Your second option provides a buffer for unexpected expenses. However, I do enjoy planning out future spending and recommend that you do that as best you can so that you have an idea of the spread before you get there.
Here's how I am calculating future expenses:
1. I add up last month's expenses and put them in their buckets (food, utilities, etc). This is my baseline,and I do it every month. I have six years data at this point.
2. I have another column, which is my estimate of whether this will go UP or DOWN in the future. For me, food will go down because children leave, but health costs will go up.
You could use this model to come up with some projections. Rent will go away but add a mortgage payment, property taxes, maintenance.
Other costs may go down in a LCOL, you'd want to research them and make projections.
