Author Topic: Retirement Budget Planning Question  (Read 1523 times)

Fortuna

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Retirement Budget Planning Question
« on: August 03, 2015, 10:41:29 AM »
One of the things that is often not accounted for in a lot of the retirement budgets I read about is non monthly expenses that come up every few years.  I would be interested in hearing how people budget for these in the FIRE planning:

1) Replacement cars - sure we try not to drive that much but most of us are going to own a car.  How much do you budget and how do you set aside the money?

2) Health Care (Canadian Perspective) - How do you plan dental, years from now needing dentures or implants could be very expensive, expenses that that are not covered by OHIP, for example I read recently about a new cancer treatment costing $3000/month that was not covered by OHIP.

3) Long Term Care - Not only for you but what about parents or relatives that might need it.  I am going through this now one parent in care and one getting older and may need it some day.  Costs are stretching their budgets and we may need to help and who knows for how long.

I see some retirement budgets (Perhaps even MMM himself! :o) that do not really address these.  So what is your plan?  Budget monthly, keep in a separate fund?  Over a 40-50-60 year retirement these could be very hard to predict.

What others do you worry about or plan for?

yyc-phil

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Re: Retirement Budget Planning Question
« Reply #1 on: August 03, 2015, 10:44:22 AM »
Good questions...following this thread...

Lucky Girl

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Re: Retirement Budget Planning Question
« Reply #2 on: August 03, 2015, 11:26:40 AM »
I'm not FIRE yet, so I'm sure others will have more detailed answers, but here is how I'm thinking about it.

I incorporate all expenses into some sort of budget line, and we have been tracking our finances this way for several years.  So we have a good idea for the "car replacement" type situations.  For health care I am concerned about increasing out of pocket costs, but figure I will have a built in cushion.  For example, if I decide I need $40K per year to live, I will save more than exactly $1MM.  I'm not sure what that factor will be yet, but I'll definitely go over the 25x (which of course means that my SWR will be less than 4%.)

Plus we will have social security, plus I'm likely to inherit something at some point (not something I count on, but I know the likelihood in my case and it's pretty good).  Plus I may consult a little or do something that earns money at some point after RE.  Plus there will be some expenditures I could cut if needed to save up for a big expense.

So that's how I account for the "what ifs"--multiple layers of safety margin.