The Money Mustache Community
General Discussion => Post-FIRE => Topic started by: jimmyshutter on December 14, 2023, 11:26:02 AM
-
I'm not retired yet but wanted to know people's experiences with their projected "number" pre-retirement to their actual number post-retirement. I know I've already hit my number but it keeps increasing all the time. I don't hate my job and it's actually quite easy and I get paid well. I'll never find another gig like the one I have so I'm staying until I feel like leaving which makes staying much easier. The problem is this number keeps increasing and I don't want it to get in the way when I actually dread going into work.
Number increased because I didn't want to live off of cheap food and to just scrape by and didn't want to live that way.
Number increased again because I wanted "fun money" in retirement.
Number stayed the same but actually increased because I wanted "x" amount put aside to pay off mortgage as I don't like to use my equity in my NW.
Increased again because of increased inflation.
Increased again because I also wanted "x" amount of years living expenses in case of a down market like these past few years.
Increased again because of house repairs that I want to perform before retiring even though I've already factored in enough expenses/year for this.
So even thought I have enough I still let that "number" play with my head. I have been trying to change my thought processes from "saving" to "spending" which actually is helping because it's taking away the power that money I think I need has had on me. I do believe I'll spend less than my "number" in retirement without even trying because I've estimated higher projected future expenses vs actual past expenses.
I'm wondering people's experiences are with this in real-life as I don't want to stay at work because I think my number needs to increase. Again, right now I'm good with my work but I don't want to stay if that changes just because I think I financially need to. I'm sure this has been brought up before but I'd still like to hear people's experiences with projected vs real spending in retirement.
-
Do I spend "my number" in retirement? I'm 4 years in, and not yet.
My number was $33k per year ($40k if I no longer had a paid-off house). In a somewhat unplanned coincidence, I quit my career exactly when my NW hit $1 Million. I had vague ideas of getting part-time work for health insurance, then realized the ACA could meet my needs and I didn't have to worry about continuing to work. I've been spending $18-$20k per year since FIREing, way below my estimates, and feeling no reduction in my quality of life. Lots of that is personality - saving is in my blood and I have simple wants.
I have taken on some work for fun (for very little profit), which helps my SORR and means I haven't had to sell any investments yet (my large "EF" that turned into cash on hand to spend first has covered everything).
My journal has lots of boring numbers.
-
We are only semi retired, so not actually withdrawing at this point. This, his first full year with more time, DH spent more than ever. Even so, household spending was pretty much spot on target: between my ideal 3.5% and his looser 4%. There was just a large additional spending to help a friend who very much needed someone to give him a break.
Like you, as our savings grew beyond our initial goals, we started picturing new things we might do in the future. We now have enough that it will be feasible to upgrade our boat to something we wouldn't have even dreamed of a few years ago.
The nice thing about semi retirement has been that our spending only matters in so far as new habits could affect future spending. It isn't something we need to stress over while income still exceeds expenses, even if our savings rate has become closer to typical Americans than typical Mustachians.
-
Nowhere near the number. I view that planning number as an outer band for budgeting purposes. There is no need to budget to spend more than or need or want--spending just to spend it? You say you want travel, but that takes planning. And the longer it is, and more exotic / off the beaten path the destination is, the more planning it takes. So, we only do so much planning.
We stumbled into retirement (laid off) two years early, but at our planned number. Repatriated in May 2020, in the teeth of the pandemic. Navigated both the real estate market and new car market successfully. As I sit here today, our stache is up 30%, even having bought our house for cash (out of necessity).
So, do we inflate our lifestyle? We didn't then, so why do it now? We have increased our charity giving, and would do that tremendously if we got significant inheritance(s). But coming on 4 years in, all assumptions seem to be holding, despite an environment that has been anything but steady.
-
We've spent significantly less than our planned spending. I FIRE'd April 2019, and spent significantly less each year except 2023. We wanted to have plenty of fun money - meals out at restaurants, plenty of travel, extra in case the ACA was repealed, etc. None of the really bad things (like the ACA going away) happened, and we also spent less on travel (due in large part to COVID) as well as spending less on food, concerts, and other entertainment activities. We're both really happy spending most of our time at home and taking inexpensive trips to see family and friends around the country. We also like figuring out how to cook meals at home that we otherwise would go to a restaurant for.
In 2023 we actually are going to hit our planned spending number for the first time. A bunch of things all happened at once, including many thousands going to a family member in need, major car repairs, and some other big-ticket replacement items. It is comforting to know that we have tens of thousands unspent from the first few years and in a year with seemingly everything going wrong from a personal spending point of view we're just going to approach our initial planned spending number.
-
I don't like posting actual numbers online for some reason that I don't even understand, but I will say that we spent the following percentages of our planned spending each year:
2019 - 72%
2020 - 75%
2021 - 80%
2022 - 76%
2023 - 95-100% (TBD)
So if our budget was $40k in 2020, we actually spent $30k. Or if our budget in 2021 was $100k, we actually spent $80k.
And we're not generally being all that careful with our spending. We avoid doing stupid things, but neither one of us feels like we "can't" spend on something we want. We're just living the lives we want on less than we planned.
-
Would you mind sharing what you do that's both easy and pays well? I know you said it's unlikely to be replicable.
-
Thanks for the responses. I assumed people spent less but wasn't sure because some people have such large staches that I didn't know if they planned on higher spending in retirement. I see some are happy the way they live without the desire to spend more which is how I'll live also in regards to future spending.
I don't like posting actual numbers online for some reason that I don't even understand, but I will say that we spent the following percentages of our planned spending each year:
2019 - 72%
2020 - 75%
2021 - 80%
2022 - 76%
2023 - 95-100% (TBD)
So if our budget was $40k in 2020, we actually spent $30k. Or if our budget in 2021 was $100k, we actually spent $80k.
And we're not generally being all that careful with our spending. We avoid doing stupid things, but neither one of us feels like we "can't" spend on something we want. We're just living the lives we want on less than we planned.
This is interesting because when I project my future spending I automatically round up to give a more of a cushion. I'm sure I'll only be spending 70%-80% of what I will have budgeted. Right now I'm much less but I've trying to be more open to spending. Thank you
Would you mind sharing what you do that's both easy and pays well? I know you said it's unlikely to be replicable.
I work in healthcare (don't want to get into specifics) and I work for the government. I have worked private sector (hospitals) and it's a world of difference. That's not to say I don't do my job it's that there's not a lot to do.
-
Our spending is broadly split into two buckets.
The first are recurring fixed / known costs such as gas, electric, water, food, subscriptions etc and those have been pretty much spot on.
The second bucket is where our discretionary spending is, such as entertainment, socialising, alcohol, and traveling and that is way above what I was estimating. It's also very bumpy from month to month.
But saying that we knew that the first couple of years would be spendy as we have a backlog of bucket list trips that we want to do and once those are out of our system then things will settle down a bit.
At the moment we're having too much fun!
-
There is no number. Our spending is all over the place.
-
If you budget for annual living expenses realistically, don’t bake-in a lot of contingencies, and don’t forget any important line items, you should spend very close to your budgeted amount in an average year. But that’s not the point.
The experience you shared with us about the changing amount of invested assets you want to live comfortably in retirement is honest and telling. The only constant in life is change. That is certainly true of our individual needs, desires, and interests.
A 30-year-old may think $XXXX is a perfect number to FIRE on. But when he retires at 45, and looks back at 50, he may be kicking himself.
Your intuition about future changes in your life seems solid to me. Trust yourself.
-
Before I retired 13 years ago, I worked out what I’d spent in the previous five years, took out work expenses, and used that as my number. For the first few years, I spent considerably less than I’d estimated. I now do something similar to brownyboy, and have two buckets like his. The first has never gone over. The second is discretionary, and I decide what I want to do that year, and use the money. Where I live, a minimum retirement income each year must be taken from your retirement stash. I’ve never taken more than the minimum. During the pandemic years this minimum was halved, so this year I have to take double what I’ve been satisfied with for the previous few years.
I never anticipated travelling during retirement, but the bug got me! However, travel can be as cheap as $6 a night camping in a national park, or as expensive as you want it to be. Since I’m just as happy in either situation, it’s really easy to keep within my number and to have amazing experiences.
-
We are not fully retired since my wife is not working but I do keep track of our annual expenses fairly closely. Morningstar suggests that an SWR of 4% is ok again (see https://www.morningstar.com/retirement/good-news-safe-withdrawal-rates)
Our current expenses are just 50% of the SWR amount so to answer the OP's question, its very likely that we won't come close to spending our "number"
-
I spitballed estimated spending at $3,000 per month the day I walked out of the office for the last time as that was similar to what I was spending while employed. For 11 years, it has averaged about $2,200 a month. With more time, I've been able to be more picky when shopping or try two places and comparison shop. I need fewer conveniences. I could go quite a bit lower by eating out less. I don't care much for travel so that is an important consideration.
-
We're now spending 10-20% more than our original number but that's entirely by choice, and driven by the fact that our stash is now between 2-3x what it was when I FIREd. This is entirely driven by the increased cost of housing over the last couple years. We could have stayed where we were with our $976 mortgage payment @ 3% but it's not the neighborhood we really wanted to be in. With any luck, interest rates will come down a bit over the next couple years and a refinance will bring us back in line with our original number.
-
We retired almost 9 years ago with a stache of $1.5M plus a $100K fund for occasional big expenses like a new roof or replacement car. Our budget was $60K per year and we have never exceeded it or increased it for inflation. I have not run the numbers for this year yet, but I suspect we will be a little over $60K for the first time. We have only tapped the big expense fund once for $11.5K to install solar electric panels on the roof. Those have already paid for themselves. After 9 years of spending and very conservative investing, our stache is now at $1.8M.
-
We retired almost 9 years ago with a stache of $1.5M plus a $100K fund for occasional big expenses like a new roof or replacement car. Our budget was $60K per year and we have never exceeded it or increased it for inflation. I have not run the numbers for this year yet, but I suspect we will be a little over $60K for the first time. We have only tapped the big expense fund once for $11.5K to install solar electric panels on the roof. Those have already paid for themselves. After 9 years of spending and very conservative investing, our stache is now at $1.8M.
Thanks for this! It's reassuring to read, as these as basically exactly our numbers.
-
If you budget for annual living expenses realistically, don’t bake-in a lot of contingencies, and don’t forget any important line items, you should spend very close to your budgeted amount in an average year.
This has never been true for me. Not everyone's lives are consistent or predictable.
-
I think what you spend before you retire is a pretty good indicator of what you’ll spend after you retire unless you make some major change. Knocking $25 off your grocery bill isn’t going to make all that much difference.
-
If you budget for annual living expenses realistically, don’t bake-in a lot of contingencies, and don’t forget any important line items, you should spend very close to your budgeted amount in an average year. But that’s not the point.
The experience you shared with us about the changing amount of invested assets you want to live comfortably in retirement is honest and telling. The only constant in life is change. That is certainly true of our individual needs, desires, and interests.
A 30-year-old may think $XXXX is a perfect number to FIRE on. But when he retires at 45, and looks back at 50, he may be kicking himself.
Your intuition about future changes in your life seems solid to me. Trust yourself.
How do you find "realistically"? I really have no idea how often we will want to travel, what hobbies we might develop, or other factors that will have a huge bearing on our expenses. I mean, sure, if we budget $40k, we could just force ourselves to stay at $40k, but I don't want my R life to be that constrained. If I want an extra vacation or DH decides he wants to take guitar lessons at $5000/year, we want to be able to say yes to that. Or perhaps we will end up growing a ton of fruits and veggies and our grocery spending will drop dramatically (and more than our hobby budget increases, and we will realize that we have little desire to vacation, now that vacation no longer means "escape from work". Does that mean we didn't budget realistically? To me, it means that we aren't quite sure what retirement will look like.
-
Short answer: No, not anywhere close.
Long answer:
My starting goal was 25x current spending after adjusting for things that would change in retirement like taxes and healthcare. Original, I know. I figured I would be content with my current lifestyle plus not working, which has turned out to be true.
I hit that 25x point about 10 years ago. Work was still worthwhile, so I kept working. Like you, I was paid well and the job was relatively easy.
Then circumstances at the job changed. I couldn't make it work any more, so I FIREd. That was 8 years ago.
I basically continue to spend today about the same amount as what I spent then in nominal terms. If you account for inflation, I somehow manage to spend less in real terms and still lead the same lifestyle. Two reasons, probably: (1) I don't need to spend as a response to stress anymore because the stress is mostly gone and I have learned better ways to manage stress, and (2) I have more time and can use that time to optimize my spending.
Over the past decade, my net worth has tripled. Most of that was market returns, some was a side gig I picked up, some was a small inheritance, and some was Social Security benefits going up over time.
Between working 2 years past FI, net worth tripling, flat spending, being 10 years older, and some strategic family gifting that's now happening, my net WR% is 0.63%.
-
If you budget for annual living expenses realistically, don’t bake-in a lot of contingencies, and don’t forget any important line items, you should spend very close to your budgeted amount in an average year. But that’s not the point.
The experience you shared with us about the changing amount of invested assets you want to live comfortably in retirement is honest and telling. The only constant in life is change. That is certainly true of our individual needs, desires, and interests.
A 30-year-old may think $XXXX is a perfect number to FIRE on. But when he retires at 45, and looks back at 50, he may be kicking himself.
Your intuition about future changes in your life seems solid to me. Trust yourself.
How do you find "realistically"? I really have no idea how often we will want to travel, what hobbies we might develop, or other factors that will have a huge bearing on our expenses. I mean, sure, if we budget $40k, we could just force ourselves to stay at $40k, but I don't want my R life to be that constrained. If I want an extra vacation or DH decides he wants to take guitar lessons at $5000/year, we want to be able to say yes to that. Or perhaps we will end up growing a ton of fruits and veggies and our grocery spending will drop dramatically (and more than our hobby budget increases, and we will realize that we have little desire to vacation, now that vacation no longer means "escape from work". Does that mean we didn't budget realistically? To me, it means that we aren't quite sure what retirement will look like.
Interesting. I create a budget around the beginning of the year and pay no attention to it until the end of the year, just to see how it went, and I have no problem coming close, even though I don’t focus on it during the year.
I think people use a number of techniques to get at the expenses you are referring to.
The most popular one is assuming that your invested assets, from which you withdraw your normal annual living expenses, are lower than they really are, which puts some flex in the system. You can buy a new car, weather a health crisis, travel, or take expensive guitar lessons with that flex.
Other people will add a separate line item for extraordinary items they intend to buy during that year, which gives them a solid budget that just happens to vary year by year.
I’m not sure what you were looking for, but there’s not a lot of magic here.
——
In any event, all this talk of budgets is kind of besides the point, because the real issue is simply having enough money to support yourself as you would like to live once you are retired— and recognizing that if you retire early, there is a good chance your interests and needs may change in the 2nd half of your life. Saving a little extra money before you retire to handle potential changes like that makes a lot of sense to me.
-
My expenses ended up being much lower than I had planned by a fairly large amount - about 50% less. That mostly came from planned discretionary spending being lower as I had thought I'd need more to fund my "fun stuff" but found I didn't.
-
My expenses ended up being much lower than I had planned by a fairly large amount - about 50% less. That mostly came from planned discretionary spending being lower as I had thought I'd need more to fund my "fun stuff" but found I didn't.
Yes! Me too.
Like me, everyone I've talked to who's been retired for a while has spent less than they expected to in retirement, and has done different things in retirement than they thought. Plus, if you look at the simulators, if your stash is working out, you tend to have loads more money after a few years than you ever dreamt. Saving extra for later appears to be overkill.
-
My expenses ended up being much lower than I had planned by a fairly large amount - about 50% less. That mostly came from planned discretionary spending being lower as I had thought I'd need more to fund my "fun stuff" but found I didn't.
Yes! Me too.
Like me, everyone I've talked to who's been retired for a while has spent less than they expected to in retirement, and has done different things in retirement than they thought. Plus, if you look at the simulators, if your stash is working out, you tend to have loads more money after a few years than you ever dreamt. Saving extra for later appears to be overkill.
Exactly. There are some extra expenses that I wouldn't have imagined (a piano and piano lessons being the largest additions) but we're spending a lot less on other things like tickets to sporting events, international travel, going out to eat, and video games. There are a lot of things we thought we might want to do for entertainment, but playing music, reading library books, hanging out with family and friends, volunteering, hiking, and other inexpensive things have been more entertaining and fulfilling than expected so we don't need to spend to stave off boredom. Of course everyone is different, but like you most of my FIREd friends aren't spending as much in these categories as they expected. We're spending less than our planned FIRE expenses, yet our 'stache is approaching double 25x that initial planned expense number. The way things are going we're going to have a very good problem to deal with when we are hit with RMDs.
-
My expenses ended up being much lower than I had planned by a fairly large amount - about 50% less. That mostly came from planned discretionary spending being lower as I had thought I'd need more to fund my "fun stuff" but found I didn't.
Yes! Me too.
Like me, everyone I've talked to who's been retired for a while has spent less than they expected to in retirement, and has done different things in retirement than they thought. Plus, if you look at the simulators, if your stash is working out, you tend to have loads more money after a few years than you ever dreamt. Saving extra for later appears to be overkill.
It’s difficult to compare the tendency among many to over-estimate future expenses and underspend relative to their ability—with those having robust FI and lifestyle flexibility.
I think there was a recent study by New York Life insurance company that found almost 75% of retirees withdrew living expenses only from their interest & dividends, and more than half didn’t even spend that. Hardly anyone decides to retire because they hit a “number” or does the 4% rule. It’s just not a thing.
I don’t think retirees as a group consider themselves “financially independent”. Most of them have modest means and spend cautiously.
-
I don’t really know how much I’m spending but it feels like a lot, but also manageable. I look at my accessible investments (not 401k/IRA) and go, is this enough to last another 1-3 years? So far it is. When those buckets are empty, I’ll either try to develop new income sources or make a plan to get access to some of my tax-advantaged accounts.
-
Seems like the majority of people are saying they spent less than they expected. It sounds like a handful of those people simply planned for more discretionary spending than they ended up using. But my perspective is different, I knew I would spend more money post FI on entertainment than I was while I was working, I planned for that. I didn't do as much fun stuff because I was always burnt out from long hours at work and post FI that was no longer the case.
Here's a few things I found, my biggest fixed expenses all increased more than I expected at no fault of my own. Housing costs increased for me, I live in a co-op of about 250 units, there was a fire in one of the buildings where 6 units were destroyed and my HOA fees increased by 20% one year, then 11% the next. Over the span of 2 years that came out to ~$350 increase per month.
In the past few years groceries have increased more than expected. I think everyone should be able to relate to that. Gas prices also increased. Some people drive less in retirement since they don't have to commute to a job, but I drive a similar amount as to when I was working. My job was close so it wasn't a lot of driving, and now I drive to get to nice hiking trails instead.
Don't plan on spending less than you think you will, you could hit a rough few years out the gate and realize your plan doesn't work out. I'm spending more than I expected but I still planned to have more than I needed in case something I didn't foresee happened. I didn't plan for a war in Ukraine to spike gas prices, I didn't plan for Covid to throw off supply chains and mess with grocery prices for so long. I didn't plan for a fire next door to increase my housing costs. You really never know what might happen.
-
I ended my (or rather DH)'s 3rd year of retirement yesterday:)
Starting my 4th year today..
Our annual spending ranges from 100K to 120K per year...sounds big especially when we do not have a house mortagage..
But included inside is 30K of international travel per year and lots of gifting and i still have 3 kids living with us...
But my planned retirement strategy is that i want to spend more between 60 and 70 years and then scale down as our health slows down...so mine is not a level spending strategy but a kinda stepped up/stepped down strategy...
Sidenote: our net worth increased by 21% since retirement , something which kinda was not what we expected (but grateful for:) .... so we feel very comfortable with our level of spending in the past 3 years...
Yes, the old adage holds true...u can't buy back Time...and we had a blast in the last 3 years:)
Retirement Rocks!
-
We definitely had some serious spending creep this year, but we had one large unplanned expense and bought a used truck. Even so, we still only spent around 1.5% of our investments in 2023. This percentage is calculated against our investments and does not include any non-investment income. I use the total of all our investments as the base, even so we don't touch our retirement accounts yet. Spouse collects SS and she works around 16 hrs a week in the bakery of local grocery store.
I used the 4% as a yard stick when I calculated our "number," but always expected to spend less and had contingencies. I didn't expect spouse to go back to work pt, but she enjoys it and they let her take time off whenever she wants.
The truck purchase this year was a want and not a need, so it was fully by choice. If that had not occurred, we would have been much closer to target.
I will be eligible for a modest pension income in a year or so and SS in around 8 yrs.
As for your base question, we hit right on our planned spending in 2020 & 2021, exceeded it by a few thousand in 2022 and went $10k over in 2023. Aside from our plans to sell/buy our home in 2024, I expect our base spending to fall back inline in 2024. Depending on where we move next year, spouse may have to quit her job, but that income isn't significant anyways.
My wife worries about spending and sweats every dollar spent and I have learned to spend a bit more freely. If you're debt free and have low cost of living, it's easy to live large on relatively little.
-
Retired in 2019, we are kinda all over the board. We retired pretty lean but investments are doing good. Our day to day costs are still low, so good habits abound.
Things that have been throwing us off:
Unexpected health issues and the continuing repercussions. DH had retinal detachments (early 40s), one in Nov and one in Jan a few years ago, so not even in the same insurance year. Boo. This also means lots of follow up appointments, and new glasses, and prescription drugs etc etc. Costs, but manageable.
Charitable opportunities, sometimes you just gotta say yes. I'm one of the richest beings to ever live on the planet and intend to act like it :).
Helping out family, my mom is getting older and sometimes I just want to go look, see, or do with her. Even though she always says "I'm fine." Same with brother who is living with her and taking care of her.
At the same time, these are also reasons why we FIREd. So we could do life better.
Loren
-
We definitely had some serious spending creep this year, but we had one large unplanned expense and bought a used truck. Even so, we still only spent around 1.5% of our investments in 2023. This percentage is calculated against our investments and does not include any non-investment income. I use the total of all our investments as the base, even so we don't touch our retirement accounts yet. Spouse collects SS and she works around 16 hrs a week in the bakery of local grocery store.
I used the 4% as a yard stick when I calculated our "number," but always expected to spend less and had contingencies. I didn't expect spouse to go back to work pt, but she enjoys it and they let her take time off whenever she wants.
The truck purchase this year was a want and not a need, so it was fully by choice. If that had not occurred, we would have been much closer to target.
I will be eligible for a modest pension income in a year or so and SS in around 8 yrs.
As for your base question, we hit right on our planned spending in 2020 & 2021, exceeded it by a few thousand in 2022 and went $10k over in 2023. Aside from our plans to sell/buy our home in 2024, I expect our base spending to fall back inline in 2024. Depending on where we move next year, spouse may have to quit her job, but that income isn't significant anyways.
My wife worries about spending and sweats every dollar spent and I have learned to spend a bit more freely. If you're debt free and have low cost of living, it's easy to live large on relatively little.
Your message suggests that you sweat spending at 1.5% of the investment accounts. Could you explain this? Cause a 1.5% withdrawal rate is really low and you can definitely afford to spend more on wants. Why are you anxious?
-
I didn't intend to convey that, but we do have concern about selling and buying a home next year. We will be moving from a townhouse to a single family home and I'm not sure how much we may need to pull out of the investments to make up the difference. We also don't know what our new cost of living will be. We are both somewhat frugal by nature and we live comfortably at our present spend rate, which includes a healthy amount of travel. She has more of the "American Dream" notion of what size/style house we need to buy, where I could live in something modest and be completely content. My wife also worries about running out of money and I can't seem to make her completely comfortable about it. She still buys lottery tickets and I feel like we have already won the lottery. We have always been on the same page up until I decided to retire early. I wasn't secretive about it. I suspect she didn't really believe I would pull the trigger. Almost four years later and she still thinks I'm too young to be retired.
One final note: I'm not convinced 4% is a completely safe burn rate to ensure we won't run out of money. It's a common point of reference based on a theory, but far from an absolute. Regardless, I don't see any reason to spend more than necessary.
-
It's probably still too early to tell......
We're wrapping up our 7th month of FIRE.
Pre-covid and the inflationary aftermath I always projected that our core expenses in FIRE would be ~$36k (in 2019 dollars), as a fairly frugal and creative DINK couple. When the time came to pull the plug in May of '23 the purchasing power of $36k eroded but we made up for it in skills/other forms of capital.
There was still a lot of doom and gloom in May, we ran our FIRE numbers through all the standard calculators (cFIREsim, FIRECALC, ERN SWR Workbook, Rich Dead Broke, etc) and based on our asset allocation and timeline (60 years), we settled on a spending target of $48,000/yr which represented a ~3.42% WR on our investable assets.
Seven months in.....we've spent $19,000 or $32.6K/yr annualized.......far below even our conservative "target" of $48k/yr.
Now all it would take at these leanFIRE levels of spending is one or two larger (5-figure) expenses in the first couple of years to potentially throw us off course.....so I won't claim victory yet........but we're also young enough (mid-30's) to course correct very easily because even small amounts of income improve the math dramatically at these spending levels.
-
I based my FIRE budget on my actual spending for a few years prior to pulling the trigger. I've been spending approximately that amount after FIRE. If I have more than normal non-discretionary spending I cut back a bit on any extras and vice versa. I don't don't budget/track spending in detail, but my financial radar seems to keep me on track pretty well. My life has not changed a ton pre/post-FIRE. So projecting costs wasn't hard.
-
We jumped without having more than a guesstimate of what our expenses would be. We knew what we are hoping to spend but since we moved countries to a paid-off house and the boys were moved out, none of the expense planning I had previously done was relevant. So we are keeping an eye on the quarterly expenses until we have a good sense of what this life will cost us.
-
<Sigh> I am not the Mustachian poster child. I've been FIREd since December 2016, and I'm working on our budget this week for 2024 so I've actually recently looked at this.
2017: About 50 percent of our number
2018: About 40 percent of our number
2019: About 45 percent of our number
2020: (Covid): About 38 percent of our number
2021: (Covid continued): About 40 percent of our number
2022: (First year in New Mexico, bought and renovated a house): 180 percent of our number. Eeeek!!! OMG! WE WILL DIE IN DEBT! NO ONE WILL LOVE US! WE ARE CONSUMER CLOWNS!
2023: (Continuing the renovation and living in a more expensive place): 110 percent of our number. NEED TO GET THIS BACK UNDER CONTROL!
2024: Goal for this year is 90 percent of our number.
So there you have it. We will get things back down. That's why I'm pouring over spreadsheets this week and setting up goals. Your number will fluctuate. The point of FIRE is not perfect compliance with a number. It's balancing things for a good, independent life that you can afford over the long term.
-
We've withdrawn almost exactly what the VPW Retirement Worksheet states that we can withdraw. This year, we should be within a few hundred dollars of that number.
-
Increased again because I also wanted "x" amount of years living expenses in case of a down market like these past few years.
Down market past few years? My portfolio is higher than ever!
-
I ended my (or rather DH)'s 3rd year of retirement yesterday:)
Starting my 4th year today..
Our annual spending ranges from 100K to 120K per year...sounds big especially when we do not have a house mortagage..
But included inside is 30K of international travel per year and lots of gifting and i still have 3 kids living with us...
But my planned retirement strategy is that i want to spend more between 60 and 70 years and then scale down as our health slows down...so mine is not a level spending strategy but a kinda stepped up/stepped down strategy...
Sidenote: our net worth increased by 21% since retirement , something which kinda was not what we expected (but grateful for:) .... so we feel very comfortable with our level of spending in the past 3 years...
Yes, the old adage holds true...u can't buy back Time...and we had a blast in the last 3 years:)
Retirement Rocks!
I hear people say this a lot, that they expect to spend less on travel as their health is impacted over time, but as someone with very serious health issues, they don't reduce my desire to travel AT ALL, they just make traveling more expensive because I can't avail myself of a lot of cheap options.
I've worked with a lot of seniors and many reduce their travel largely because they've traveled enough and it can get kind of dull and feel like a hassle after awhile. But not my family members, they are still travel quite a bit in their senior years.
So don't expect to spend less on travel just because your body gets less cooperative. In fact, expect to spend more. The last thing you want to do when your body limits your options is to limit them more with financial constraints.
If you think you can travel enough to get travel out of your system, then cool, but if travel is truly something that brings richness to your life, it would be risky to anticipate that you'll just not want to do it because of health.
For me, personally, my health prevents me from having interest in flying somewhere for 7-10 days because I need a lot of rest, so a vacation where I'm paying per day is suboptimal and flying is hard on me. So I prefer to go to places for much longer and have accommodations for months at a time.
I impulse bought a second house in an a very exotic location just so that I would have a place to travel to, and that was while my femur was broken and I could barely walk even with crutches.
Having health problems can actually make it *more* important to live life as richly as possible.
-
I don’t really know how much I’m spending but it feels like a lot, but also manageable. I look at my accessible investments (not 401k/IRA) and go, is this enough to last another 1-3 years? So far it is. When those buckets are empty, I’ll either try to develop new income sources or make a plan to get access to some of my tax-advantaged accounts.
I worry about that gap! one reason I put off till 2025. how far away are you from 59.5?
-
I agree to a certain extent with metalcat.
My parents were very much into travel. When they could, no longer drive long distances, they went on tours. When dad stopped being able to negotiate a bus, they went on river cruises. When dad had difficulty at all the stops, they went on ocean cruises, including a round the world cruise. When dad died at 92, my 90 year old mother decided to get a Winnebago. Fortunately or unfortunately, this was soon after the pandemic started and she couldn’t get one for more than a year. By that stage, she’d realised that it would be too difficult for her to negotiate with a walker. However, every so often, she gets one of her children to take her on a holiday somewhere.
However, as you get older, being part of a community becomes more and more important. It’s easier to do this if you’re not spending your life travelling. Staying in one place, or spending your time bouncing between a few different locations, like metalcat is, makes it much easier to build your community.
-
I agree to a certain extent with metalcat.
My parents were very much into travel. When they could, no longer drive long distances, they went on tours. When dad stopped being able to negotiate a bus, they went on river cruises. When dad had difficulty at all the stops, they went on ocean cruises, including a round the world cruise. When dad died at 92, my 90 year old mother decided to get a Winnebago. Fortunately or unfortunately, this was soon after the pandemic started and she couldn’t get one for more than a year. By that stage, she’d realised that it would be too difficult for her to negotiate with a walker. However, every so often, she gets one of her children to take her on a holiday somewhere.
However, as you get older, being part of a community becomes more and more important. It’s easier to do this if you’re not spending your life travelling. Staying in one place, or spending your time bouncing between a few different locations, like metalcat is, makes it much easier to build your community.
What I do is actually live in multiple locations, plenty of community in both.
-
I agree to a certain extent with metalcat.
My parents were very much into travel. When they could, no longer drive long distances, they went on tours. When dad stopped being able to negotiate a bus, they went on river cruises. When dad had difficulty at all the stops, they went on ocean cruises, including a round the world cruise. When dad died at 92, my 90 year old mother decided to get a Winnebago. Fortunately or unfortunately, this was soon after the pandemic started and she couldn’t get one for more than a year. By that stage, she’d realised that it would be too difficult for her to negotiate with a walker. However, every so often, she gets one of her children to take her on a holiday somewhere.
However, as you get older, being part of a community becomes more and more important. It’s easier to do this if you’re not spending your life travelling. Staying in one place, or spending your time bouncing between a few different locations, like metalcat is, makes it much easier to build your community.
My parents are in their 80s. They still travel internationally, usually for 9-12 days, several times a year. More often than not, they travel with friends. The two of them, plus 1-3 other couples. Sometimes we are able to coordinate so my sibling and/or I, along with our spouses are able to join them. So for them, traveling has become part of their community and community-building.
-
I agree to a certain extent with metalcat.
My parents were very much into travel. When they could, no longer drive long distances, they went on tours. When dad stopped being able to negotiate a bus, they went on river cruises. When dad had difficulty at all the stops, they went on ocean cruises, including a round the world cruise. When dad died at 92, my 90 year old mother decided to get a Winnebago. Fortunately or unfortunately, this was soon after the pandemic started and she couldn’t get one for more than a year. By that stage, she’d realised that it would be too difficult for her to negotiate with a walker. However, every so often, she gets one of her children to take her on a holiday somewhere.
However, as you get older, being part of a community becomes more and more important. It’s easier to do this if you’re not spending your life travelling. Staying in one place, or spending your time bouncing between a few different locations, like metalcat is, makes it much easier to build your community.
My parents are in their 80s. They still travel internationally, usually for 9-12 days, several times a year. More often than not, they travel with friends. The two of them, plus 1-3 other couples. Sometimes we are able to coordinate so my sibling and/or I, along with our spouses are able to join them. So for them, traveling has become part of their community and community-building.
Exactly. I have a friend in her 70s who travels extensively with a rather disabled friend of hers in her 80s. They take trips with various different single older woman friends, but always together since the younger acts as an aide for the older one. Travel is a huge part of their community with friends.
My whole point is that people shouldn't assume that reduced health means less interest in travel. The world is still super interesting and just as beautiful to see for those of us with medical issues.
-
My in-laws spent 6-9 months out of he year in their RV. He's now 81, and she turns 80 next year, so they're slowing down.
They are currently on a tour of South America, culminating in a cruise to Antarctica. It's their fourth time. Next summer will be her 80th birthday party in Alaska for a couple months, where BIL lives.
I hope I'm able to match their trajectory as they slow down.
To be fair, they both have a few long-term health conditions, and both DW and I are amazed that they have kept going as they are. But travel is both important to them, and something they are used to--so, they don't have delusions of idealized travel; they know the ups and downs, as they have traveled extensively their whole lives. They also plan 3 years in advance.
-
I'm seven months in. So far I am spending exactly what my budget says I can spend. We will see how it goes in the future.
-
Yeah, my in laws were traveling to Europe into their 80s because they loved it. There are lots of travel groups set up largely for older people who are not wanting to sprint up mountains.
I do not love anything at all about travel. I’m willing to do a little because dh wants to, but I’d rather not.
-
Yeah, my in laws were traveling to Europe into their 80s because they loved it. There are lots of travel groups set up largely for older people who are not wanting to sprint up mountains.
what about old people who do want to sprint up the mountains?
-
Yeah, my in laws were traveling to Europe into their 80s because they loved it. There are lots of travel groups set up largely for older people who are not wanting to sprint up mountains.
what about old people who do want to sprint up the mountains?
My dad scuba dived (scuba dove?) until his 70th birthday. He decided to give it up, so we went on one last family vacation for his final dive. He taught my sister and me to dive (well, got us certified) as soon as we were old enough, and diving was a special thing he shared with us. (Mom wasn't interested, but was happy to sunbath on the boat while we dove). So many special family memories involved diving and dive vacations. And he lasted until 70. Pretty darn good.
-
Years ago I used to ride with a few buddies, 30 miles or so, Saturday mornings, same route.
Half the time we’d run across this older guy and talk with him for a mile or so. We thought he was in his late 60s because he was slower than us but one day we asked him. Turns out he was 84.
-
I live in a town that seems to have thousands of extremely fit 70, 80, even 90-somethings. Like way more active than me and I’m no slouch. I’m able to do a lot of very enjoyable camping out here, and I don’t really like to fly so don’t spend too much on travel. Still, 3 plane trips for me this year.
To answer the original question, spending for my first two full years equaled my estimates. In 2023 I was over by 44 cents. Yes, cents. This amount was a best guess/bottom of the range, I did not use up any of my buffer. I’m not including expense for taxes due on my Roth conversions.
I seem to have some sort of spending homeostasis, I keep an eye on my credit card bills but I don’t closely track or budget during the year. I’d have been fine with spending more, I just didn’t.
-
My in-laws spent 6-9 months out of he year in their RV. He's now 81, and she turns 80 next year, so they're slowing down.
They are currently on a tour of South America, culminating in a cruise to Antarctica. It's their fourth time. Next summer will be her 80th birthday party in Alaska for a couple months, where BIL lives.
I hope I'm able to match their trajectory as they slow down.
To be fair, they both have a few long-term health conditions, and both DW and I are amazed that they have kept going as they are. But travel is both important to them, and something they are used to--so, they don't have delusions of idealized travel; they know the ups and downs, as they have traveled extensively their whole lives. They also plan 3 years in advance.
Go to Antarctica in their 80s? I'm really impressed.
-
Having set and passed our NW goal now at least 3 times, only to announce a new number, I bet when the time comes to draw down, we will not be spending our number. But having seen our annual spend go from 50-60k-ish to over 100k during the last few years (home ownership! maintenance and improvements) I am really wanting to make sure our number is higher than what we are spending now by a good margin. Idk what that margin is, so conveniently, I do not need to make any hard decisions and just keep working. I mostly like my job, but some weeks are harder than others…
-
Having set and passed our NW goal now at least 3 times, only to announce a new number, I bet when the time comes to draw down, we will not be spending our number. But having seen our annual spend go from 50-60k-ish to over 100k during the last few years (home ownership! maintenance and improvements) I am really wanting to make sure our number is higher than what we are spending now by a good margin. Idk what that margin is, so conveniently, I do not need to make any hard decisions and just keep working. I mostly like my job, but some weeks are harder than others…
Since I started this thread I've been debating on changing my number AGAIN. And it's not because I think I need it but it's because I want my NW to be closer to my brother's. I could probably get there working another 6-7 years but that's just stupid.
So, I am now content with my NW and I'm working now to burn down time, give money to my son, and will work until I no longer feel like it. I'm now hoping by the time I'm sick of working I'll be comfortable with a high enough NW to buy him a condo. :)
-
Having set and passed our NW goal now at least 3 times, only to announce a new number, I bet when the time comes to draw down, we will not be spending our number. But having seen our annual spend go from 50-60k-ish to over 100k during the last few years (home ownership! maintenance and improvements) I am really wanting to make sure our number is higher than what we are spending now by a good margin. Idk what that margin is, so conveniently, I do not need to make any hard decisions and just keep working. I mostly like my job, but some weeks are harder than others…
Think of it like an 80-20 Rule.
80% of the value is in FI; 20% in RE.
-
Yeah, my in laws were traveling to Europe into their 80s because they loved it. There are lots of travel groups set up largely for older people who are not wanting to sprint up mountains.
what about old people who do want to sprint up the mountains?
Have at it! My point is that if you live to travel you can do that even if you aren’t up to mountaineering.
-
Yeah, my in laws were traveling to Europe into their 80s because they loved it. There are lots of travel groups set up largely for older people who are not wanting to sprint up mountains.
what about old people who do want to sprint up the mountains?
Have at it! My point is that if you live to travel you can do that even if you aren’t up to mountaineering.
I traveled this year while barely able to stand. I even went out to a UNESCO site on a boat tour that required a long hike to get to the fjord, but they provided a free all-terrain wheelchair.
-
So what's "my number?".
For about 5 years, I built and refined my "retirement spending" list that has everything from Medicare cost to gas for the car. I'll mention that it is so far away from my "while working spending" list that that one can mostly be thrown into recycling. But we retired last June and the final number was $75k a year, dominated by health care expenses. It's pretty much right on. Now, if you used the Trinity study 4% number, because we way over saved, that would be (today) $168,000. And we obviously don't spend that.
-
@RootofGood has not.
https://twitter.com/RootofGoodBlog/status/1746003033278885918
-
Been reading and re-reading this thread for inspiration... Now, more for my own accountability, such that I check back after 3 months or so with how it goes, my "number" is $6750 per month split from a SEPP account's dividends and an after tax withdrawal of income-only from an after tax account. This also includes saving for auto replacement and hopefully maxing the funnel from IRA to my Roth starting next month for the first year of FIRE. This is with a working spouse covering medical while still maxing her 401K so we keep our top federal tax max tier to 12%. Now, let the game begin!
-
For about 5 years, I built and refined my "retirement spending" list that has everything from Medicare cost to gas for the car…the final number was $75k a year… Now, if you used the Trinity study 4% number…that would be (today) $168,000.
So a “frugal” 1.8% WR against a $4.2M stash? Sounds like robust FI with meaningful flexibility. I like.
-
Been reading and re-reading this thread for inspiration... Now, more for my own accountability, such that I check back after 3 months or so with how it goes, my "number" is $6750 per month split from a SEPP account's dividends and an after tax withdrawal of income-only from an after tax account. This also includes saving for auto replacement and hopefully maxing the funnel from IRA to my Roth starting next month for the first year of FIRE. This is with a working spouse covering medical while still maxing her 401K so we keep our top federal tax max tier to 12%. Now, let the game begin!
<picard> Engage! </picard>
I'm curious to hear the 3 month report because I'm contemplating doing something similar as soon as next year. What withdrawal method are you going to use with the SEPP?
-
Haha!! Engage indeed!
On the SEPP, single annual payment, amortization option. There are good (and bad) financial planning blogs and some well done white papers online that talk about the pro's and con's. What I liked on this is I don't screw up on the withdrawal equal amounts each year by doing this annually and gave the maximum annual payout (which I'll use partially and use to feed to the "normal" Roth IRA limit annually. Also ensures I shrink that part of my IRA funds to minimize future RMD taxation in the "elder years" whatever they may be). I keep the "spendable" part of these payout funds in a separate after-tax account with auto transfers to my checking as the baseline income each month to avoid spending the SEPP's annual "lump" prematurely in the year. Also put the "taxes on the payout" aside in a 12 month CD to get some useful interest at least until tax time next year. Used the Fidelity SEPP calculator and printed the baseline details for the distribution for future tax filing or audit purposes. This also leaves a partial-out for a single time I could reduce the payments by transitioning to a "RMD" option in the future in case of heaven forbids (change in financial situation, divorce, etc.). We're being very careful with any other investments to keep our joint adjusted income below 94K to stay in or below the 12% max federal bracket as well. It's early days, but it seems a pretty simple system as long as we don't mess-up in years 2 thru 5. Time and the IRS will tell I suppose.
-
Haha!! Engage indeed!
On the SEPP, single annual payment, amortization option. There are good (and bad) financial planning blogs and some well done white papers online that talk about the pro's and con's. What I liked on this is I don't screw up on the withdrawal equal amounts each year by doing this annually and gave the maximum annual payout (which I'll use partially and use to feed to the "normal" Roth IRA limit annually. Also ensures I shrink that part of my IRA funds to minimize future RMD taxation in the "elder years" whatever they may be). I keep the "spendable" part of these payout funds in a separate after-tax account with auto transfers to my checking as the baseline income each month to avoid spending the SEPP's annual "lump" prematurely in the year. Also put the "taxes on the payout" aside in a 12 month CD to get some useful interest at least until tax time next year. Used the Fidelity SEPP calculator and printed the baseline details for the distribution for future tax filing or audit purposes. This also leaves a partial-out for a single time I could reduce the payments by transitioning to a "RMD" option in the future in case of heaven forbids (change in financial situation, divorce, etc.). We're being very careful with any other investments to keep our joint adjusted income below 94K to stay in or below the 12% max federal bracket as well. It's early days, but it seems a pretty simple system as long as we don't mess-up in years 2 thru 5. Time and the IRS will tell I suppose.
I'm also leaning towards the amortization method, mostly due to its simplicity. Being able to transition to the RMD method is a nice bonus. I love your approach of putting the money used to cover the tax burden in a separate interest bearing account. I also like how the periodic autotransfer from the after-tax account containing the annual payout simulates a paycheck.
Thanks for the detailed response. Reading through stuff like this really helps me marshal my thoughts about how I'm going to make this happen.
-
I’m not really sure what you mean by “your number”. We retired about 4 years ago and the way we determined our spending needs was simply tracking our current lifestyle - ignoring vacations. So for example our current lifestyle has our spending at about $70k (before vacation). This covers our bills, entertainment, charity, Christmas, property taxes etc (we are Canadian so now medical insurance costs). Our investment income generates around $100k after tax plus we have a pension that generates around $33k after tax. We do not touch the principal of our investments - around $2.2m when we retired and at the same level now (some sizeable ups and downs in those years thanks to Covid and the associated market gyrations). I guess I am saying we didn’t plan for “a number”, other than making sure our cash flow covered our lifestyle and left a nice buffer for vacations. Do we spend it all right now….. yes, as we like to travel and get out of cold Canada for three months to a warmer place and I have no concerns on spending a decent amount on doing that. Our number was never about the percentage of our stash but rather living off of what our stash generates. If we have to dip into the stash at some point for a big ticket item, so be it as it will not impact our lifestyle.
-
I’m not really sure what you mean by “your number”.
I think it means the amount of money you budgeted to spend on an annual basis in retirement.
-
DH and I just figured out that between his pension and our FRA SS estimates (when we start collecting) we will be earning 60% more than we ever earned annually. Bonkers! That's not including investments. Who'da thunk?
-
I’m not really sure what you mean by “your number”.
This is actually a good question and one I should have clarified when I made this post. I should have posted "What was your projected SWR percent before retirement and what is your actual WR while in retirement".
I ask because the 4% "rule" has had such a high probability of success yet many still err on the side of caution with how much they believe they may need (including myself). I am considering buying a second home for my son to live in (and probably gift it to him at a later time) but I don't want to keep working for the sole purpose of increasing my NW when I'll likely not need it.
-
I’m not really sure what you mean by “your number”.
This is actually a good question and one I should have clarified when I made this post. I should have posted "What was your projected SWR percent before retirement and what is your actual WR while in retirement".
I ask because the 4% "rule" has had such a high probability of success yet many still err on the side of caution with how much they believe they may need (including myself). I am considering buying a second home for my son to live in (and probably gift it to him at a later time) but I don't want to keep working for the sole purpose of increasing my NW when I'll likely not need it.
I FIRED with a projected WR just about 10%. Actual spending came in lower than projected and my first year had really good returns. I've been as low as about 6% and sitting about 7.5% now. Plan was always to do part time work but I've never gotten serious about finding something. Looking a little harder now but focused on non profits to ensure I do something aligns with values rather than help a huge faceless corp destroy the planet for fun and profit.
-
I’m not really sure what you mean by “your number”.
This is actually a good question and one I should have clarified when I made this post. I should have posted "What was your projected SWR percent before retirement and what is your actual WR while in retirement".
I ask because the 4% "rule" has had such a high probability of success yet many still err on the side of caution with how much they believe they may need (including myself). I am considering buying a second home for my son to live in (and probably gift it to him at a later time) but I don't want to keep working for the sole purpose of increasing my NW when I'll likely not need it.
I FIRED with a projected WR just about 10%. Actual spending came in lower than projected and my first year had really good returns. I've been as low as about 6% and sitting about 7.5% now. Plan was always to do part time work but I've never gotten serious about finding something. Looking a little harder now but focused on non profits to ensure I do something aligns with values rather than help a huge faceless corp destroy the planet for fun and profit.
I know you've mention the high WR before and Im curious if you have a back up plan besides going back work again? A future pension? Selling and downsizing or renting? A rich Sugar Daddy/mommy footing the bills? How long do you predict your money will last if you don't use any of those options?
-
I know you've mention the high WR before and Im curious if you have a back up plan besides going back work again? A future pension? Selling and downsizing or renting? A rich Sugar Daddy/mommy footing the bills? How long do you predict your money will last if you don't use any of those options?
The plan was always what we call BARISTA FIRE around here. I didn't know about the FIRE movement when I pulled trigger so didn't have a word for that. I never got the part time job b/c the markets have been too kind. I have six opportunities I'm applying for tomorrow. That started as 9 opps but I ruled 3 out as unpalatable. I'm being picky b/c I still have FU money. I'd be delighted to just win the lotto though!
-
7 years ago I came up with my "number" after reading MMM blog, based on expenses from years past. In those 7 years our expenses have increased by 50% higher even beyond inflation. Mostly due to growing family, medical costs, daycare and Travel with larger family. While most of these additional expenses are onetime or in rearview, it still gives me pause. Now I am inclined to pad our stash well for any future shocks.
Reading through this thread was comforting though. Thanks.
-
@achvfi, Breathe deep. 7 years is about the time it takes for investments to double. So 50% increase in expenses is rather small in comparison. But reality is reality. If the expenses are growing, the first question is how to cut them by 50% NOW. Really. Travel is discretionary. I went to a party with a whole group of spendypants friends in their late 50s all bragging about their trips to Italy. And half of those also complained about "having to work for years still" and how "scary healthcare insurance is if they retire early". This is of course financial stupidity. The real problem is spending. So the question now is how to cut 50% off your expenses. Truly, no one will die. It'll be fine.
-
7 years ago I came up with my "number" after reading MMM blog, based on expenses from years past. In those 7 years our expenses have increased by 50% higher even beyond inflation. Mostly due to growing family, medical costs, daycare and Travel with larger family. While most of these additional expenses are onetime or in rearview, it still gives me pause. Now I am inclined to pad our stash well for any future shocks.
Reading through this thread was comforting though. Thanks.
You make a NEW number and you will be fine.
-
I know you've mention the high WR before and Im curious if you have a back up plan besides going back work again? A future pension? Selling and downsizing or renting? A rich Sugar Daddy/mommy footing the bills? How long do you predict your money will last if you don't use any of those options?
The plan was always what we call BARISTA FIRE around here. I didn't know about the FIRE movement when I pulled trigger so didn't have a word for that. I never got the part time job b/c the markets have been too kind. I have six opportunities I'm applying for tomorrow. That started as 9 opps but I ruled 3 out as unpalatable. I'm being picky b/c I still have FU money. I'd be delighted to just win the lotto though!
Would you be OK (and satisfied with your life style) if you never worked or earnedvagain? Im pretty risk tolerant but I'm not sure I could go into a long period of unemployment with a 9 % WR. I started out at lean FIRE at what was approx a 4% WR (although I use a bucket method and not the 4 % rule) but ended up not needing or spending as much as I though I would so it morphed into FIRE. Plus the high karketband housing market helped ;-).
-
7 years ago I came up with my "number" after reading MMM blog, based on expenses from years past. In those 7 years our expenses have increased by 50% higher even beyond inflation. Mostly due to growing family, medical costs, daycare and Travel with larger family. While most of these additional expenses are onetime or in rearview, it still gives me pause. Now I am inclined to pad our stash well for any future shocks.
Reading through this thread was comforting though. Thanks.
You make a NEW number and you will be fine.
This. I always assume that when people plan to RE and leave their jobs, or take a lower paid role, they account for any potential life changes that will happen in the future and not just what's happening in their life currently. Marriage, kids, housing, medical stuff, elderly parents, travel, inflation, etc... Lots of those costs can be pre-planned as part of the FIRE stash if you know you're likely going to want those things. It's the un-planned, unexpected and often catashrophic shit that may get you. So change your number to reflect the normal changes if you're still working and able to do so.
-
[/quote] Would you be OK (and satisfied with your life style) if you never worked or earnedvagain? Im pretty risk tolerant but I'm not sure I could go into a long period of unemployment with a 9 % WR. I started out at lean FIRE at what was approx a 4% WR (although I use a bucket method and not the 4 % rule) but ended up not needing or spending as much as I though I would so it morphed into FIRE. Plus the high karketband housing market helped ;-).
[/quote]
Hi @spartana would you mind taking a quick look at my case study please as I'm also planning using the bucket approach. I got a couple of responses which were really helpful but would be good to test with someone who used the same approach, cheers
-
^^^Hi - I'll take a look but I'm not as financially smart/sophisticated as most of the people here. I know @Laura33 uses a bucket method and she MUCH wiser then me.
-
thanks @spartana :) it's this one here: https://forum.mrmoneymustache.com/case-studies/sense-check-please-staged-approach-to-fi-(nz)/
mspym walked me through using the rich broke or dead calculator which was great and I think we're pretty ok given we are prepared to be flexible. I need to take the bucket approach as our income and expenses will go through quite distinct phases and I can't access our personal or the govt super funds until we are 65 at least, cheers
-
Short answer is no. Well, last year maybe. If you believe and use the 4% rule then most years we're under that. BUT......the wife hit 60 last year and I'll be hitting 64 soon enough. We've seen several friends have the rug pulled out from under them, health wise, in the past year so our thinking has started to change.
I'm not a Dave Ramsey groupie. He's great on getting out of debt, but his investment advice is questionable. Still, one his famous sayings is "Live like now one else, and one day you can live like no one else. Well, for us....that one day has arrived!
-
So I'm going to say that we're close but likely over. First, I will say that I'm pretty adamant that people do an "in retirement" spending list as it's not going to be close to what your "while working" list is. The number may end up close but it could easily be way off. We're retired for 10 months now. Our "in retirement" list brought our spending to $75k a year, 50% more than our "while working" $50k a year. Here's some places it's off.
Travel: We put in $5k. Shortly after retirement, our cat started having seizures. The medicine she's on was 3 times a day, every 8 hours. Now revised to twice a day. Either way, we're pretty stuck to day trips. No, we're not considering bringing a 17 year old cat with us. So that's pretty near zero.
Health Insurance: We put in $20k. I'm on Medicare and DW is on Cobra. We're all on Cobra for dental. I have done my homework and now am on a Ferris wheel with where I get meds. I'm at the "preferred" pharmacy for most but off to Wegmans with a GoodRx card for one because it's cheaper than it would be using insurance. Also, I'm well aware of the Medicare "doughnut hole" that's sort of like a first level out of pocket max but instead of going to zero cost, they triple the cost. So I'm playing doctor and have substituted some OTC meds for huge dollar "TV drugs" (drugs that have TV commercials) because those would put me into the doughnut hole and I'm not paying $90 a day for 2 meds (and yes, that's what they would cost in the doughnut hole). So we are probably just under $20k. Also, my income from 2 years ago put me into IRMAA territory second level which doubled my Medicare cost. I appealed and they agreed so the premium is normal for both last year and this.
Taxes: I was way off. I put $5k. I did not realize that I would be doing so much Roth conversion. Why am I doing so much Roth conversion? Most of my and DWs savings over the years were in 401k's pre tax. So at RMD time, we'd be forced to take over $250k out. Add 2 social securitys and interest and dividends and we'd both be paying big time into IRMAA. So I'm converting on the order of $200k a year in Roths. Of course that means we're paying like $50k a year in federal and state income taxes. I count property taxes separate so that's right on the spot.
If you haven't figured it out yet, we wickedly over-saved. And we're not spendy people so in the 10 months of not working, our investments haven't dropped to support us. They've risen about $300k so far. I have said many times "why the hell was I working?". I've never made $300k working in any year of my life. And the year's not done yet.
You will have a different story entirely if you barely have enough to live through retirement. There are medication non-profits that can bundle meds together and give you a much better price. With Roth conversions, our income is too much. Maybe you get ACA with subsidies. DW can't because with the conversions, we make too much. There are even town programs to reduce our property taxes but again....yup. We make too much.
Anyways, I could revise our "in retirement" list but it doesn't really matter at this point as we're only spending around 1.7% of what's saved. That, of course doesn't include our paid off house or 4 debt free cars.
-
Our number was deliberately higher than our past spend, as we expected to travel more. It's been an interesting exercise as I haven't been just adjusting our target for inflation each year. When I do, our spending has been:
2019 93%
2020 66%
2021 63%
2022 104%
2023 99%
Apart from the pandemic years, that all looks pretty close. It's complicated though. Thanks to ongoing PT work growing the stache, I've actually upped our number by more than inflation, so really I'm continuing to spend low 90%s against my current number, which is the range I'm happiest in :)
The numbers exclude most of a kitchen reno in 2023 and supporting kids at Uni as these were saved for in separate pots before we FIREd.
-
Most of my and DWs savings over the years were in 401k's pre tax. So at RMD time, we'd be forced to take over $250k out.
It looks like you guys saved about $6.7M combined in your deferred accounts? I just played with an RMD calculator to back into the $250k annual distribution.
No problem with that (other than the taxes) but to be sure you’re thinking correctly on the RMD amount is that total correct?
-
My wife and I FIRE's 1.5 years ago. (At 62, not sure if you can say RE, But at least it is FI. )
We have a no real spending budget.
We don't do Starbucks (Due to the new tipping culture). But do enjoy eating out sometimes. Mostly eat at home.
Home Depot, Costco and Sams club get all our money.
but maybe in a few years when we get stabilized into our new retired lives, we will re-assess our budget system.
So all we do for income now is trade stocks and some venture capital investments.
So our budget tracking now would be:
1: Every year, after taxes are all done, tally up our net worth onto a spreadsheet.
2: If it or any particular category is going down without accountability, then we will have to assess why, and if anything has changed.
When we retired, we sold our old house and our rental unit (Both in N. VA), and moved to a cheaper house in the Richmond VA area.
This year put 100K into fixing up the new unit! And that is doing a lot of the work ourselves... (And we still have a lot more to do)..
Also we discovered that Healthcare is expensive!
Anyway,
-
My wife and I FIRE's 1.5 years ago. (At 62, not sure if you can say RE, But at least it is FI. )
We have a no real spending budget.
We don't do Starbucks (Due to the new tipping culture). But do enjoy eating out sometimes. Mostly eat at home.
Home Depot, Costco and Sams club get all our money.
but maybe in a few years when we get stabilized into our new retired lives, we will re-assess our budget system.
So all we do for income now is trade stocks and some venture capital investments.
So our budget tracking now would be:
1: Every year, after taxes are all done, tally up our net worth onto a spreadsheet.
2: If it or any particular category is going down without accountability, then we will have to assess why, and if anything has changed.
When we retired, we sold our old house and our rental unit (Both in N. VA), and moved to a cheaper house in the Richmond VA area.
This year put 100K into fixing up the new unit! And that is doing a lot of the work ourselves... (And we still have a lot more to do)..
Also we discovered that Healthcare is expensive!
Anyway,
New tipping culture? I've never tipped at Starbucks
-
We are spending more. My "retirement spending" list did not take Roth conversions into account so I only had $5k for income tax listed. It's more like $30k. So in that, we're definitely spending more and will continue to do so. We also did a $27,000 house project. We had a huge amount of padding in our retirement saving so even if we spent double what our original number was, we're still well within the Trinity number.
-
New tipping culture? I've never tipped at Starbucks
You must be joking. They give dirty looks at the counter, and then the person turns the payment terminal towards you with 20% already highlighted.
If you select "Custom Tip" while they’re watching— Watch out because this is before they even make your $4.00 cappuccino.
Yes, Starbucks is part of the new tipping culture, where you’re expected to tip for counter service.
I'm surprised McDonald's hasn't followed Starbucks' lead.
If I like the person, I still tip.
But really, these convenience stores, kiosks, ice cream shops, bakeries, food trucks, and takeout pizza (not even delivery) have all jumped on the bandwagon.
I'd like to say it doesn't influence my decision to do business with these places, but it very much does.
-
New tipping culture? I've never tipped at Starbucks
You must be joking. They give dirty looks at the counter, and then the person turns the payment terminal towards you with 20% already highlighted.
If you select "Custom Tip" while they’re watching— Watch out because this is before they even make your $4.00 cappuccino.
Yes, Starbucks is part of the new tipping culture, where you’re expected to tip for counter service.
I'm surprised McDonald's hasn't followed Starbucks' lead.
If I like the person, I still tip.
But really, these convenience stores, kiosks, ice cream shops, bakeries, food trucks, and takeout pizza (not even delivery) have all jumped on the bandwagon.
I'd like to say it doesn't influence my decision to do business with these places, but it very much does.
I admittedly haven't been to a Starbucks in a while. In general, I don't tip for counter service. Some places click the no tip before they turn it around, some don't.