I don’t feel like our expenses have gone down much in retirement. The main thing is not paying so many taxes, since our pension is lower than our pay was, not having all those deductions for 401K, SS and Medicare, union dues. We did far more personal travel last year than before retirement, when our company was paying for much of our costs. We spent over 40K just on airline and hotel costs, though we used plenty of airmiles and hotel points. I didn’t realize it was so much until I added it up. Never would have spent that while working, because we wouldn’t have traveled like that.
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Expenses are about the same. The most surprise is paying for income based medicare part B for each of us.
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Ah, yea taxes is a definite factor. It’s one of the reason that years ago I started to track monthly “outflow” (cash + checks + autopays + VISA; we pay cash for cars so had to have a separate estimate for that).
The FA/instructor for the first retirement planning class we took included a free personal session (hoping to get new clients). He needed to know how much net (after tax) income we’d need in retirement. We had no idea - mostly we’ve just been a “live well within your means” kind of couple.
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We plan on downsizing our house to about 40% the size of our current home. We will also probably move to a different state. Our property taxes should go down about 70%. We plan on being able to purchase our retirement home outright when we sell our current place. Homeowners insurance should go down as well. So my current mortgage pmt that includes taxes and ins should go down to about 25% of the current pmt. Utilities should go down as well.
We won’t have kid expenses any longer. Right now it cost me about $8 in gas and tolls to get to work each day. (I bring a lunch)
The tough one is always medical costs.
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And obtaining good medical care where you move to - another consideration with a big move. Sometimes having to learn the medical systems in a new area.
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We put both DDs on a Visa that was from our Credit Union - so that in case of emergency they could use it. DD2 said it bumped up her credit and her credit history was longer than her age. They are now both off of it, but it did have its benefits.
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Speaking of credit cards for college kids, I was in college during the times when the CC companies would be on campus and if you signed up you go that neat t-shirt. And they approved everyone. I am pretty sure that practice has stopped.
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We also told the guys that we’d pay for UG, but that grad school was on them unless they took the big UG merit $$ at the flagship. We did not pay for cars (S1 still doesn’t drive; S2 has a license, rent occasionally overseas, borrows our 2011 car when he’s in the US).
We also lived off of H’s salary and used mine for long-term savings/college. Worked for us, esp since my income was unexpectedly erratic. S1 has been off the payroll since 2012. S2 has been off since 2018, though we send a couple shipments a year to Ukraine with meds he can’t get there, Sweet Baby Ray’s, Kraft mac & cheese, and American jeans for DIL.
We didn’t put our sons on our credit cards. S1 didn’t get one til he started working FT. S2 applied to USAA for a card in college, got a $300 limit, which was enough for emergencies. Has built up his credit limit and credit rating since. Both have taken care of their student loans. S2 still has his UGMA account, which would pay off his Staffords, but that is also his nest egg and he has preferred to let that grow since his loans have low rates.
We’ve had a good eight years since college expenses ended, which has enabled us to take what we used to pay for college and throw it into savings, plus things like food, utilities, gas, and car insurance are lower with just the two of us. The plan is to continue the aggressive savings for another 5-6 years, health and job willing.
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Congrats on raising financially responsible kids while doing well on the home front and with their education. We are blessed that DDs kept on track and graduated college on time, w/o debt, and with careers that have them be self supporting. DD1 is married and mom of 4, while maintaining her career - both DD1/SIL have aspirations of graduate school - her employer will pay (so she will have one more thing to juggle, but it is intricate with her job so some of her academic responsibilities will be handled on the job). SIL is advancing with his job, and his continued military commitment is the path for graduate school (hasn’t crossed that bridge yet - he is gaining certifications and work experience in his area) - the door has to open for him on the graduate school path. How does this affect our retirement? I am the volunteer back up ‘extra adult’ - and SIL will have 4 weeks of training away Mar/April coming up. American Airlines, with one stop over for me to get to where they now live. I will have a wonderful time with DD1/grandkids while fulfilling the family care needs. I was FT nanny for GD1 and GS1 for 6 weeks during Covid daycare shut down early 2021 (at that time they lived 100 miles from us). During the Covid time, I just needed to work one day per month to keep my job status (I worked a sunset career for 4 1/2 years until retirement at age 65 - mostly hours up to full time, in nursing, PRN status - but there always were hours/shifts to pick up; for 18 years was SAHM and also successful survivor of stage III cancer).
While I was unable to stay FT employed through the years (which was my plan with career), our family benefited from having a SAHM, and I handled our investments while we also were a bit more careful on spending. It helped that we live in a relatively low cost area. DH was generally happy with his job and was able to stay employed throughout his career w/o us moving, although he had to do a lot of work travel. His work travel is what lead to decision for me to be SAHM.
7 years before DH retired is when we started with our Financial Advisor and got some of our ‘loose’ investments consolidated, and a ‘plan’ with purchasing annuities and lowering our overall portfolio risk.
The only thing I would like to have is something unachievable at this stage in the game - our 401k is big, and so all the returns are of course pre-tax. Our annuities are pre-tax. Eventually I guess with our estate, the Roth IRA funds will help pay the taxes over the spend down of the estate based on the laws in place. Do plan to leave an estate, but that is not in our hands due to potential long term health care needs of DH or me.
Something to consider is forming a family trust, but not sure if we will stay in our current state. Will gauge this as we get more things going on estate/trust planning.
Just clicked on my New York Times to find some recent studies on parental involvement with next generation, and also how many adult children not living far from mom. I know some of you don’t have subscriptions but maybe can find elsewhere.
In past generations, there were often multi-generations under one roof or nearby. That was the case with DH’s family - although grandpa lived a few houses down (in duplex with family there) DH’s mom did grandpa’s laundry and he was over for meals a lot. Both sides of DH’s family were generally geographically close area.
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BlockquoteWe’ve had a good eight years since college expenses ended, which has enabled us to take what we used to pay for college and throw it into savings, plus things like food, utilities, gas, and car insurance are lower with just the two of us. The plan is to continue the aggressive savings for another 5-6 years, health and job willing.
My youngest(D2) is in UG and oldest(D1) is finishing a Masters. D1 is off the payroll although we will have to go down in May for graduation and help move to different apartment. D2 has full-ride so we give her $100 of fun money a month.
I have totally noticed the household expenses with both gone and out of the going down. Lowest water bill in November in 21 years at our house. We run almost everything through 2 CCs. One CC just closed the month for the new statement. It was the lowest month of spending on that card we have had in well over 3 years.
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Our expenses have stayed roughly the same. We eat out much less, and commuting costs are down, but nearly everything else has increased, some substantially (such as property taxes, and maintenance costs). I’m not counting the “big ticket” items (college funding, weddings, etc.).
No pensions for either of us, so our living expenses will need to come from SS and IRA’s. (Roths were not available when we started, and we didn’t have much opportunity to convert). While we won’t pay FICA or income tax on earned income, our taxes will likely be similar due to RMD’s .
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I have been tracking expenses for a few years now.
Every month, I tally routine expenses and keep a separate category for “kid” expenses (tuition, etc.) and unusual expenses (new furnace, for example).
After retirement, the kid expenses will go away. Special expenses will not, but we have tried to take care of as much as we can before retirement so there should not be a need for the equivalent of a new furnace every year.
Eventually, all the kids will have degrees and be launched, but until then we are paying for car insurance and phones, etc., and that will last at least a few years into retirement.
We are also retiring before we are Medicare eligible, so will need to purchase health insurance at a significant cost.
So our routine expenses will not go down. To keep them from going up, we are paying off the mortgage. The money that used to go toward the mortgage will go toward health insurance.
When we get closer to Medicare age, our ideal scenario would be to downsize into a new construction one-story home that is designed for aging in place, energy efficient, and too new to require more than relatively inexpensive routine maintenance. That could cut utility bills, etc., a bit. But that’s too distant to count on.
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I do know some couples who have found a way to cash out assets before retirement, “game it” so that they have very low income the year(s) prior to Medicare.
It was not the right thing in our scenario, but out of curiousity I have checked some What If scenarios on our state’s website (CO aca example - Quick Cost and Plan Finder . I use a particular nickname for this kind of sleuthing so that associated resulting junk mail is better identified.
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Last year we needed a new well pump $6000. New water softener $2500. Tree removal $2200.
Unless you count good water pressure, all of this is necessary maintenance and not planned. But as I tell my kids owning a home comes with unexpected costs.
These costs aren’t built into any plan. Some years you don’t have any. Some years you need a new roof.
I consider remodeling in a different category. One that is planned for. Like a wedding. Or travel. Those are easier to plan and easier to cut.
And remember that sometimes retirement isn’t planned by you but by an employer. There’s not a plan for that either but is something that unfortunately happens. Try to plan for the unexpected.
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Obviously a clickbait but quite entertaining to read on a slow Saturday morning. 
I have zero sympathy for that couple, and wonder who’d be foolish enough to hire them as consultants.
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I’m not sure where this number is coming from.
“He says to cover the family’s expected expenses (without cutting back on any areas), they would need to make about $420,000 a year before taxes.”
I think it is what they need pre-tax in their area to get $230k they think they need for their annual living expenses. Ridiculous!
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Maybe if your goal is to be retired. FIREd 
. You could move to a lower cost of living area. Ridiculous that he thinks he needs to live in the most expensive area of the country.
Even if he had family, he could move to a exurb.
I can’t believe anyone wrote that article with a straight face.
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