I don’t disagree. But in terms of retirement, I read that you need to be able to replace 80% of current expenditures to retire. If we were to keep our house to local standard and travel, eat out, pay for good health insurance etc. then we can’t retire, ever. And I wonder if that figure is real or just an attempt to terrify people into dumping their money into financial instruments that yield fees for financial advisors.
Well, I’m grumpy and scared. We’ll retire because we’ll run out of mojo sooner rather than later. Hopefully it will work out.
I log a very detailed budget at the end of each year, so usually know within a few hundred dollars where we spend our money. It really isn’t that hard, because it is all on charge cards or bank withdrawals, and I’ll occasionally update the information over the year when I just need down (non-thinking) time.
Our total expenses have not changed much in retirement at all. It has just repositioned to other areas (like my hips?). Less is spent in work-related expenses; less in childcare/education expenses, but more in medical, travel, maintenance (old house, old owners who now prefer and sometimes need additional help), property taxes, sales taxes, etc.
The numbers are different for everyone, but we have not seen a 20% decrease.
We saw a decrease. We had a lot of work related costs, beyond the cost of gas and clothing … H had a long commute and I worked long hours, so we tended to spend more on food. I now have time to shop more carefully and to make food from scratch. Oh, and I find myself spending far less on wine! Don’t forget … you’re probably saving for retirement, right? You won’t be doing that in retirement.
We saw a significant decrease because we always lived on the higher income and invested the lower while also contributing the max to both 401Ks. Once the higher income increased past a certain point, we invested a portion of that, too. We were very flexible about where we lived, willing to go anywhere and monetizing our housing with every move, always buying down. We were more focused on becoming the covert millionaire next door than wealth signaling. An early, comfortable retirement was way more important to us than anything we wore, owned, or did, and we paid no attention to anyone else. Like @kjofkw, I kept track of cash flow, but more strictly, detailing every penny in, every penny out monthly for twenty years. Knowing what we’d need in retirement was clearcut, no surprises. We retired eight years ago on 30% of our highest combined gross incomes and spend much more freely and easily now than we did while we were working.
I realize not everyone can/will make the choices we did or is as laser-focused on retirement as we were, and life also throws curves along the way (like a surprise child at 40) but, barring a lottery windfall, careful planning and dedication are key. Though the sooner you start, the better, there are no extra points for arriving early, just full points for getting there securely eventually.
I had to smile. Practically everything I own is 20 years old. When the loveseat we got in 1984 was wearing out after 20 years, we got it reupholstered, the refrigerator, 28 years old, still going strong, the old family car, not quite 20 at only 19 years old, still runs like new after replacing a few parts, etc.
I read those “advice” articles like the junk published by SmartAsset for entertainment. Taken at face value, they can scare the bejezus out of someone who is on the right track to retire that what they are doing is not enough. As other posters said, it is all individual.
We tried to find a replacement couch a couple of years ago - the old one was at least 15 years old. The fabric was fine; just saggy cushions. There was nothing at all like what we wanted, in stores or online. We got it restuffed and it’s great.
My DW was a SAHM for 8 years, so we lived on one income. Those were some lean years to be certain. She went back to work slowly, first PT then a clerk position close to home with good hours. In 2020 she was promoted to a professional level job and in two months she is moving to a higher paying job much closer to an income level she should be at.
All of this has occurred while the two kids are leaving. One kid is launched fully. The other is on a full-ride. 2024 was a highest level of income ever in our 29 years. 2025 will be a bit higher as well. We are catching up some on retirement. We are nowhere close to multiple homes level. But we don’t buy or spend on credit. We will only have a mortgage and car loans and right now we don’t have any car loans. This has allowed us to spend a bit more on entertainment and travel. Both myself and DW needed a lot of new clothes recently and we decided that we are no longer shopping at Kohls. We are buying nicer clothes. We just went into the city on Saturday to see a show and we have plans for the next 4 weekends to go out and do stuff.
As far as travel goes I like to travel nice. I won’t spend $2K per night but also I won’t stay at Motel 6/Red Roof Inn. Back in '19 my Mom gave us some funds for our trip to Universal in FL. We had already saved for the trip so we decided to use the funds to have a VIP day at the parks. It was wonderful and somewhat ruined the idea of going to a park without it. Walking on to the rides with no wait was great. I will definitely pay $$ to skip a line or speed things up.
I also don’t mind spending funds on making our lives easier. We have a person that comes to clean the house once every two weeks. Totally worth it. I do cut my own grass, but I get anal about it. I will happily have people do work around the house like landscaping etc. But I am picky about who does the work. I like to ‘know a guy’. My Dad worked in the trades so he would barter his services for getting services. I don’t like to have companies/corporations to do the work. I know I am paying more because there has to be a profit for the owner to take out of the job. And if said owner is not working on the job then it will cost more. When we had our bathroom renovated we had ex-firemen do the work. The outfit that redid our driveway last year was way cheaper than the other quote mainly because it was small outfit and the owner was a worker.
On the tax issue I will put it this way. I grew up lower middle class. I played golf my whole life. My dream used to be to join a Country Club. In HS I worked at a Country Club. I realized many of the members were jerks and were cheapskates. Not all of them but most. Many people who have money will do anything and everything to keep it. I would never move to a state solely to save 4-8% a year on Taxable Income. There would have to be more to the location than cheap taxes.
But in the scheme of things everything is relative. By the time my oldest finished college I had gotten a ‘bonus daughter’. Long story but this girl is like our daughter now. She does have a Ex-Stepdad that floats in and out of her life. He is rich. And when I say rich I mean net-worth $50-$100 million at least. He spends money like it means nothing. He took my daughter and bonus daughter on a Spring Break trip senior year. They did everything in CA. When up to Napa stayed at places that were $1K a night. My daughter texted me while on the trip "John is buying $90 margaritas and he will only eat if the restaurant has a Michelin Star.’ I figured it up that he probably spend $10-15K on those two for the trip. But for him it would be pocket change. I met him at graduation and he is a nice guy. He paid a woman to be his driver that day/night because we were drinking a lot. He is just not reliable. He also will do things very last minute and if he has to pay more then no big deal. Lastly if you saw him you wouldn’t think he had money as he dresses down most of the time.
The articles I’ve read said we need to replace 80% of income, not expenses.
And I think that is pretty disingenuous of the financial companies to focus on income rather than expenses. Which income, anyway- my highest? My last year? Who knows.
Many of our expenses went way down the last few years before and at retirement - didn’t have to save for retirement any more, no more college tuition bills, our income tax burden went way down (no FICA for example), property tax got cut in half.
Some of our expenses went way up - travel, health insurance.
Health insurance expense should go down significantly in a couple years when we reach Medicare age.
So even saying something broad like “80% of expenses” is really not helpful IMO because your expenses may dramatically change at certain points.
Everyone’s situation is different, so you need to make a budget based off your circumstances to see what you need.
Our DD1 in her first apartment after college had a nicer refrigerator than I had at home, also nicer/better washer and dryer. I got the new refrigerator first (one that delivers both round ball ice in the freezer and cubed/crushes/water in the door - love, love, love it. DH used to be ridiculous about even minor appliances (a toaster comes to mind - I bought a new one and gave it to DD1 when DH insisted the toaster still worked; then I ended up purchasing the same toaster that I had given DD1 when DH finally gave up on the toaster). Story with coffee maker too. When DH ended up liking the new refrigerator, he was an easy sell with getting the new washer/dryer, and since I do all the laundry - I made the specific purchasing decision. IDK why the new machine doesn’t have ‘rinse and spin’ but it has a 15-minute wash cycle which is ‘close enough’.
Your parents’ couch example came to mind when a friend moved from a 4 BR house to a 1 BR apartment. They had moved all their stuff from another state years ago after her husband had a stroke, to move close to DD and her family. They moved all their stuff, and now she was ready to downsize. I believe her husband made the decisions to keep everything and move into a similar sized house. She just had moved stuff into the one bedroom and has lived there for about a week. She is going back to look through the kitchen cabinets and see if there is something there that she still wants. I imagine her DD will be communicating with other sister (who lives away) on what they will want from the house, if anything.
I look at that 80% replacement ratio, look at H’s salary deductions and think we don’t need that much. By the time we account for 401k contributions, other direct deposit allocations, Social Security deductions & disability coverage, plus commuting expenses and the external life insurance policy H carries that we won’t be paying any longer – that’s a lot of money we don’t have to replace in retirement.
We’ve been doing the go-go travel for two decades now since we haven’t known at what point my health might preclude it, so that level of expense is baked into our current budget. Travel and the guys’ college are the two things we treat ourselves to, though we are very cost-conscious with travel – we like to travel a lot on a budget rather than a one or two big vacations. Our big concern is medical expenses, and that feels like an unknowable number, so we keep squirreling away acorns for the winter.
Is it possible that it does have “rinse and spin” but that it is hidden as “spin only” with “extra rinse” selected? I had a washer with that situation.
It has a rinse and spin cycle, but the 15-minute speed wash is quicker. Machine has 7 steam clean cycles (which includes Normal, which is what is set unless you change with the dial) and 7 other cycles. Speed Wash and Rinse and Spin are in those other cycles, including Delicate, Permanent Press and some others.
I meant to say in original post just spin cycle. Sometimes I would hand wash something out and just want to have it spin. Now I just use the 15-minute wash with a few items that I want to have available clean.
I looked at our Adjusted Gross Income for 3 years just before retiring and 3 years during retirement (2018-2023). I haven’t done our taxes for 2024 yet. We have been taking $25,000 from IRA to Roth IRA so that is being reflected on these retirement years, and even with this ‘boost’ we have 86% of income between pre-retirement and in retirement. That has also included doing some things with home maintenance and also some cash loans to DD2/BF (interest free loans for auto purchases to help them avoid high interest rates; DD1 had about half savings). DH is on the car title with BF. We have another grandchild coming, so funds will go into the child’s stock account from us (matching what went into his/her siblings’ stock accounts).
We have not ‘worried’ about spending, as we have the cash flow coming from SS and our 5 annuities; any additional money we transact out of DH’s 401k. We have not gone on expensive trips - DH avoids travel. I have postponed a Europe trip - might go in 2026 or 2027.
I would not count on a 20% decrease until later in life - unless needing to go into Assisted Living or Skilled Care – and then hang onto your hats. If one spouse needs Skilled Care, getting the right legal and tax advising so healthier spouse can continue on their share of assets and home; Certified Elder Attorney can be very helpful. Assisted Living might work well money-wise, with downsizing with home sale and possibly paring expenses from home ownership – but it may be less desirable if one spouse is active/healthy and doesn’t want the move to Assisted Living.
