How did your expense categories surprise you in retirement

[Hillview]

In retirement my plans call for
- increasing travel
- increasing health care costs
- increasing gifts (to kids)
- decreasing clothing costs (no more $$ suits and shoes)
- decreasing home costs (we are moving to a condo in 2 years)
- decreasing food (kids will be moving out / college)

were there areas that changed in ways you didn't plan for?

[jebmke]

We expected to have high travel expense but after a couple of trips, we concluded that we had traveled so much prior to retirement that it was getting repetitive and we were less interested. The logistics etc around traveling also degraded over time.

I don't keep track of expense details so there is no way to know what made up for this -- our overall expenses seem to be in line with expectation so something else filled the void.

Probably the biggest "surprise" was that the year to year variation in the total expense is much larger than I think I would have predicted before retiring. This is true even if I exclude income taxes which can sometimes fluctuate a lot.

[HomeStretch]

Inflation/price increases over the last 5 years were surprising as it has been a long time since I have seen meaningful personal inflation.

In-home and in-facility care costs for parents and in-laws were surprisingly very high. As was the realization that in-home care is not always a safe, realistic, reliable or more affordable option.

These are not personal issues as we oversaved. But for someone retiring with aggressive projected real portfolio returns, it could be a big issue.

[neilpilot]

I was surprised that our income tax increased as much as it did, particularly when I started to take SS at 70. Income from SS (wasn't expecting it to be 85% taxable) + Pensions + RMDs + investment income much higher than anticipated.

OTOH we expected travel expenses to be higher. However, even though we continue to travel more than we anticipated we've found a way to drastically decrease our travel expenses.

[mhc]

No surprises here. Our spending pretty much stayed the same from pre-retirement to retirement except health insurance premiums and income taxes. Health insurance premiums went up as expected, and income taxes went down as expected.

Our lifestyles didn't change due to retirement.

[Sandi_k]

Taxes. I am retiring in 7 months, and by my estimates, our taxes will go from 17% effective Federal rate, to a 21% effective Federal rate. A similar tale for state tax estimates in 2025 as opposed to 2024.

The reason? No more tax-deferred investments, no pre-tax medical premiums, or other tax shelter options.

[secondcor521]

Most changes I was able to predict at least directionally and approximate magnitude. I knew that in my case taxes would drop quite a bit because I was only basically taxed on dollars I was spending, not on dollars I was earning - my savings rate before retiring was over 60%.

Changes I didn't expect:

1. All three kids ended up in private high school after I retired. I had expected them to remain in public school.

2. Not yet, but others have said dental expenses in 60s/70s/onward can be pricey. I didn't plan for this.

3. Desire for travel hasn't lately been as high as I would have thought.

I also didn't expect my portfolio to more than double even after spending from it for nine years, and I didn't expect basically a 0% personal inflation rate. So things are working out OK.

[Cruise]

If someone told me 10 years ago what I would be spending on travel now, I would have called them crazy. In reality, we are spending at least 3X the amount I penciled in. Other than not flying private or Emirates F suites, or staying in hotel/cruise ship presidential suites, we have not set limits.

We know that the window for retirement travel is relatively narrow, so we will go go until circumstances cause us to either slow down or stop.

[AlohaJoe]

After retirement:

Had a kid. Turned out to be twins, so had two kids.

Moved to a new country with much higher cost of living than previous country.

Bought a house in the new country. Haven't sold the previous house. (Currency controls mean moving money out is tricky, plus have a thought that it would be nice to own that property in 15-20 years.)

Bought a car after being car-free for 20 years.

Solar power became more viable. To some extent this is just "pre-purchasing" electricity and should (fingers crossed) be cheaper in the long run but it still affects cash flow now, which means it affects overall retirement planning.

Financial support for in-laws to age in place since they refuse to sell & move. In theory we will probably recoup some or all of this once they pass, the property is sold, etc etc but who really knows?

Nephew turned out to be quite talented at basketball (maybe a decent college athlete, not pro) which is a huge expense in terms of coaching, travel teams, etc for his parents so the whole extended family chips in.

Niece's daughter was diagnosed with a tumour at 1-month old and related expenses (unplanned time off work, etc etc) meant they were financially struggling.

I always laugh that anyone thinks they can predict expenses 15+ years out.

The iPhone didn't even exist 15 years ago. Did retirees back then budget for it and the related expenses?

Depending on where you live you might have seen property taxes or home insurance go up much faster than inflation. How does any retiree realistically plan for that 20 years in advance?

[victw]

Clothing costs did not decrease. They werevjust reallocated. More miles on my feet means trail shoes are purchased mord often. They are the most expensive clothing item I purchase and the most often purchased.

I think you just end up with a number you think you can live with and call it quits.

Vic

[nguy44]

Health care costs before Medicare turned out to be much less than we planned for. We had set aside about $150K for five years of medical costs, but the actual cost was about $34K. The retiree health care we were able to get turned out to be much less in premium cost and better coverage than the non-subsidy ACA plans in our area.

[Nowizard]

Healthcare in the sense that we became aware of the total cost versus our share when employed. Then there were increases related to IRMAA earlier due to failure to convert Traditional to Roth-IRA's.

[Wannaretireearly]

If someone told me 10 years ago what I would be spending on travel now, I would have called them crazy. In reality, we are spending at least 3X the amount I penciled in. Other than not flying private or Emirates F, suites, or staying in hotel/cruise ship presidential suites, we have not set limits.

We know that the window for retirement travel is relatively narrow, so we will go go until circumstances cause us to either slow down or stop.

Curious. What is your current travel spending per year, roughly?

[SunRainSnow]

Coming up on 3 years since we ended full time employment and this year will be the first full year since our move a lifestyle change (SFH vs condo living). Probably the biggest surprise is how low our essential living costs are (all costs minus vacation, eating out and gifting/charity) without specifically trying to get them particularly low (we could have chose a condo with a far lower HOA fee but wanted the amenities we've got (no regrets!)).

I'm also surprised how little we've spent on eating out (which includes drinks out and take out) but I think that is partly driven by how much we've spent (time and money) on vacation spending this year (again no regrets!).

By the time the year is over I estimate our vacation spending will be roughly 60% of our total spending (roughly $50k) and I'm really happy about this as this was one of the primary reasons to retire, to have the time to do these fun trips.

Our spending is still quite low (as a % of our portfolio) and we still have some contract work income coming in so these is room to 'improve" our spending! Great stuff as far as I'm concerned!

Future spending I anticipate transportation costs to increase as we'll purchase a new vehicle before year end but aside from that I don't see much changing.

A rough breakdown of where my money goes:

Cars/Everyday Transport 5.35%
Clothes 1.42%
Communications - cell, internet, phone, etc. 1.03%
Eating/Drinking Out/House Drink/Take Out 3.49%
Electronics/Durable goods 0.96%
Entertainment 1.40%
Gifts/Charity 1.21%
Health 3.10%
Household essentials - food, cleaning products etc. 4.96%
Other 2.34%
Personal Services - massage, cleaner, hair, etc. 0.10%
Post Work Taxes (minus SE taxes) 2.80%
Housing costs 9.23%
Utilities 0.93%
Vacation 60.59%
Yard & House Maintenance 1.10%

[mercutio2]

After retirement:

I always laugh that anyone thinks they can predict expenses 15+ years out.

The iPhone didn't even exist 15 years ago. Did retirees back then budget for it and the related expenses?

With you until this one. iPhone was announced to the public in 2007. That’s 17 years ago now!

[Cruise]

If someone told me 10 years ago what I would be spending on travel now, I would have called them crazy. In reality, we are spending at least 3X the amount I penciled in. Other than not flying private or Emirates F, suites, or staying in hotel/cruise ship presidential suites, we have not set limits.

We know that the window for retirement travel is relatively narrow, so we will go go until circumstances cause us to either slow down or stop.

Curious. What is your current travel spending per year, roughly?

Actually, due to multiple cards and pre-payments long in advance, this is hard to say with precision unless I want to do a lot of accounting work.

I did look up my cruise-only cost for next year. Well over $100K for our three booked cruises (two of them expedition-type). This does not include very pricey airfare to get to/from embarkation/debarkation cites, pricey travel insurance, or hotels pre- and post cruise.

Aside from our cruise travel, we do a fair amount of travel in-state, as well as air travel to see family out of state. It all adds up.

[heyyou]

Didn't track any of them, so just blaming the increase on not-unexpected inflation.

[Wannaretireearly]

Curious. What is your current travel spending per year, roughly?

Actually, due to multiple cards and pre-payments long in advance, this is hard to say with precision unless I want to do a lot of accounting work.

I did look up my cruise-only cost for next year. Well over $100K for our three booked cruises (two of them expedition-type). This does not include very pricey airfare to get to/from embarkation/debarkation cites, pricey travel insurance, or hotels pre- and post cruise.

Aside from our cruise travel, we do a fair amount of travel in-state, as well as air travel to see family out of state. It all adds up.

Nice chunk of change
Nothing better to spend on imo.

[Cruise]

Actually, due to multiple cards and pre-payments long in advance, this is hard to say with precision unless I want to do a lot of accounting work.

I did look up my cruise-only cost for next year. Well over $100K for our three booked cruises (two of them expedition-type). This does not include very pricey airfare to get to/from embarkation/debarkation cites, pricey travel insurance, or hotels pre- and post cruise.

Aside from our cruise travel, we do a fair amount of travel in-state, as well as air travel to see family out of state. It all adds up.

Nice chunk of change
Nothing better to spend on imo.

To make this actionable on a finance forum: Don't pay AUM and you will have more play money.

[gwanghoops]

I retired a couple of years before the wife did, so expenses were much lower than expected.
Now that the wife retired, our cruise "budget" has been blown out of the water (it was fairly conservative) and booked into 2027.
Several years ago, we budgeted $25K/yr (more than double anything previously) and now it's laughable.

[JayB]

We had expected to spend significantly more on travel in retirement than we have. We spent a bit more for the first 3 years and then got the travel bug out of our systems as far as big or expensive trips are concerned. Now we mostly do 1-2 night stays fairly nearby and are happy with that.

In addition, we had budgeted an extra $1K/month for whatever strikes our fancy, but we're not really spending any of that extra, so took it out of the budget.

We did end up spending more on taxes the first few years after retirement due to Roth conversions. Conversions stopped making financial sense after that.

[Cruise]

I retired a couple of years before the wife did, so expenses were much lower than expected.

Yes, this was what happened for us as well. Plus, COVID stopped our travel for quite a while.

[Sandtrap]

1
The 10 year plan to complete major home renovations and property improvements stretched out to 15 years.
Total costs (still ongoing but 90% done) went from 3-400k to easily double to triple that.
2
Medical insurance: sky high.
ACA bit us hard first with terrible coverage and high premiums for little in return. Who gave it that name?
Then, Medicare Origiginal, Part G Medigap, plus supplementals of all sorts. (but worth every dime).
3
Medical costs, healthcare costs, and costs of lifestyle adjustments associated with that.
Does not fit on an age related curve or have any predictability as far as just how expensive things can be.
Costs? Huge. (this can do more damage to a portfolio than many might expect).
4
Other retirement expenses were little and frugal in comparison.

Aging accelerates exponentially. When we are young we age in human years, then it speeds up to cat years, then dog years, then finally grasshopper years. . .

Financials deteriorate exponentially: in 1950, a "Snickers" candy bar was 5 cents. Now it costs about $1.30 dollars. Supposedly the most popular chocolate bar in the world.

FIRE 14 years ago. DW/Me: 70's.
j

[MisterCruise]

If someone told me 10 years ago what I would be spending on travel now, I would have called them crazy. In reality, we are spending at least 3X the amount I penciled in. Other than not flying private or Emirates F suites, or staying in hotel/cruise ship presidential suites, we have not set limits.

We know that the window for retirement travel is relatively narrow, so we will go go until circumstances cause us to either slow down or stop.

I totally agree, my retirement motto is “Exploring The World in Comfort”, to steal a phrase from Mister Viking. We have two cruises planned for next year, with the added comfort of business class flights. Every day is a gift to enjoy!
MisterCruise

[syc]

Only about 4 months into retirement. Two things so far, both probably trivial, caught me off-guard:

Lunch! I go out for lunch much more often now. When working, I just always brought a sandwich. Lunch seems to be a common socialization for retired old men like me. Certainly I enjoy it and would not give it up, but I did not have that line item in my budget!

Household heating. When we were both working, we set our programmable thermostat pretty darn low during the day. We bummed heating from our employer, so to speak. Now, since we are spending more time in the house during the day, I had to dial it up a tad.

[Jack FFR1846]

Medicare costs and complexity surprised me. I had expected that Medicare would be cheaper than workplace insurance. And all the deductibles make the cost much higher than I expected.

We are doing Roth conversions to avoid excessive RMD era taxes. This has raised our tax bracket above what it was when working which was unexpected after years of 401k speakers telling us how much lower our retirement bracket would be. And of course, no more 401k tax break so that much more tax.

Car expenses and travel have dropped dramatically. I keep procrastinating on buying an expensive, fun car. I will eventually but keep running into need vs want.

[MikeG62]

In retirement my plans call for
- increasing travel
- increasing health care costs
- increasing gifts (to kids)
- decreasing clothing costs (no more $$ suits and shoes)
- decreasing home costs (we are moving to a condo in 2 years)
- decreasing food (kids will be moving out / college)

were there areas that changed in ways you didn't plan for?

OP, there was a similar thread on this topic not long ago. My reply is contained therein.

viewtopic.php?p=8104650&hilit=means#p8104650