Author Topic: Monthly Budget for future expenses  (Read 1566 times)

LAL

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Monthly Budget for future expenses
« on: May 23, 2014, 11:33:34 AM »
I was just wondering when you are still working, how do you project future expenses? 

I was calculating and we spend about $2500/month living and $2500/month mortgage (PITI+HOA).  So $5k/month, up to $65k/year.  But whenever people talk about retirement and expenses I picture myself not having a mortgage and needing maybe $2500-3k.  But that means we need substantially less nest egg to make do.

But that's why I struggle so much. I don't think I'll need an extra $2500/month in retirement after the mortgage is done.

How do you look at your monthly budget?  And how to you calculate future expenses?  Especially for early retirement.

BFGirl

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Re: Monthly Budget for future expenses
« Reply #1 on: May 23, 2014, 11:36:57 AM »
I don't think you can ever be 100% certain.  I have gone through my current budget and reduced it for things I know I won't be paying for in retirement and then I gave myself a $5000-$7000 cushion per year for the unexpected/trips/etc.

Also, I have played with cFIREsim to get some ideas about how my portfolio and different allocations would work as adjusted for inflation.  You can also set it to see the amount of expenditures your portfolio target could support in retirement.
« Last Edit: May 23, 2014, 12:07:13 PM by BFGirl »

zolotiyeruki

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Re: Monthly Budget for future expenses
« Reply #2 on: May 23, 2014, 11:48:57 AM »
Keep in mind also that the PITI+HOA doesn't go away entirely.  It just becomes TI+HOA.  For us, ignoring the HOA part, it means our PITI will go from $2500/mo down to about $900/mo, assuming we stay in the same home.