Author Topic: for recent retirees - expectation vs reality  (Read 1259 times)

bluebelle

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for recent retirees - expectation vs reality
« on: January 10, 2018, 04:10:53 PM »
Hi All,
this question is for folks that have FIREd in the last couple of years, and is directed at the 'softer' mustaches.   Has your actual spending been at least close to your projected spending?  I ask because our target FIRE date is a little over two years out, and I've got over 3 years worth of monthly spending tracked.  I started the tracking when we started to get to the point where freedom 55 started looking very doable, but we were both not convinced, and well, hubby likes to throw out numbers of what we 'need' (he doesn't pay the bills - how would he know)....anyway, my plan is use our current annual spending, tack on a travel budget (that doubles as a buffer - obviously we don't travel if markets are off or my guess of spending is wrong).  We're moving as part of our retirement dream, moving to Muskoka area of Ontario (beautiful area if you've never visited), but the move is forcing me to guess a little more than I want for the actual numbers (to the point that I may work for an extra year after we've moved - I work from home, so anywhere with an internet connection works for me)

So long interlude, hopefully you're still with me.....my question is - is your spending similar to what you expected, what it was before retirement?  Or have you seen a huge increase or decrease?  Please exclude out the things you expected to change - for example, if you had a mortgage before retirement, but didn't have one after.   Hubby has commute costs now, but I'm leaving it in, since we'll have local travel costs getting to hiking trails or putting gas in the boat.

Greystache

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Re: for recent retirees - expectation vs reality
« Reply #1 on: January 11, 2018, 08:26:26 AM »
We retired 3 years ago with a target budget of $60K per year. For the first three years, we have hit our target right on the nose each year. I spent some time prior to retirement tracking our spending so I had a good idea how much we would need. Just weeks prior to retirement, our youngest kid finished college and we paid off our mortgage, so pre-retirement spending was considerably different than in retirement. For the first 2 years of retirement, I tracked spending carefully, entering every dollar spent into a spreadsheet at the end of each month. As a result we refined our budget allocations a little over the first couple years.  In the third year, we were pretty confident we had a handle on the budget and monitor our gross spending much less frequently (we use Personal Capital to do this). At the end of third year, our spending was right on target. We have not had any major budget calamities, we are pretty healthy and we haven't had to replace any big ticket items like  car.  I think the biggest item we replaced was a refrigerator. Probably the most difficult thing to budget was our taxes (the size and sources of our income changed drastically in retirement) and health insurance.

Sun Hat

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Re: for recent retirees - expectation vs reality
« Reply #2 on: January 11, 2018, 08:50:54 AM »
I FIREd 11 months ago and find that I'm spending about 30% less than when I when I was working. That's less gas, less convenience food from being too tired/stressed to cook, no work clothes, no hair salon visits to dye and cut my hair (since embracing the grey and letting it grow it's looking healthier than it has in decades), no going away/congratulatory/networking lunches with colleagues, no buying of coffee stuffs for the office (I was the boss), no food/drink at mandatory socializing events, no massages or spa treatments to unwind from the stressful job. My new costs are a gym membership and dog expenses (food and vet), but it's still less overall.

Looking at my list, it's shocking to me now to see how much I spent on stress management. Now that I have less stress to manage, those costs sort of evaporate. I really hope that you get to enjoy the Muskokas soon - there's nothing better than listening to trees and loons.
"You need a little bit of insanity to do great things." ~ Henry Rollins

bluebelle

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Re: for recent retirees - expectation vs reality
« Reply #3 on: January 11, 2018, 11:49:46 AM »
thank you both for the reply.  I'm looking forward to the more natural 'grey' look.  I had forgotten about that.  The haircuts will probably slip to 8 weeks instead of the 5-6 weeks in retirement, the hair on the top of my head is so white, I look like I'm balding by week 3 as the skunk look appears.   It's more the time savings even more than the ~$1K a year in savings that I'm looking forward to in letting my hair grow out.....and I think being grey will make others more comfortable about my 'early' retirement at 55.  They'll assume I'm older, and consider the retirement 'normal'.  I'm of course speaking about the general public who don't know how old I am and will make an ASS-umption.  They'll be more accepting if they think I'm 65.

Interesting about the 30% reduction when you retired.  I can see that.  I wasn't closely tracking 5 years ago when I changed jobs, but I wouldn't be surprised if I had something similar happen then.  I work from home now in a much less stressful environment, so I have time to think about 'what's for supper', I am not stress eating food court pad tai at lunch, and my work wardrobe now is tshirts and yoga pants.  I think we've already gotten that benefit.  In fact I worry our food costs will go up for two reasons (1) we'll have more company (hello lake front) (2) with more time, we'll probably experiment with food more.  But I don't think it will go up so much that it is cause for worry, and it's pretty controlable.  Not every vistor gets the porter house steaks.


ozbeach

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Re: for recent retirees - expectation vs reality
« Reply #4 on: January 11, 2018, 02:22:25 PM »
Not quite retired, but just finishing up a 14 month sabbatical (or gap year!) and hoping to get a severance package when I go back at the end of the month.

I've been closely tracking my spending using Quicken for about 15 years so have a good handle on it. I don't consciously budget or fret about my spending, but nonetheless it has consistently hovered around AU$20K per year.

Last year, while not at work, I spent... $20K. Some categories went down, some went up, but essentially spending remained the same as when I was at work.
FIREd @ 52

2Birds1Stone

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Re: for recent retirees - expectation vs reality
« Reply #5 on: January 11, 2018, 03:25:39 PM »
I'm not retired, but one thing I would urge you to consider is the amortized cost of large purchases, that you may have perhaps not had over the past 3 years.

Roof? Car? Large unexpected medical bill that took you up to your out of pocket max? Those sorts of things.

Gerard

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Re: for recent retirees - expectation vs reality
« Reply #6 on: January 12, 2018, 09:30:20 PM »
Roof? Car? Large unexpected medical bill that took you up to your out of pocket max?

What's a "medical bill"? :-)

OP, the only useful data point I have is that I was surprised how much my food bill went up after I left Toronto. But I was shopping at a lot of very cheap Asian supermarkets...
"I can't believe you're still doing things your way after I explained why my way is better."

Catbert

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Re: for recent retirees - expectation vs reality
« Reply #7 on: January 13, 2018, 08:25:19 AM »
If you're looking back at tracked expenses it's easy to discount one-off expenses.  By that I mean you'll look back and see a new roof, unexpected new-to-you car after an accident, expensive travel to a funeral, updated kitchen, etc.  People discount these expenses when developing a core budget.  But if you look back, every year likely has one or more of these expenses.  Don't ignore them.  You can look back at past years and identify how much $$ each year goes to these random expenses.