Author Topic: really spend less if you are getting older ?  (Read 2741 times)

hawkeye_de

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really spend less if you are getting older ?
« on: January 21, 2018, 08:58:12 AM »
I've read here and on other sources (don't have links) that you would in general spend less money if you getting older.

This statement is a little suspicious to me...I understand that when you're getting older you maybe do not travel so often and do (expensive) things compared to your younger age...but is this not completely compensated by the effect that you need additional spending in the medical sector (teeth, utilities and so forth) ? Also maybe you are forced to go to a nursing home, too; also if you have an insurance it might not cover all necessary spendings

So how do handle this ?

wenchsenior

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Re: really spend less if you are getting older ?
« Reply #1 on: January 21, 2018, 09:29:54 AM »
I've always been suspicious of this 'rule of thumb' as well.   I think it is based on a number of assumptions about spending, jobs, and lifestyle that do not hold true for us, and probably will hold true for fewer people in the future.

E.g.,  Assumption is that you have kids, and might be saving/paying at least something toward their college expenses.  Of course, kids are a big cash drain you won't have later in life (theoretically).  However, you might not have kids (we don't) or you might end up helping your kids out more/longer than you planned, financially speaking.

E.g., Assumption is that you have a job that requires a lot of spending on clothing (nice clothes, regular shopping, dry cleaning, etc) or in some careers (e.g., real estate), nicer newer cars.  Not applicable in our case, and thus, no room to reduce spending.

E.g., Assumption is that you will be in one of the following housing situations in retirement: 1) you own a 'forever' home that you have paid off, so you will have no mortgage payment; 2) you will sell the large house you raised your kids in, and downsize to a cheaper smaller place that costs you less, possibly gaining a chunk of cash equity in the process; or 3) if you cannot afford the housing costs you could bear while working, you will relocate to a cheaper location/area of the country.  None of these are applicable in our case.  We live in one of the cities with the cheapest housing in the country, in a modest starter home. We have no desire to stay here in retirement, and we may even need a LARGER home in early retirement to support needs of aging parents living with us.  So we are planning for housing expenses to stay the same or actually INCREASE, at least until very late in retirement.

Assumptions about retirees willy nilly relocating to cheaper parts of the country is also questionable, unless said retirees have friends or family living in said cheaper locations.  Most people strive to avoid leaving their social network, if they like where they live.

E.g., Assumption that you will no longer be eating out, doing expensive traveling, etc.  That makes very little sense to me.  Yes, if travel inclined you will likely travel less and less with age.  But initially, you are likely to want to travel MORE.  Being retired leaves a ton of previously occupied free time.  Even if you travel cheaply, or locally, you might potentially burn a lot of money in the early years, just in gasoline costs alone!  Same with all other hobbies.  Not all hobbies cost much money, but most cost SOME money.  And you will have a lot more free time to do those hobbies.

E.g., Assumption is that medical spending won't suck up all that extra cash.  This is very hard to predict. Medicare takes care of a lot if your health holds out that long, but it does not pay for hardly anything related to long term care needs, either in home or in a facility.  And about 50% of us will need that type of care for some period of time.

So yeah,  we are planning for spending a minimum of the annual $ amount equivalent to our current take-home pay, which is somewhere between 20 and 30K MORE per year than what we currently spend.

ender

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Re: really spend less if you are getting older ?
« Reply #2 on: January 21, 2018, 09:38:22 AM »
You have to define "older."

Someone retiring at 65 probably will spend more than they did at 60. Someone who is now 80 probably will spend less than you did at 65, excluding medical.

Someone who had all their kids by 40-45 will likely not be supporting them financially by the time they retire.

It's also worth recognizing that when someone retires at a typical age, one of two situations happens:

  • you never saved, so you are forced to spend less
  • you saved a decent % of income that you now do not have to save


GuitarStv

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Re: really spend less if you are getting older ?
« Reply #3 on: January 21, 2018, 09:51:03 AM »
Working - Kinda expensive, need to buy clothing, have reliable transportation, need to have a place to live not too far from work, time crunched so tend to pay more for things that are quicker/easier.

Early retired - Much cheaper!  Can wear rags, can live anywhere, can blow huge amounts of time to do things more cheaply (transportation, home repairs, etc.).

Old as fuck - Expensive as fuck!  May have mobility issues limiting where you can live, will have higher costs related to medical care, may eventually need some sort of nursing home, will probably be less enthused about hardship in general.



Kids will add some costs of course, wherever they come in.

hawkeye_de

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Re: really spend less if you are getting older ?
« Reply #4 on: January 21, 2018, 09:57:08 AM »
So, how to calculate then your living costs then for (early) retirement...assume you would be in your early 40's ? Do you add a factor like +25 % to your assumed living costs after retirement (assumed living costs with early 40)?

I've a pretty good understanding about my living costs now (after retirement)...but I'm struggling how to calculate for the 'I might be old and sick' case ...

MayDay

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Re: really spend less if you are getting older ?
« Reply #5 on: January 22, 2018, 06:25:10 AM »
I think you might spend less for awhile, but that sometime after ~age 60 it will start going up, possibly dramatically (nursing home).

I know many older folks who were frugal all their lives and at some point they say "fuck it, I don't want to spend my remaining time cooking/cleaning/DIYing". And that doesn't touch those who become physically unable to do it.

ooeei

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Re: really spend less if you are getting older ?
« Reply #6 on: January 22, 2018, 12:12:35 PM »
So, how to calculate then your living costs then for (early) retirement...assume you would be in your early 40's ? Do you add a factor like +25 % to your assumed living costs after retirement (assumed living costs with early 40)?

I've a pretty good understanding about my living costs now (after retirement)...but I'm struggling how to calculate for the 'I might be old and sick' case ...

Any calculations you do are going to be ballpark, and they can all be thrown out the window if any number of events happens. Maybe you get cancer, maybe you get an inheritance, maybe you do some part time work for fun, maybe your investments go higher/lower than expected, government healthcare takes off, etc etc.

Most people on this board who RE say their expenses went down, so that's a reasonable assumption for "standard." The rest you just have to balance with your risk tolerance. Discussing what your healthcare costs might be in 20 years is almost not worth doing since any number of things could change before then.

Cassie

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Re: really spend less if you are getting older ?
« Reply #7 on: January 22, 2018, 12:30:26 PM »
We retired almost 7 years ago at 53 and 58. Car gas went down as did some other things. Our health insurance costs 6x's what it did while working. We have more time so go out more to eat, entertainment, etc. We take 2 big vacations/year and a few shorter driving ones ( 10-15k/year
).  We did not do this while working.  We want to travel now and do stuff as you never know when that will end. We lost 3 good friends between the ages of 59-67.  We did downsize our home but stayed in same town because our social network is here.

former player

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Re: really spend less if you are getting older ?
« Reply #8 on: January 22, 2018, 01:14:18 PM »
There comes a point where spending less is a function of being able to do less.  Not just travelling (although some travelling can work well into old age: trains, coach trips, cruises).  But a lifetime of acquiring "stuff" will end: you have everything you need and it's not going to wear out before you do.  You will spend less on updating your home: you have probably got to the stage where you like what you have and you can't cope with the work and disruption of changing it. Your hobbies become more limited.  You will become less capable of maintaining a house and garden: that may mean spending money on people to do it for you or it may mean it just doesn't get done, or not to the same standard, or it may mean you move into a much smaller and easier (and therefore cheaper) home.  You may stop driving a car: taxis and volunteer drivers are probably cheaper for the limited travel you now want to do.  Because you are older, younger relatives are more likely to visit you than vice versa, old friends are dying off so you no longer have so many people to go out to meals or concerts with.

All those lower costs add up.  The problem is when things get beyond that stage and so difficult that help with personal care or nursing help is needed: that can get very expensive.  Plus, if you are in the USA, the issue of medical costs.

marty998

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Re: really spend less if you are getting older ?
« Reply #9 on: January 22, 2018, 01:28:51 PM »
There comes a point where spending less is a function of being able to do less.

And I suppose the speed at which you can pay for things :)

Old bloke I saw at the local supermarket was buying groceries, and got out his big bag of coins to pay.

Counting out 10c at a time for $4.50 of groceries...

He was very old, but good on him for still being somewhat semi-mobile and independent.

frugaliknowit

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Re: really spend less if you are getting older ?
« Reply #10 on: January 22, 2018, 02:24:04 PM »
My observation of what is fairly consistent:

Folks in their 80's and 90's generally don't travel.  If you are relatively well in these years and able to live independently, you tend to spend very little.

hawkeye_de

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Re: really spend less if you are getting older ?
« Reply #11 on: January 22, 2018, 11:41:59 PM »
Thanks for sharing your thoughts...I guess I add just a risk margin to my current estimated spending level after retirement...

Mezzie

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Re: really spend less if you are getting older ?
« Reply #12 on: January 23, 2018, 01:59:59 AM »
My nearly-ninety grandpa travels and hikes the world by taking at least three international trips a year. He's still working, too (his line of work allows him complete control on how often he works, so not too often) -- not because he has to, but because he loves it. He's my retirement guru, and he definitely spends more now than when he was younger. He also invested wisely and early on, so he's got the funds to cover it. He and my late grandma each own/ed their own successful businesses. I grew up in moderate poverty, so their home and lifestyle were a whole other world to me. When I was young, I worried I'd never scrape together the capital to invest, but luckily between the example of my grandparents and an excellent class in high school that covered the basics, doing so was always on my radar.

We talk investing a lot. He's way more risky and active in trading than I am, but that has treated him well. As far as I know, we're the only ones in the family that have any interest in this stuff.

I'm being rambly. My point is, I hope to spend a lot on meaningful experiences when I retire. I also love my work, so, health-willing, I'd like to do it part-time for both fun and to fund my globetrotting.

Pigeon

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Re: really spend less if you are getting older ?
« Reply #13 on: January 23, 2018, 08:06:00 AM »
I think it's very much a YMMV kind of thing.  We're older than most here, in our late 50s, with  kids in college, FI but not RE.  We are at our maximum spend, I think.  We pay for 4 years of college, the kids are on our insurance and all that is $$$$.  We don't have big expenses from working, so that won't change much.  We don't buy lunches, don't spend much on clothing and don't pay people to do stuff.

I suspect we will spend a bit less when we initially retire.  Our house is just about paid off, but we have about $5.5K/year property tax, so it's not like housing costs go away, and there's maintenance.  We'll travel a bit more.  Hopefully the kids will be fledged completely, although one may continue to live with us while in grad school, but she won't cost us money. 

My MIL and father died last year, both in their mid 90s.  I agree with what frugaliknowit said, having knowledge of their finances.  They didn't spend much in their 80s.  They needed nursing homes/memory care in their 90s, and that is very, very expensive. 

iris lily

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Re: really spend less if you are getting older ?
« Reply #14 on: January 23, 2018, 08:47:06 AM »
We are old, a couple of years into retirement, and we are spending the money we have accumulated. so, we spend more than when were were working because working kept our nose to the grindstone and in a tight routine.

Now that we are retired we spend more on travel. We even put more miles on out car just tolling around because we do more.

We hang out with a couple who are 82 and 79 and they take 2-3 out of country trips each year. She still works part time to fund this travel.