every year. Perhaps the right answer is a range between $10k and $15k a month. For the spendy go-go years.

Thank god for social security which many of us don’t factor, and keep as our gravy/backup funds.

Figuring out X is like a calculus problem. At some point a swag around $120k - $140k a year should be good enough for my planning purposes.
Death and taxes. Only one is under your control!
AlohaBill
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Re: Retirement expense projection. Anyone else willing to share?

Post by AlohaBill »

We spend from $55,000 t0 $75,000 per year in retirement. Everything is covered by social security and pension. If we wanted to take out from our savings we could take out another $60,000 or so. However we don’t need to.
nalor511
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Re: Retirement expense projection. Anyone else willing to share?

Post by nalor511 »

categories per month expense per year expense
rent $1,394.00 $16,728.00
med premiums $2.00 $24.00
groceries $600.00 $7,200.00
restaurant $100.00 $1,200.00
elec/gas $32.00 $384.00
cell bill $20.00 $240.00
phone hardware $16.67 $200.04
computer hardware $16.67 $200.04
internet $10.00 $120.00
healthcare $419.00 $5,028.00
laundry $7.50 $90.00
cat food $64.00 $768.00
cat litter $39.00 $468.00
state taxes $250.00 $3,000.00
fed taxes $100.00 $1,200.00
misc (cat medical, clothes, appliances) $50.00 $600.00
dental $37.50 $450.00
----------------------------------------
totals $3,158.34 $37,900.08
2pedals
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Re: Retirement expense projection. Anyone else willing to share?

Post by 2pedals »

Actual retirement expenses have been lumpy.
year 1: 97k (includes the purchase of a lightly used car, 25k)
year 2: 71k
year 3: 80k (legal fees and special discretionary, 5k)
year 4: TBD est. >115k (home upgrades, kitchen, flooring, roof, water heater, etc)
year 5+, ??, est. between 75k and 100k
jebmke
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Re: Retirement expense projection. Anyone else willing to share?

Post by jebmke »

2pedals wrote: Tue Nov 22, 2022 5:52 pm Actual retirement expenses have been lumpy.
year 1: 97k (includes the purchase of a lightly used car, 25k)
year 2: 71k
year 3: 80k (legal fees and special discretionary, 5k)
year 4: TBD est. >115k (home upgrades, kitchen, flooring, roof, water heater, etc)
year 5+, ??, est. between 75k and 100k
Our average since retiring is fairly close to what I projected but the year to year variation has been substantial.
When you discover that you are riding a dead horse, the best strategy is to dismount.
Vanguard User
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Re: Retirement expense projection. Anyone else willing to share?

Post by Vanguard User »

I am 44 but not retiring until 55-60. So I won’t know my rent?
nanosour
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Re: Retirement expense projection. Anyone else willing to share?

Post by nanosour »

Been retired for 9 years during kids HS and College years. Two still in college. Outside of college costs, we have spent all in a total of 63K-66K every year including taxes. I'm kinda amazed that it's been that consistent, but those are the numbers according to meticulous tracking in Quicken. It breaks out like this per month.

Mortgage - 1100
RE Tax - 530
Utilities - 490 (Electric, Water, Internet, Phone)
Insurance - 130 (Home & Auto)
Medical - 60 (Tricare)
Gen Household - 4500 (Everything that doesn't fit in the above categories; i.e. discretionary spending)

These categories come out to roughly 82K/year of which we always seem to under spend by 16K-20K. In nine years, I've built up a substantial surplus which I'll use for big ticket item if/when they occur. Example, my gas furnace was installed in 1986 but still going strong. I've gotten several bids over the past 3 years for anywhere between $2600-$3500. Will have no problem replacing her when she gives up the ghost.
2pedals
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Re: Retirement expense projection. Anyone else willing to share?

Post by 2pedals »

jebmke wrote: Tue Nov 22, 2022 5:57 pm
2pedals wrote: Tue Nov 22, 2022 5:52 pm Actual retirement expenses have been lumpy.
year 1: 97k (includes the purchase of a lightly used car, 25k)
year 2: 71k
year 3: 80k (legal fees and special discretionary, 5k)
year 4: TBD est. >115k (home upgrades, kitchen, flooring, roof, water heater, etc)
year 5+, ??, est. between 75k and 100k
Our average since retiring is fairly close to what I projected but the year to year variation has been substantial.
I think expecting lumpy expenses in retirement is important. I actually believe it allows one to focus on enjoyment and fulfillment rather than trying to keep expenses below a certain limit.
02nz
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Re: Retirement expense projection. Anyone else willing to share?

Post by 02nz »

nomorework wrote: Tue Nov 22, 2022 11:19 am I do need clothes :-)
Well, Florida does get hot ... :happy
nguy44
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Re: Retirement expense projection. Anyone else willing to share?

Post by nguy44 »

For what it is worth, here are our major categories (some have subcategories) and average monthly expenses for my wife and I since I retired as of July 1 2018 at age 60. I use Quicken to track. Sorted by largest to smallest. Grand total: $9,531 (less than what I projected before I retired):

Taxes (federal, state, property, includes taxes on Roth conversions) 2,442
Medical (premiums, doctors, drugs, supplies) 1,193
Charity (tax deductible items) 1,090
Vacation and Travel 990
Gifts Given 681
Groceries 525
Auto (purchase, fees, fuel, repairs, supplies, insurance ) 524
Household (maintenance, repairs, improvements, supplies) 413
Utilities (electric, internet, cable TV) 365
Recreation 259
Other Food (dining/takeout) 168
Insurance (home, life, liability) 161
Personal (barber, salon, dry cleaning, etc.) 104
Cellular Phone (service and cell phone purchases) 99
Telephone (landline) 85
Computer (hardware, software, supplies) 82
Interest Exp (from mortgage, which has been paid off) 72
Fees (safe deposit box, Amazon Prime, estate lawyer, various memberships) 54
Entertainment 51
Electronics 37
Clothing 30
Online Services 25 (a few websites and domain names)
Sanitation 21
Postage 18
Business 16 (things related to my LLC)
Books and Subscriptions 13
Misc 13
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calmaniac
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Re: Retirement expense projection. Anyone else willing to share?

Post by calmaniac »

Pretty much all of our expenses go through one checking account. I simply download a csv file for our expenses for the year from that account and save it into Excel. I delete some of the irrelevant items (income, excess cash sent to brokerage account, cash gifts to family) and the rest are our annual expenses. Doesn't account for income tax, but that level of detail can be added if desired. I don't see much point in adding more details in regard to expense categories, but reasonable minds may differ.

My sense is that real data, actual expenses that you have tracked, are more valuable than budget projections.
≈63yo. AA 75/25: 30% TSM, 19% value (VFVA/AVUV), 18% foreign LC, 8% emerging, 25% GFund/VBTIX. Fed pensions now ≈60% of expenses. Taking SS @age 70--> pension+SS ≈100% of expenses. What me worry?
MathWizard
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Re: Retirement expense projection. Anyone else willing to share?

Post by MathWizard »

Base spending during Covid, not counting taxes health insurance,
was $42K. We didn't travel or do home improvement.

Health insurance after age 65, will be about $15K.

5K for house improvement
5K for car replacement

This makes 52K + the taxes on tax deferred withdrawals and SS benefits.
Normchad
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Re: Retirement expense projection. Anyone else willing to share?

Post by Normchad »

clarkdfw wrote: Tue Nov 22, 2022 4:41 pm I have been retired just over 2 years. Single (divorced). I am spending very close to the same amount I was before retirement.
For planning purposes, my starting anchor is what I already spend today. Then I adjust as needed for healthcare, etc.

I track my expenses diligently in quicken. After making adjustments, I think I will spend $105K/year in the first year of retirement.

I’m sure I could get by on less if I had to. But it’s based in what I do now and I don’t want to change…..
Starfish
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Re: Retirement expense projection. Anyone else willing to share?

Post by Starfish »

nomorework wrote: Tue Nov 22, 2022 11:01 am
Tom_T wrote: Tue Nov 22, 2022 10:59 am Are you asking if you missed something?
Feel free to point out anything. More curious as to what others are projecting.
New roof, major repair, replacing furnace etc.
ClaycordJCA
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Re: Retirement expense projection. Anyone else willing to share?

Post by ClaycordJCA »

This Topic is now in the Personal Finance (Not Investing) forum.
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22twain
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Re: Retirement expense projection. Anyone else willing to share?

Post by 22twain »

Tom_T wrote: Tue Nov 22, 2022 11:05 am
nomorework wrote: Tue Nov 22, 2022 11:01 am
Tom_T wrote: Tue Nov 22, 2022 10:59 am Are you asking if you missed something?
Feel free to point out anything. More curious as to what others are projecting.
That is going to be highly personal. Some people would be amazed that you spend either that much or that little. :)
Yep. Household spending depends on location (coastal megaburb or tiny Podunk town in flyover country or something in between) and on lifestyle choices.

We're a couple of retired college professors, ages 68 and 73, in one of those tiny Podunk towns. Our total expenses in 2021 were $56K $58K, which I calculated by a simple analyisis of cash flow through our checking accounts:

Initial balance
(+) deposits from Social Security, dividend checks, withdrawals from investments, etc.
(-) debits that don't correspond to expenses (i.e. transfers to savings accounts or investments)
(-) the final balance.

Then I added our income taxes, which are paid by withholding from my wife's SS and RMDs.

Oops, I just realized I didn't include my wife's Medicare part B and D premiums which are paid by withholding from her SS. (I pay mine directly because I'm not taking SS yet.) So I added $2K just now.

Our taxes are low right now because I'm not collecting SS or taking RMDs yet. After I'm doing both in a few years, our tax bill will rise by about $24K, which would have made for a 2021 total of $80K $82K.

But... let's look at food costs, for example. The OP lists $800/mo for groceries and $800/mo for eating out. During the last six months we averaged less than $250/mo for groceries (simple diet, shopping mostly at Aldi). We don't eat out together very often, so it's mostly me eating lunch once a week at the local pizza buffet (senior discount!), and once or twice a month at one of the other pizza/Mexican/Chinese places. Maybe it averages $150 per month. So that's (generously) $400 per month for food for us, versus the OP's $1600. But if the OP gets pleasure from the extra expense, and he can afford it, fine!

Travel? No major travel since the pandemic began. Maybe next year. But our style is mainly road trips to visit family, friends and hobby events and sightsee along the way. 2-3 weeks per trip, 2-3 times per year. Call it 6 weeks total. Nowadays that would be maybe $2K per week based on current prices, or $12K per year.

We keep our cars for at least ten years, so if you figure $30K per car, that's about $6K per year when spread out. Gas and maintenance are already in the annual total.

Other one-off expenses? The $58K for 2021 does include $8K for a new roof. This year we have about the same amount for bathroom repair/remodel and replacing some furniture. In 2020 we had a few thousand for new computers etc. The year before that it was new hearing aids. Every year there's something, but so far it's been fairly consistent.

Different people have different financial situations, interests and priorities in life. Don't try to compare yourself to other people, unless you know you all are fairly similar.
Last edited by 22twain on Wed Nov 23, 2022 9:52 am, edited 3 times in total.
It's "IRMAA" (Income Related Monthly Adjustment Amount), not "IIRMA" or "IRRMA" or "IRMMA".
jbinpa59
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Re: Retirement expense projection. Anyone else willing to share?

Post by jbinpa59 »

I'm basing my retiement spending estimate ;
my current still working Net to Bank, which is easily supporting our current lifestyle including a vehicle payment
then ADDING my Health Insurance premiums and Federal Taxes to the top of the 12% bracket to cover taxes on Roth Conversions
since taxes will no longer be taken out before I get the rest
we will only have state taxes in retirement on interest/div/cap gains; in Pa all pensions / iras /401k's etc are state tax free

Its a bit rough but for me I think it will do; and its what we are used to spending / having available to spend
punkinhead
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Re: Retirement expense projection. Anyone else willing to share?

Post by punkinhead »

calmaniac wrote: Tue Nov 22, 2022 9:42 pm Pretty much all of our expenses go through one checking account. I simply download a csv file for our expenses for the year from that account and save it into Excel. I delete some of the irrelevant items (income, excess cash sent to brokerage account, cash gifts to family) and the rest are our annual expenses. Doesn't account for income tax, but that level of detail can be added if desired. I don't see much point in adding more details in regard to expense categories, but reasonable minds may differ.

My sense is that real data, actual expenses that you have tracked, are more valuable than budget projections.
We did the same. I don't see the point in a high degree of granularity. I made the assumption that our standard of living would remain the same so I left in luxuries like maid service, etc. I categorized things enough to be able to eliminate things I knew would go away (kids college expenses, retirement savings) then added in the things I knew would be added or weren't comprehended in the checking account .csv file (health insurance, income taxes). By going back 5+ years the .csv naturally included lumpy expenses like car purchases or home maintenance. I made no attempt to guess at what categories would go up or down because I figured we could always adapt by changing some other optional expense. We're coming up on our second year of retirement and so far it's worked out fine.
Admiral
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Re: Retirement expense projection. Anyone else willing to share?

Post by Admiral »

$140,000 likely
$150,000+ possible
$75,000 core/base case, the rest is discretionary

Once we have two SS payments most of the $140k will be covered by SS+pension so maybe we will go wild, who knows. I could see spending at the high end from 60-67. We are mid and early 50s.

Assumptions are basically everything stays the same except: no mortgage (saves $24k) and no education expenses (saves $80k :shock:). The rest is gravy.
MikeG62
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Re: Retirement expense projection. Anyone else willing to share?

Post by MikeG62 »

OP, not sure if or how this is helpful to you, but here is what I will say (completing our 7th year of retirement). We spend more money in retirement than we spent pre-retirement. Reasons being that while working we lived well below our means and we now live "up to" the level of our means. Primary drivers of the increase is spending on travel and entertainment (which is many, many multiples of what it was when we worked and by far the largest single line item of spending for us) and health care (we pay for our own healthcare, whereas we had employer subsidized healthcare while I worked).
Real Knowledge Comes Only From Experience
WillRetire
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Re: Retirement expense projection. Anyone else willing to share?

Post by WillRetire »

OP: We spend about the same as when we were working. Somehow, it evens itself out. For example, when you are working, you have less time for hobbies, travel, shopping for bargains. After retirement, you might spend more on hobbies & travel, but also have time to shop more carefully & save money at the grocery store or on major appliances. Income taxes may be lower if you fund expenses with withdrawals as opposed to pension.

The big disrupters to any budget: big purchases like a car or home repair/remodel.

Suggest you look at 2 years' worth of your spending amount and categories. Look at checking account & credit card statements. Rough numbers. Don't be too quick to dismiss something like an expensive tool set or draperies. Those types of purchases count.

The numbers are personal. It's a big range depending on where you live, how big your house is, and your lifestyle choices. Oh, and health.

Bottom line: Household & personal expense totals end up being very similiar to pre-retirement.
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