Hey you retired folk...

[thyme4change]

The first question any financial consultant asks is "How much will your income needs go down in retirement?" And I always say that I expect to spend more, as I will have more free time. Not one of them seems to take me seriously. I do say that I will stop saving, so, it will go down by my saving rate.

Besides getting rid of my kids, maybe paying off my mortgage - why would my expenses go down?

What percentage of your previous income do you need in retirement?

[buystoys]

There are assumptions about vehicle usage, clothing, fuel for transit, etc. that are considered as going down when you retire.  You also aren't saving in your 401(k) plan any longer. 

Our spending has stayed the same as we did when we worked.  Yes, clothing, transportation, property taxes and utilities went down for us.  (We moved from NY to TX which drove some of the decreases.)  We spent more on medical expenses.  A lot more.  Even though we weren't saving to retirement vehicles any longer, our income stayed pretty much the same and we spent it. 

A lot of people do travel more when they first retire.  I would expect costs to go up, myself.  It's better than expecting expenses to go down and not seeing it.

[minnesotapaintlady]

The amount of your savings rate could be significant.  Most people should be able to at least decrease annual income by 15% if they've been saving sufficiently.  

I'm currently saving over 50% of gross, so even if I spend exactly the same as I am now my annual income needs are a lot less. 

[thyme4change]

Mar 7, 2021 18:39:06 GMT -5 buystoys said:

There are assumptions about vehicle usage, clothing, fuel for transit, etc. that are considered as going down when you retire.  You also aren't saving in your 401(k) plan any longer. 

Our spending has stayed the same as we did when we worked.  Yes, clothing, transportation, property taxes and utilities went down for us.  (We moved from NY to TX which drove some of the decreases.)  We spent more on medical expenses.  A lot more.  Even though we weren't saving to retirement vehicles any longer, our income stayed pretty much the same and we spent it. 

A lot of people do travel more when they first retire.  I would expect costs to go up, myself.  It's better than expecting expenses to go down and not seeing it.

That travel thing will cost me!

I don't expect clothing or transportation to change drastically. I wear jeans to work, and my commute is 2 miles each way. And in a post covid world, I will probably work at home a few days per week until the end of my career.

[Miss Tequila]

I retired in the middle of a pandemic so my expenses are WAY down!lol. In a normal year, I expect my spending to be about the same. I maxed out my 401k and put more into investing that have stopped. I now need to pay for my own healthcare (cha ching!) and I want to spend at least one month in Florida in the winter, on top of our normal travel. I built my budget on the assumption that my spending will stay the same. Hopefully one day the country will open and I can test that theory

[tallguy]

I will need less than when I was working.  I will have more than when I was working.  The real question is now, "How do I increase spending to make up that difference?"  Fortunately (or unfortunately) I have a girlfriend who is more than willing to help!  Travel when we get back to it may be a little extreme.  

[giramomma]

 In early retirement, we'll likely have an increase in costs. Our mortgage + health insurance premiums will take up over half of our income. Yes, we could make living on the rest work. We did it, once, as newlyweds making less. But, I don't want to.

I also expect that spending on myself will ramp up because I am deferring on spending on myself right now.

I've started to see how we might be in a place to travel again. Likely not to Europe. But, definitely across the US.

Plus, by the time we hit 60-62, I'm sure at least one of my older three will have paired up (23-31+ by that point), and maybe even procreated. So. That will be more opportunities for spending.

I would expect spending to slow down in my early-mid 70s, TBH.

[susana1954]

My spending went way down, some of it because of my job but not all.

• No SS taken from my check
• No Medicare taxes
• No state taxes (specific to my job and state including no tax on SS)
• No retirement savings
• Extra exemption or whatever when you are 65 and do taxes
• Lower property tax (based on income here, but I have negative income due to age)

There are other factors.  I don't buy many new clothes since I have lots and  am not trying to impress anyone.  I don't redecorate as much.  I eat less because you are less hungry when you get old.  At first, you throw a lot more food away, but you adjust.  You drive less, too.

I don't travel, though.  I didn't before I retired.  That one factor can be enormous.

[justme]

I think I mostly view take home pay as different than others. I only think of the money hitting my account so taxes, health insurance, retirement savings and such aren't in what I consider take home.

As I hope to retire before 65 what I need will go up quite a bit just for health insurance - though I'm hoping the money I put in my HSA will help with that.

If I ignore health care costs I still think it'll go up as the few work related stuff won't balance out more traveling.

[minnesotapaintlady]

Mar 8, 2021 0:34:13 GMT -5 justme said:

I think I mostly view take home pay as different than others. I only think of the money hitting my account so taxes, health insurance, retirement savings and such aren't in what I consider take home.

As I hope to retire before 65 what I need will go up quite a bit just for health insurance - though I'm hoping the money I put in my HSA will help with that.

If I ignore health care costs I still think it'll go up as the few work related stuff won't balance out more traveling.

You can't use HSA money for insurance premiums prior to retirement (except COBRA which is limited to 18 months).

[justme]

Mar 8, 2021 8:21:30 GMT -5 minnesotapaintlady said:

Mar 8, 2021 0:34:13 GMT -5 justme said:

I think I mostly view take home pay as different than others. I only think of the money hitting my account so taxes, health insurance, retirement savings and such aren't in what I consider take home.

As I hope to retire before 65 what I need will go up quite a bit just for health insurance - though I'm hoping the money I put in my HSA will help with that.

If I ignore health care costs I still think it'll go up as the few work related stuff won't balance out more traveling.

You can't use HSA money for insurance premiums prior to retirement (except COBRA which is limited to 18 months).

Yeah, but I thought it's not considering 65 as retirement age? It's far away for me so I haven't bothered looking deep into it, but yea I meant after I retire but before I"m 65 and get medicare. 

[minnesotapaintlady]

Mar 8, 2021 9:41:40 GMT -5 justme said:

Mar 8, 2021 8:21:30 GMT -5 minnesotapaintlady said:

You can't use HSA money for insurance premiums prior to retirement (except COBRA which is limited to 18 months).

Yeah, but I thought it's not considering 65 as retirement age? It's far away for me so I haven't bothered looking deep into it, but yea I meant after I retire but before I"m 65 and get medicare. 

I meant you can't use HSA for medical insurance premiums at all except Medicare supplemental premiums and COBRA, so prior to being eligible for Medicare only COBRA.

[justme]

Mar 8, 2021 9:51:34 GMT -5 minnesotapaintlady said:

Mar 8, 2021 9:41:40 GMT -5 justme said:

Yeah, but I thought it's not considering 65 as retirement age? It's far away for me so I haven't bothered looking deep into it, but yea I meant after I retire but before I"m 65 and get medicare. 

I meant you can't use HSA for medical insurance premiums at all except Medicare supplemental premiums and COBRA, so prior to being eligible for Medicare only COBRA.

Ah. Hmph must have misremembered from an article or something. So only 18 months of health insurance pre-65. Good to know. 

[Gardening Grandma]

Mar 7, 2021 18:33:21 GMT -5 thyme4change said:

The first question any financial consultant asks is "How much will your income needs go down in retirement?" And I always say that I expect to spend more, as I will have more free time. Not one of them seems to take me seriously. I do say that I will stop saving, so, it will go down by my saving rate.

Besides getting rid of my kids, maybe paying off my mortgage - why would my expenses go down?

What percentage of your previous income do you need in retirement?

Been fully retired since 2009.  Our income in retirement is actually more than when we were working, so we are pleasantly surprised.

We spend about the same on gas/transportion because we moved to a rural area where the nearest grocery store is 15 miles away.
We spend less on clothing, although as blue collar workers we did not dress up when working.  
We spend more on healthcare premiums; considerably more.  When we were working we paid no premiums and our coverage was very very good.  Now I budget $800/mo for premiums and a cushion for OOP healthcare expenses.

We spend more on eating out (pre pandemic). We still eat out about the same, but prices have gone up.
Taxes (property and sales tax), other insurance, utilities - all are higher than they used to be.

We spend far more on travel than pre-retirement.  We take more trips, longer trips, and stay in nicer accomodations.

Basically to address your question, I think that if you want a comfortable retirement, plan on the same amount of income.

[minnesotapaintlady]

Mar 8, 2021 9:57:31 GMT -5 justme said:

Mar 8, 2021 9:51:34 GMT -5 minnesotapaintlady said:

I meant you can't use HSA for medical insurance premiums at all except Medicare supplemental premiums and COBRA, so prior to being eligible for Medicare only COBRA.

Ah. Hmph must have misremembered from an article or something. So only 18 months of health insurance pre-65. Good to know. 

Yeah...I had assumed the same thing until just recently when I started thinking seriously about retiring at 59.

[tskeeter]

Maybe the financial advisors should be asking how your income needs will increase in retirement.

Taxes - Our federal tax rate went up by over 70% after we retired because were weren’t making deductible retirement plan contributions any more.  (No state income tax.)

Medical - For me, retiree medical was not as heavily subsidized as when I was working.  Plus the line of medication bottles on the vanity keeps getting longer and I’m spending a lot more time going to doctor’s appointments.

Travel - We’re trying to travel while we’re able.  There are lots of places to see and a short amount of time to see them.  The COVID interruption may result in us making two trips a year.

Unless you are forced to reduce your spending as a result of savings constraints, I don’t think that retirement really reduces what people spend.  What we spend money on changes, but spending doesn’t go down.

[justme]

Mar 8, 2021 12:46:24 GMT -5 tskeeter said:

Maybe the financial advisors should be asking how your income needs will increase in retirement.

Taxes - Our federal tax rate went up by over 70% after we retired because were weren’t making deductible retirement plan contributions any more.  (No state income tax.)

Medical - For me, retiree medical was not as heavily subsidized as when I was working.  Plus the line of medication bottles on the vanity keeps getting longer and I’m spending a lot more time going to doctor’s appointments.

Travel - We’re trying to travel while we’re able.  There are lots of places to see and a short amount of time to see them.  The COVID interruption may result in us making two trips a year.

Unless you are forced to reduce your spending as a result of savings constraints, I don’t think that retirement really reduces what people spend.  What we spend money on changes, but spending doesn’t go down.

I think that's correct for people that are like YMAM in that they save a lot of money, often retire early because of that. Whereas I think a lot of people that retire and live on only or mostly SS are spending a lot less. Though I guess that probably falls under saving constraints. 

[Tiny]

I've been thinking of how my retirement expenses will be different than now.. and trying to think of income taxes and healthcare as expenses. I've spent most of my life not thinking too much about all payroll deductions (taxes, healthcare, other stuff in there)
and have mostly 'budgeted' with my net income (after retirement savings and any other transfers to other accounts).

When thinking about how much I will need per year in 'retirement' - I usually just subtract my "savings" amount from Gross and go with that. Which means I need to replace 60% of my current gross income in retirement.

going at this "number" from my 'expenses' (guesstimating taxes) I think it might be closer to 50% of my gross income. And that's if I maintain my current life style.

I really need to start paying attention to the taxes and healthcare costs to get a better idea of the amount of $$ I will need. 

[teen persuasion]

I don't think in terms of our income, I think of our current expenses. I expect regular expenses to be roughly the same in the short run, a few fall off like FICA, but a few new ones will pop up to replace them. Over time I expect our expenses to increase as we outsource more chores as we age. I'd also like to fund some home upgrades.

One "expense" I expect to increase sometime in retirement is taxes; currently income taxes are negative for us due to dependent credits. When the dependents are gone, the best we can do is zero tax, but probably not forever.

[Deleted]

I'd say it's about even.

Things that decreased: nothing goes to savings, no SS contributions, clothing expenses way down (I had expensive tastes in my work wardrobe), after a downsizing that was costlier than expected, my ongoing housing costs (mortgage, property taxes, utilities) are lower. Health insurance got as high as $900/month and then I qualified for Medicare so it's about hlaf that for better coverage even with the nasty IRMA surcharges.

Travel probably increased, especially when DH was alive. He was over 6 feet tall and had a creaky back and after flying Business Class on miles he realized it took him less time to recover on transatlantics if we flew Business. I've continued that habit even though neither excuse applies, but it's cheaper for one!

Charity has increased since I'm pretty sure I'm not going to end up relying on public funds in my old age and will likely leave DS and DDIL a decent amount. You can't take it with you.

Taxes are all over the place depending on investment income but went up considerably the first year I filed Single in 2017 (DH died in 2016). All those brackets for tax rates, deductions, etc. double or halve when you're single- whatever works to the disadvantage of the taxpayer. I get no break on property taxes for being Old.

My tactic has been to withdraw about 3%/year (it's averaging 3.3% due to the expensive downsizing in 2015) and either spend it or put into in the grandchildren's 529 account. The latter has the advantage of sheltering any further investment income from taxes.

[Rukh O'Rorke]

Mar 8, 2021 9:51:34 GMT -5 minnesotapaintlady said:

Mar 8, 2021 9:41:40 GMT -5 justme said:

Yeah, but I thought it's not considering 65 as retirement age? It's far away for me so I haven't bothered looking deep into it, but yea I meant after I retire but before I"m 65 and get medicare. 

I meant you can't use HSA for medical insurance premiums at all except Medicare supplemental premiums and COBRA, so prior to being eligible for Medicare only COBRA.

wha?? why?? just no....


but if you don't have insurance and get a 100k medical bill, the hsa is open for business, huh?

[Rukh O'Rorke]

Mar 8, 2021 9:58:34 GMT -5 Gardening Grandma said:

Mar 7, 2021 18:33:21 GMT -5 thyme4change said:

The first question any financial consultant asks is "How much will your income needs go down in retirement?" And I always say that I expect to spend more, as I will have more free time. Not one of them seems to take me seriously. I do say that I will stop saving, so, it will go down by my saving rate.

Besides getting rid of my kids, maybe paying off my mortgage - why would my expenses go down?

What percentage of your previous income do you need in retirement?

Been fully retired since 2009.  Our income in retirement is actually more than when we were working, so we are pleasantly surprised.Q1

We spend about the same on gas/transportion because we moved to a rural area where the nearest grocery store is 15 miles away.
We spend less on clothing, although as blue collar workers we did not dress up when working.  
We spend more on healthcare premiums; considerably more.  When we were working we paid no premiums and our coverage was very very good.  Now I budget $800/mo for premiums and a cushion for OOP healthcare expenses. Q2

Q1 - do you have pensions and ss for 2?

Q2 - is this with medicare and supplemental?

[Rukh O'Rorke]

Mar 8, 2021 10:01:25 GMT -5 minnesotapaintlady said:

Mar 8, 2021 9:57:31 GMT -5 justme said:

Ah. Hmph must have misremembered from an article or something. So only 18 months of health insurance pre-65. Good to know. 

Yeah...I had assumed the same thing until just recently when I started thinking seriously about retiring at 59.

looks like you can if you are collecting unemployment - so the rules were specifically put in place to prevent its use for early retirement...just....ugh!

[The Walk of the Penguin Mich]

Mar 9, 2021 9:44:51 GMT -5 Rukh O'Rorke said:

Mar 8, 2021 9:58:34 GMT -5 Gardening Grandma said:

Been fully retired since 2009.  Our income in retirement is actually more than when we were working, so we are pleasantly surprised.Q1

We spend about the same on gas/transportion because we moved to a rural area where the nearest grocery store is 15 miles away.
We spend less on clothing, although as blue collar workers we did not dress up when working.  
We spend more on healthcare premiums; considerably more.  When we were working we paid no premiums and our coverage was very very good.  Now I budget $800/mo for premiums and a cushion for OOP healthcare expenses. Q2

Q1 - do you have pensions and ss for 2?

Q2 - is this with medicare and supplemental?

This is probably about right, but it depends on drugs you take and likely includes dental and eyes as well.  I think we have figured about $1000/mo for both of us.  This does NOT include dental, which can be a huge chunk (especially for TD).  I anticipate this will go higher for us, as we will also be looking at international health policies too.  

[Gardening Grandma]

Mar 9, 2021 9:44:51 GMT -5 Rukh O'Rorke said:

Mar 8, 2021 9:58:34 GMT -5 Gardening Grandma said:

Been fully retired since 2009.  Our income in retirement is actually more than when we were working, so we are pleasantly surprised.Q1

We spend about the same on gas/transportion because we moved to a rural area where the nearest grocery store is 15 miles away.
We spend less on clothing, although as blue collar workers we did not dress up when working.  
We spend more on healthcare premiums; considerably more.  When we were working we paid no premiums and our coverage was very very good.  Now I budget $800/mo for premiums and a cushion for OOP healthcare expenses. Q2

Q1 - do you have pensions and ss for 2?

Q2 - is this with medicare and supplemental?

Q1 - do you have pensions and ss for 2? Yes

Q2 - is this with medicare and supplemental? Yes
   Medicare Part B (for two) $297
   Medicare Part D (both) $23.50
    Medigap Plan G (for DH) $209.50
    Medigap Plan F (High Ded for me) $66.89
    Dental Ins (both) $71.24
    Set aside for OOP expenses $130


(My high deductible plan has a deductible of $2370 and our yearly Medicare deductibles are $203 each so I'm setting some aside to cover those)


    

[Gardening Grandma]

Mar 8, 2021 12:46:24 GMT -5 tskeeter said:

Maybe the financial advisors should be asking how your income needs will increase in retirement.

Taxes - Our federal tax rate went up by over 70% after we retired because were weren’t making deductible retirement plan contributions any more.  (No state income tax.)

Medical - For me, retiree medical was not as heavily subsidized as when I was working.  Plus the line of medication bottles on the vanity keeps getting longer and I’m spending a lot more time going to doctor’s appointments.

Travel - We’re trying to travel while we’re able.  There are lots of places to see and a short amount of time to see them.  The COVID interruption may result in us making two trips a year.

Unless you are forced to reduce your spending as a result of savings constraints, I don’t think that retirement really reduces what people spend.  What we spend money on changes, but spending doesn’t go down.

What we spend money on changes, but spending doesn’t go down.

This. 1000%

[CCL]

Our spending has gone down. My housing expenses are about half what they were before retirement. I spend less on vehicles. We had a lot more medical expenses when the kids were home. Sure, insurance paid most of it, but I had to pay my share, too. Food costs less for two people than it did for a family. We travel more, but spend less money since we've got two people instead of five.

[giramomma]

Mar 10, 2021 0:49:51 GMT -5 CCL said:

Our spending has gone down. My housing expenses are about half what they were before retirement. I spend less on vehicles. We had a lot more medical expenses when the kids were home. Sure, insurance paid most of it, but I had to pay my share, too. Food costs less for two people than it did for a family. We travel more, but spend less money since we've got two people instead of five.

I think this depends. Now that my mom is alone, she is opting for more prepared meals from the grocery store. Even with things like buying canned soup, I can get 4-5 meals for my myself making pea or lentil soup for the same price that she pays for progresso soups that provide her with 2 meals, max.

Mom is also making extensive use of the "hot bar" and prepared salads. Again, a big container of lettuce for my family for a week costs the same as one prepared salad that lasts my mom two or three days.

She also isn't comparison shopping or waiting for sales, either. So, we only buy cold cereal when it hits a certain price point. Mom paid $2 for the same box of cereal that we pay for.

I've gone shopping with her a couple of times in the past 6 weeks or so. She spends more when I'm not around. She isn't spending 1/6 of what we do. She's spending about half of what we do..And I'm sure what she's spending on groceries now, is just about the same as when I was at home as a child and we were a family of3.

[minnesotapaintlady]

Mar 10, 2021 8:33:54 GMT -5 giramomma said:

Mar 10, 2021 0:49:51 GMT -5 CCL said:

Our spending has gone down. My housing expenses are about half what they were before retirement. I spend less on vehicles. We had a lot more medical expenses when the kids were home. Sure, insurance paid most of it, but I had to pay my share, too. Food costs less for two people than it did for a family. We travel more, but spend less money since we've got two people instead of five.

I think this depends. Now that my mom is alone, she is opting for more prepared meals from the grocery store. Even with things like buying canned soup, I can get 4-5 meals for my myself making pea or lentil soup for the same price that she pays for progresso soups that provide her with 2 meals, max.

Mom is also making extensive use of the "hot bar" and prepared salads. Again, a big container of lettuce for my family for a week costs the same as one prepared salad that lasts my mom two or three days.

She also isn't comparison shopping or waiting for sales, either. So, we only buy cold cereal when it hits a certain price point. Mom paid $2 for the same box of cereal that we pay for.

I've gone shopping with her a couple of times in the past 6 weeks or so. She spends more when I'm not around. She isn't spending 1/6 of what we do. She's spending about half of what we do..And I'm sure what she's spending on groceries now, is just about the same as when I was at home as a child and we were a family of3.

Well, I'm good then because I already shop like that with kids!  The only things I buy or prepare bulk are things that are shelf stable or frozen.  My grocery costs plummeted when DS left for college. I might actually have to start freezing shredded cheese which was never an issue before because he put it on/in everything!  I never had cheese when I needed it for something.

[thyme4change]

Mar 10, 2021 0:49:51 GMT -5 CCL said:

Our spending has gone down. My housing expenses are about half what they were before retirement. I spend less on vehicles. We had a lot more medical expenses when the kids were home. Sure, insurance paid most of it, but I had to pay my share, too. Food costs less for two people than it did for a family. We travel more, but spend less money since we've got two people instead of five.

It sounds like your spending went down because your kids moved out, not because you retired.

I do see my kids being on their own dime as a place where expenses will down pretty dramatically. Except housing. I dont plan on moving, so housing will stay about the same.