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Reducing expenses in retirement

K&PFitz

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I have a question for the retired Tuggers out there:

I'm 55, so I spend a good bit of time calculating when I'll be able to retire. Most of the online retirement calculators project that you will reduce your expenditures in retirement, so that you can live on say 75 or 85% of your current income.

I'm wondering how realistic that is. I can think of two things I might save money on. One, I won't be buying suits and ties. Two, I'll stop putting money away for retirement, which actually is a significant amount.

But, at the same time, my golfing expense should increase, and no doubt health expense will, too. One thing that concerns me is the cost of health insurance, which my employer pays now.

So, retired folks, were you able to live on less after retirement? Thanks!
 

Passepartout

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I also retired early (62). Between paying all my health insurance, more traveling. I haven't experienced a reduction in spending. That was about what we expected, though. We have kept up our lifestyle choices. Large house, cable, yard care, occasional housekeeper, dining out a couple times a week, etc. I suppose the time may come when we downsize to a condo, move to a different locale, stay home more, but so far that hasn't become necessary.

Your age (55) and going forward should be about your highest earning years. Time to sock away for your retirements, not fussing about where to cut back.

Develop a plan and stick with it. You'll be fine.

Jim
 

bogey21

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IMO if you have your house paid for, no car payment, and no credit card debt, you should be able to get by on 75% of prior pay unless you take a lot of trips, eat out a lot, play a lot of golf, etc.

George
 

ronparise

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when you vist Florida and shop at Publix, you will note the the average age of the bag boys is about 75. These are the guyes that cant afford to retire

Im 65, and I keep working because I have too and want to..

As you suggest in retirement certain expenses go away, like the business suits you mentiond (although my brother the retired UPS driver found his clothing budget increased...no more company provided uniforms) others will increase...travel for example....I think the secret would be to pay off the mortgage. Then you could get by on less
 

kool_kat

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While I'm a long way from retirement, I always assumed the 75 - 85% was due to having your house paid off too. The mortgage payment alone will decrease my expenses by the 15-25%

Then I would think the other things would balance out. Yes, you spend more on a hobby, but less on work stuff. Not putting money into retirement anymore, but increased health insurance cost, etc...
 

zinger1457

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It's best to forget about percentages of income that others recommend since everyone's situation is different. The key to me is knowing what your current expenses are and work on a good estimate of what they will be in retirement. Always be on the high side when estimating future expenses. I use an Excel spreadsheet but pencil and paper will work. There are some good expense spreadsheet templates online if you need some help. The biggest expense changes for me in retirement are; expense increases (golf, travel, health insurance), expense decreases (debt, retirement contributions). I retired in my 50's and what allowed me to take the leap was getting rid of all my debt (mortgage, credit cards, loans, etc.) before retiring.

I've plugged this site several times on TUG for those looking for retirement advice/assistance, I've got no ties to it other then that it's been a valuable resource for me (http://www.early-retirement.org/forums/).
 

sue1947

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I retired early at 53. Before making the final decision, I went on 'retired' mode for a year and cut all expenses down to the bone while still maintaining the things that make life enjoyable. I budgeted for $10000/year more than that amount and have found that I am living on $10000/year less than that amount. I'm pretty darn thrifty, which is the reason I could retire at 53, but still manage to work the timeshare angle for 84 nights this year. I travel with others who split those expenses so I can get more for less.

My recommendation: pay off your mortgage. It's huge peace of mind.
Second: think about what is important to you and spend your money accordingly. How much you need for retirement will be different for each individual. You won't know until you figure out how much money you need (not want) to live on and then add a cushion. One thing that spurred me to retire was realizing that I could buy individual health care cheaper than the company retirement version. That made me realize that many of my assumptions on what I needed to retire were wrong. I've been retired for 5 years and wouldn't change a thing.

Sue
 

isisdave

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You might find the price of health insurance surprising, particularly after 60. Ours (two of us and one child) costs more than our house payment, and our deductibles are $3500 each. Figure about $600 a month each at today's prices. I don't know what will happen in 2014, but I don't expect rates to decrease.

The other thing I found is that dental problems accelerated after 55; I had quite a few big fillings from my 20's and one by one they cracked and/or broke and had to be crowned at about $900 each. (I'm on my dentist's Smiles Plus plan, and both his kids are in really good colleges.)

I actually made a spreadsheet with our projected income and expenses. That helped, but you have to get everything into it or you'll have a false sense of security.
 

funtime

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Part time job at golf course

I have a tenant who is retired and he works part time at a golf course. He loves it. He opens up and gets the carts ready for the first round. He of course meets lots of golf buddies and gets to play for free.
 
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funtime

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Cutting down expenses - like timeshare expenses

Another thought - does this need to be said?? My sister and I look forward to retiring in a year or two and we have given away 7 timeshares in the last two years on the Bargain Deals Board here on TUG in order to reduce maintenance fees on units that just no longer fit in our retirement visitation plans including a lot of potential ski weeks. However, we have not gone bare bones as we love timeshares and plan to use the ones we keep in our retirement. Funtime
 

LisaH

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One thing that spurred me to retire was realizing that I could buy individual health care cheaper than the company retirement version. That made me realize that many of my assumptions on what I needed to retire were wrong. I've been retired for 5 years and wouldn't change a thing.

Sue
Sue, could you elaborate on this? I would like to retire when I am 55 but health insurance is one big issue that prevents us from doing so. IsisDave mentioned how expensive it can be and that was also my general understanding. I wonder if you could provide some insight and details for how to obtain affordable insurance.
 

Talent312

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When you vist Florida and shop at Publix, you will note that the average age of the bag boys is about 75.

At the Publix's where I shop, the average age of bag boys seems to be ~ 14.

Getting my ducks in a row to retire at age 62...
1. Paying off car loans and swearing off any new debts.
2. Refinancing my house (10 yrs. @3.125%), reducing payments and term.
3. Shelling a few $$ to improve energy efficiency, reducing utility payments.
4. Handing bill-paying to DW, so she can see how trips to The Mall affects things.
 
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bogey21

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Sue, could you elaborate on this? I would like to retire when I am 55 but health insurance is one big issue that prevents us from doing so. IsisDave mentioned how expensive it can be and that was also my general understanding. I wonder if you could provide some insight and details for how to obtain affordable insurance.

My oldest Son (age 40) just bought a policy with a $5,000 decuctible for something line $180 a month. Sounds rediculous, but that is what it cost.

George
 

Blues

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My oldest Son (age 40) just bought a policy with a $5,000 decuctible for something line $180 a month. Sounds rediculous, but that is what it cost.

It certainly does sound ridiculous. How on earth did he manage to get it so cheap? That's a tiny fraction of what I was paying when I was a consultant, before I went back on employee status (partially for the health insurance). Kudos to your son.

-Bob
 

talkamotta

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Have only been retired for a month. The biggest expense will be health insurance. For 28 years never had to pay anything for healthcare for me and my 5 children. Last 3 years $30/month. I had real good insurance.


Now its $500/month. Union contracts dont include retirees.

Make sure you have lots of buckets. I remember during my lifetime my family and I lived on 35k/yr and other years 100K We still made it work. The only thing about retiring the income usually doesnt get better.
 

funtime

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Talkamotta - how are you enjoying your retirmement - i recall your countdown!! Funtime
 

aliikai2

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I retired from my day job

On the 27th of last month at almost 64, We sold our printing company, and received a fraction of it's previous worth.

Wise?? Probably not, but my wife needs full time care, and I can do it, collect SSI and it will cost less than paying a healthcare pro.
We are also selling off the big home, and moving to Yuma where we have a paid for family home so no mortgage payment.
We will be living on around $49K per year, plus what ever our timeshare business nets.

I must say so far, it is working well, of course we are in Mazatlan, so it had be great so far.

I have posted some photos on facebook, here are a couple of links.
http://www.facebook.com/media/set/?set=a.316266548437490.77137.100001624422760&type=1&l=781635f713

http://www.facebook.com/media/set/?set=a.317446601652818.77370.100001624422760&type=1&l=0b8c0b515e

http://www.facebook.com/media/set/?set=a.316505821746896.77177.100001624422760&type=1&l=3556a80766
Greg
 

IngridN

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It's best to forget about percentages of income that others recommend since everyone's situation is different. The key to me is knowing what your current expenses are and work on a good estimate of what they will be in retirement. Always be on the high side when estimating future expenses. I use an Excel spreadsheet but pencil and paper will work. There are some good expense spreadsheet templates online if you need some help. The biggest expense changes for me in retirement are; expense increases (golf, travel, health insurance), expense decreases (debt, retirement contributions). I retired in my 50's and what allowed me to take the leap was getting rid of all my debt (mortgage, credit cards, loans, etc.) before retiring.

I've plugged this site several times on TUG for those looking for retirement advice/assistance, I've got no ties to it other then that it's been a valuable resource for me (http://www.early-retirement.org/forums/).

+1 on both counts. I retired late last year and DH will retire within the next 2 years (he loves his job :eek: ). We just updated our retirement plan yesterday and once we get within 1 year of DH's retirement we'll focus in excruciating detail on the retirement income stream. The key is your projected expenses in retirement as well as your income stream to make sure you don't end up as a greeter at Walmart.

Ingrid
 

zinger1457

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It certainly does sound ridiculous. How on earth did he manage to get it so cheap? That's a tiny fraction of what I was paying when I was a consultant, before I went back on employee status (partially for the health insurance). Kudos to your son.
-Bob

For someone 40 years old and in good health $180/month is expensive for a policy with a $5K deductible, at least where I live. I'm in my mid-50's and that's about what I pay for a similar policy.
 

sue1947

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Sue, could you elaborate on this? I would like to retire when I am 55 but health insurance is one big issue that prevents us from doing so. IsisDave mentioned how expensive it can be and that was also my general understanding. I wonder if you could provide some insight and details for how to obtain affordable insurance.

Bottom line, investigate the options available where you live (or where you want to live after retiring).

I live in the Seattle area and use Group Health. My individual account with $5000 deductible cost $120/mo when I started and is now (5 years later) double that, but still less than the group rate via my company's retiree plan. I recently added in dental coverage for another $600/year to cover those old fillings. Back in 1999, I changed careers and found that I could do an individual policy cheaper (again through GH) than COBRA for the 6 months between jobs. Group Health is an HMO that focuses on preventative medicine; you have to go to their doctors but pretty much everything is covered with a copay. I like it because they keep it simple. I'm very fortunate to live where it's available.

Sue
 

funtime

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Greg has the right idea - start a little side business or hobby business while you are still working and use that both to occupy yourself in retirement and to bring in a little extra income. There are many of us who could make a little hobby business out of our timeshares - at least enough to subsidize our travels. Other ideas - ebay business selling antique items (assuming there is an area of expertise there), making crafts and selling online, part time consulting or whatever. Funtime
 

LisaH

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On the 27th of last month at almost 64, We sold our printing company, and received a fraction of it's previous worth.

Wise?? Probably not, but my wife needs full time care, and I can do it, collect SSI and it will cost less than paying a healthcare pro.
We are also selling off the big home, and moving to Yuma where we have a paid for family home so no mortgage payment.
We will be living on around $49K per year, plus what ever our timeshare business nets.

I must say so far, it is working well, of course we are in Mazatlan, so it had be great so far.

I have posted some photos on facebook, here are a couple of links.
http://www.facebook.com/media/set/?set=a.316266548437490.77137.100001624422760&type=1&l=781635f713

http://www.facebook.com/media/set/?set=a.317446601652818.77370.100001624422760&type=1&l=0b8c0b515e

http://www.facebook.com/media/set/?set=a.316505821746896.77177.100001624422760&type=1&l=3556a80766
Greg

Greg, You are a great, loving husband! Joyce looks good in the pictures and I hope her health continues to improve. May I ask why you decided to move to Yuma, AZ? Because of the weather, the cost of living, or both?
 

LisaH

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Bottom line, investigate the options available where you live (or where you want to live after retiring).

I live in the Seattle area and use Group Health. My individual account with $5000 deductible cost $120/mo when I started and is now (5 years later) double that, but still less than the group rate via my company's retiree plan. I recently added in dental coverage for another $600/year to cover those old fillings. Back in 1999, I changed careers and found that I could do an individual policy cheaper (again through GH) than COBRA for the 6 months between jobs. Group Health is an HMO that focuses on preventative medicine; you have to go to their doctors but pretty much everything is covered with a copay. I like it because they keep it simple. I'm very fortunate to live where it's available.

Sue

Thanks Sue. I will look into it in CA but I suspect that the cost of health insurance differs from state to state. What you quoted sounds low to me here. I know a couple in their late 50s who were forced into retirement due to the layoffs can't find anything that costs less than $1000 per month with similar deductibles. :mad:
 

aliikai2

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Weather was a big deal

Our propane heat this winter ran over $700 a month, and it wasn't a real cold winter. Joyce has become sensitive to cold, so 80+ is where she feels good. Add that to the no mortgage home and it became a real easy decision. The cost of supporting that home including all utilities, taxes, insurance, phone, tv, internet and food will be about what our heat cost during the winter.
Add that the fact that we can drive to Mazatlan in 2 days, makes it an even better move.

Greg

Greg, You are a great, loving husband! Joyce looks good in the pictures and I hope her health continues to improve. May I ask why you decided to move to Yuma, AZ? Because of the weather, the cost of living, or both?
 

bogey21

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Our propane heat this winter ran over $700 a month, and it wasn't a real cold winter. Joyce has become sensitive to cold, so 80+ is where she feels good. Add that to the no mortgage home and it became a real easy decision. The cost of supporting that home including all utilities, taxes, insurance, phone, tv, internet and food will be about what our heat cost during the winter.
Good, clear, consise planning. As others have said, there is more to it than some magical percentage of previous income. Understand your expenses and work them down.

George
 
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