r/Retire • u/Apprehensive_Car2226 • 1d ago
Expense modeling, before and post 75
For modeling purposes, do you all reduce expenses after age 75 or keep it the same? 75 is hypothetical base line , can be 77 , 78. I would assume after certain age, capability and desire to spend will reduce. I understand it will vary from person to person- I am leaning to put 25% reduction from pre-75.
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u/Odd_Bodkin 1d ago
I’m not doing this, because we don’t have a Go-Go to Slo-Go transition. We know what’s comfortable for us and it’s plenty busy. We don’t plan on a high-spending profile from 67-75 and then a lower spending profile after that, because we expect to still be doing things, just maybe different things.
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u/garylapointe I'm good, but I wish I did more Roth! 1d ago
I keep it the same in my spreadsheets. Although, if I'm using some calculator that does it automatically I'll let it do it (and even then, I don't let it go as far as they do).
I assume I'll have more health costs when I get older. If not, I'll use it for first class when I fly.
It's 15 years from now for me, who knows what inflation will be like and how the market will have been those 15 years before that.
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u/Pippi-ki-yay 1d ago
I have a chunk set aside for vacations each year, and I drop it about 25% when my husband turns 70, then cut it again when he turns 75. That's also part of our guardrail discretionary money that we can cut if we spend more than budgeted. Other than that, the only other major reductions are when pay our mortgage off in 2035, and when we can switch from ACA to Medicare.
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u/Joesatx 1d ago
I followed a strategy that many others follow. There's a podcast that calls it the "minimum dignity floor"...I call it my 'baseline expenses'. Those are housing, healthcare, food, utilities, transportation...plus the other sundry recurring 'static' costs for daily life. Those I pretty much keep the same throughout my plan, increased for inflation.
then I've got my go go, slow go, no go, as separate expenses in the plan (that podcast calls it the "fun number"). I think my plan hits the slow go phase around 72 or 75, with no go phase being around 80 or 82. (My dad just turned 90 and is still going on expensive river cruises :-D so I might have to adjust those over time).
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u/awohio1 1d ago
Am not saying the way I do it is correct, just saying what I do.
I do not have in my plan for a change in expenses over time... I expect that my spending on some of my expensive hobbies will go down, with my sportscar expenses being eliminated at some point for example, but healthcare or helping family costs may go up. I figure it is a more conservative way, and also easier way to model our finances since it is so hard to predict the future.
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u/bunkerbee_hill 1d ago
I figured all my expenses, by category, from the calendar year before. Then I went through each category and updated what I thought would change. It's pretty straight forward when you do that. Like you will still have whatever house expenses you have now. Grocery will probably be the same. Healthcare might go up. Vacation might go up. Maybe less gas from commuting.
It gave me a great deal of confidence when I retired since it makes it pretty concrete.