Post-retirement spending
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Anonymous
| My mom is spending way more than she ever did when working. She gets about $4k in pension and draws down another $4k for living expenses plus about $20k for travel. |
Anonymous
| I’ve been retired for eight years. There are a lot of things you don’t spend in retirement - anything related to kids, for starters - and on top of that you’re not saving for retirement. So yeah you don’t spend 80 percent. You spend less. |
Anonymous
| We are high income and will spend less than 80% for sure. We’ve paid off 1 mortgage and will have the second house paid off soon. We save a lot right now, which we won’t need to do. So with no savings and no mortgages we cut our biggest expenses off the top. |
Anonymous
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It depends on the stage of your retirement.
Early 60s, you are still active, so I think 80% is a good rule of thumb, but that's 80% of net, not gross current income. It assume you are very active, and you don't have a mortgage. Around 70 to late 70s, I'd say you start slowing down a bit, so maybe 50% Around late 70s, you start to really slow down. My IL and parents are in their 80s, and they spend less than $3000/month on living expenses + medical care. They downsized, so utilities aren't high. They don't drive anymore, so need for car insurance. They don't eat that much, so food costs are low. Obviously YMMV |
Anonymous
| Depends also on your hobbies. Some are quite expensive- golf, travel, boating |
Anonymous
| Depends on what you want to do and where you want to be. We already have our retirement home in oceanfront community paid off so no mortgage. DH has fed pension + health care and we will be in state that doesn't tax pensions. We recently met with our planner who put us at 40% though we are high earners so they puts us around $200k. |
Anonymous
80% (or 70% on some sites) is an average based on average income. Much better to forecast based on your reality (i.e. your expenses). |
Anonymous
| If your house is paid off, you will just need 1-2k a month to pay real estate tax and insurance in DMV, probably another 1k on utilities and upkeep. Add another 3k for food, cloth, gas, Medicare deductibles and you are around 6k/month if you want to stay in your house. |
Anonymous
| I'm still working (in my 40s) and I save about a quarter of my gross salary (between 403b, 457, 529, savings bonds, brokerage) so it seems clear to me that 75% of my current salary would be enough. |
Anonymous
| For us, the only difference I can see in going from working budget to retirement budget is we won’t be saving for retirement in retirement. Health care will be about the same at first as we already pay for our healthcare and don’t anticipate a drop in retirement. Initially, travel will be higher but the drop - so will average out. |
Anonymous
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I've been retired for a little under a decade and just turned 60. My spouse stayed at home and our kids are long out of college and launched so she is retired as well. We still have a mortgage because we have a very low interest rate so there's no reason to pay it off. We live a very, very nice life in the DMV, with a home in a highly desirable part of the city and a second home in the country where we also spend a large amount of time. I track my expenses with the personal cap app.
Removing mortgage payments from our expenses -- because I know others will insist on paying theirs off before retiring, for whatever (often irrational) reason -- here are our average yearly expenses for the last three years, from highest to lowest: Taxes (federal and DC income and DC and second home property taxes): 35k Healthcare (premiums, deductibles and all out of pockets): 28k Home maintenance (for both the DC and second home, including cleaning services, lawn services, swimming pool maintenance in the second home, and all general maintenance on both houses): 26k General merchandise (basically every "thing" we buy): 18k Travel: 13k (average probably lower than the past because of covid) Car (gas and maintenance, including buying a late model used one): 14k Groceries: 12k Restaurants: 8k Utilities: 7k Cable/internet: 5k Gifts: 4k Insurance (home & auto): 3.5k Phones: 3.3k Miscellaneous (assistance to elderly mother, entertainment, cash withdrawals from ATMs, gifts to charity, clothing): 6k TOTAL per year average: $183k So, for $183k a year, we are paying our taxes, paying for health care, managing to high end homes, traveling, eating out, buying decent cars, helping out our mother, etc. It's a very nice life, and it's affordable. Some DCUM posters worry too much. |
Anonymous
How do you manage to pay so little federal and state tax on 150k in income |
Anonymous
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The percent of income thing is dumb. Make a budget and get an actual annual dollar amount you think you’ll need.
We spend 25% of our pretax income now before retirement. We expect we’ll want to spend 50% of our current pretax income in retirement. But we got to those numbers by looking at current spending and what we want to do later, they are based on actual dollars and cents, not percentages. I would hardly know how to spend 80% of our income. And no we don’t earn $1mil plus or even 500K. Everyone is different. |
Anonymous
So this varies by the person. In discussions with UMC and higher folks they are not spending less and still spending on kids and grandkids. It may be that they do this because they can but something to consider. |
Anonymous
Right, per rhe bolded above, when you first retire it's go-go (travel, projects, hobbies etc.). When you slow down a bit, it's slow-go (and spending less money), and then you get to the no-go stage, where most of your money goes to health care! |