# Required Annual Retirement Net income



## Canadafan (Oct 19, 2014)

This is a thread I reviwed and was part of 3 years back.Being 2015.
Now into the future, quite a few Canadian national polls/studies have been published.
Notable a few of the business magazines,Sun Life & even Canadian Gov

Back to 2011-2015 we bounced around various numbers, scinarios etc. As has done with the publications. The Macleans one did a good job of separating into 3 basic ranges,
Minimal, middle & luxury ( Familiy income before taxes of $42k, $57K and $101/year)
Back when we did our CMF blog ,(2015 the average then was $53K, which equates to $63K now, ( after taxes)= Roughly $72K/year before taxes, which is in the mid range of the $57K to $101K they are talking about iin the MacLeans story
http://www.macleans.ca/economy/money-economy/heres-the-real-cost-of-retirement-happiness/

So...Moving forward to see where the C.MF. bloggers are at today.
Simple question?
What do you see as your estimate retirement annual expenses? NET. Exclusive of any special events, one of items or vacations which could amount to anything?
Point is , to give those who are close to retirment an idea of whtat is needed.and invoke some thougt provoking dialog.
Is the Macleans article accurate? 
Not asking what you expect to make or have, but what you think you will need. Recent retirees most valuable comments.


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## OhGreatGuru (May 24, 2009)

With respect, I think this is a pretty meaningless survey. It depends entirely on one's lifestyle expectations; housing costs; plans for what to do in retirement; and to some extent what regional market you are living in. Health is also an issue; whether or not one still has dependents, and other factors.

There are people who can live happily on $20K/yr, and people who think they can't live on $100K/yr.


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## AltaRed (Jun 8, 2009)

Indeed, everyone's lifestyle is different and I suspect primarily tempered by how they lived during working years while accumulating assets. What people do in retirement may not be that much different from working years other than spending more money on travel and recreation because they now have the time and flexibility to do so. All tempered by how much resources they have. The Macleans examples are likely not out of line with what many couples would do with the same budgets. 

Twelve years into retirement, we are more like the Coopers with the exception we do not have a second home and instead spend a lot more on travel.


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## Canadafan (Oct 19, 2014)

OhGreatGuru said:


> With respect, I think this is a pretty meaningless survey. It depends entirely on one's lifestyle expectations; housing costs; plans for what to do in retirement; and to some extent what regional market you are living in. Health is also an issue; whether or not one still has dependents, and other factors.
> 
> There are people who can live happily on $20K/yr, and people who think they can't live on $100K/yr.



Clearly that is an oppinion worth merit and well makes sense.
However, My question is to those on here: What do you think you will need to cover your retirment living.
Hence our own survey.
No survay is meaningless, as long as the context is understood.
Myself am considring retring. zero dependants other then spouse. Zero debt and mid size Canadain city.
I see myself in mid 65K after taxes, all-in incuding health costs and travel of $10K/year. aka $55k base fixed costs


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## agent99 (Sep 11, 2013)

I will bite - Married and 14 years into retirement from profession & business. 

No desire to fly, so not much travel. Snowbird for 3 months (drive there!). Quite frugal lifestyle. Eat out once a week - no fancy restaurants. Play golf & sail.
No debt. Own home. We spend about $90k. 28% goes to paying income and property taxes - biggest expense.
Spend $65k including $10k on snowbirding and $7k for sports. 
Minimal health expenses so far.
Income that exceeds expenses gets re-invested. Kids may need it! Maybe we should learn to spend more!

Good luck with survey!


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## OnlyMyOpinion (Sep 1, 2013)

Depending on the circumstances, between $24k and $110k per year.


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## My Own Advisor (Sep 24, 2012)

Assuming $0 debt at time of full-time retirement, we figure $4k per month NET or $48k per year will cover our basics and some small extras in Ottawa. Two adults, no dependents but cats!

We are striving for a $1 M portfolio to nearly cover this need and we'll have some small workplace pensions + CPP x2 + OAS x2 as well.


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## AltaRed (Jun 8, 2009)

My Own Advisor said:


> Assuming $0 debt at time of full-time retirement, we figure $4k per month NET or $48k per year will cover our basics and some small extras in Ottawa. Two adults, no dependents but cats!


FWIW, we have no debt, a too large house with a pool for the family to enjoy, and one feline dependent. Our average living costs, before material extras, is about $60k per year, not including income taxes in the Kelowna area of BC. It allows for some basic entertainment and recreation, some accessory purchases, etc. We have a pretty good handle on that because that all comes from us funding our shares of the joint operating expenses account. It does not cover travel, nor income taxes, nor home improvement, nor any significant personal purchase such as vehicles, appliance replacement, etc. Bottom line is I would not want to operate with <$100k per year in our retirement, although obviously we could do so. We actually spend a lot more than $100k due to trying to get our traveling done while we still are physically able, and/or mentally want too. If we are lucky, that will be upwards of 10 more years. Hopefully 5 more years at least.

Added for perspective: I have been retired 12 years and about to hit 70 years old. I most likely have less 'good' days left than I have already 'spent' since retired. Time has become more precious, not to be compromised. So for us, we do NOT want to have to think about 'basic' money we are spending. For example, if a good concert comes to Vancouver, we are not going to check our budget to see whether we can/should spend circa $800 to go see that concert (gas to get there, hotel room, meals, and $200 for our two concert tickets). At this time in our life, running a tight budget would seem to me to be a major deterrent in the quality of life. 

I strongly suggest those in accumulation mode seriously think about whether what one can get by on is in one's best interest versus how one would prefer to live out their last 20 "good" years. Obviously, it is a balance of continuing to work longer in a job one has grown to despise or mark days off the calendar (to have flexibility in the budget), and how one wants to enjoy retirement. 

The decision point for me never was...what is the minimum one thinks one can retire on. It was would the extra money working an additional few years make a significant difference in how one wants to spend their retirement. When I could answer the latter question as a definite NO, I knew I had enough to retire on and is when I pulled the plug.


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## My Own Advisor (Sep 24, 2012)

We loved Kelowna BTW....beautiful there....

We figure most of the "basics" run us about $48k per year and some "extras" push expenses closer to $60k net. The wildcard in our retirement plan comes from mostly wants and not needs...

In an older blogpost, here is what I came up with:

*Needs per month – Home ($1400)
*
Home maintenance ($300 per month)
Property taxes ($350 per month)
Home (core) utilities (heat, hydro, water) ($325 per month)
Home insurance ($125 per month)
Internet ($100 per month)
Cell phones ($100 per month)
Contingency/buffer (TV?) ($100 per month)

*Needs per month – Personal ($1600)
*
Food/groceries ($600 per month)
Healthcare ($200 per month)
Household supplies ($200 per month)
Clothing ($200 per month)
Contingency/buffer ($400 per month to cover various entertainment)

*Needs per month – Auto ($600)*
*
Car insurance x2 vehicles? ($200 per month)
Car maintenance x2 vehicles? ($100 per month)
Gas (max $200 per month) x2 vehicles?
Contingency/buffer/saving for a newer car every 10 years ($100 per month)
*Depending upon where we live, in the city or outside the downtown core, we only need one car. 

*Needs per month – General Savings Fund ($400 per month* - just in case money above and beyond portfolio, pensions, CPP and OAS)

*Wants – Major Travel and Major Entertainment $X?*

"Bottom line is I would not want to operate with <$100k per year in our retirement, although obviously we could do so. We actually spend a lot more than $100k due to trying to get our traveling done while we still are physically able, and/or mentally want too."

That's a very, very healthy retirement lifestyle. *Kudos. * 

We won't earn that in retirement but I think with modest pensions and > $1 M portfolio (and no debt of course) we'll meet our needs _and wants_ starting in our mid-50s.

I can appreciate the added for perspective....my parents are now 70/approaching 70 and their lifestyle has changed quite a bit since their 50s.

They still have mortgage debt, quite a bit actually, so they must think about 'basic' money and travel needs and other needs. They are lucky they have great pensions. I have no idea how they would get by without them in retirement, with debt. Anyhow....

....your advice is always good and very relevant: "I strongly suggest those in accumulation mode seriously think about whether what one can get by on is in one's best interest versus how one would prefer to live out their last 20 "good" years."

I'm happy to work longer and have a better balanced semi-retirement vs. being retired and not being able to do anything without any money.


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## RBull (Jan 20, 2013)

FWIW:

Retired within days of 4 years ~on 55th birthday. We are generally frugal, but expect to gradually increase our lifestyle and spend over the next 10-15 yrs. 

* Does not include cost or financing of vehicles (4) that are owned/paid for, or any major home maintenance. **Have been away travelling over 11 mths of the 48 which takes up the bulk of our "extras" = $24500/yr avg. 

Using total to calculate annual avg. of the 4 yrs, under the overall categories of spending from Moneysense our breakdown is as follows: 

Basics $34600*
Extras $ 27800**
Sub T $ 62400
I. Taxes $ 15600
Total $ 78000 (+ or - 10K each yr)


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## AltaRed (Jun 8, 2009)

MOA, thanks for sharing. 

Depending on what kind of house you have and its age, I suspect you may want to put aside more than $300/month for home maintenance. We are likely running $10k per year as we cycle through the appliances, refresh landscaping, paint, etc. We replaced the roof in 2017 ($15k) and I will have to replace the Duradek covering on the deck in 2019 latest (~$6k). We will need to replace the furnace within 5 years and maybe the A/C compressor at any time (is original 1999 vintage). All other appliances have already been replaced in the last 5 years. I'd like to think the cycle will end but there is always something. I'd budget $800-1000/month. 

I also think you are light on your vehicle fund of $100/mo, especially with 2 vehicles. I'd suggest budgeting for a $30k replacement every 14 years and that is a modest vehicle these days. Our current vehicles are 5 and 12 years old respectively and originally cost $50k and $65k when new. If you consider replacing one $30k vehicle on 7 year intervals (meaning 14 yrs old when replaced with 0 residual value), that is $4-5k per year.... 3-4 times your rate. Our next replacement is thus likely due in 1-2 years. That said, we will likely be down to one vehicle as we approach 80. Indeed, the one that is currently 5 years old may never be replaced. Time will tell.

P.S. As an aside, our house operating expenses are higher than some would have given we spend upwards of $4k/year operating the pool with weekly service, gas heating and pump electricity, and replacing equipment (solar blanket and filters every few years) and we've had to replace both the pump and the heater in the last 5 years. The liner may be next given our neighbour had to replace theirs 2 years ago - similar vintage of house.


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## My Own Advisor (Sep 24, 2012)

Fair points!

We're moving into a condo in another year or so, so that $300/month might be close to double while home (core) utilities will be lower. Our roof is done and although we have a few thousand set aside to get the house ready for sale, I'm optimistic not much more will be needed.

We'll see.... *knocking on wood*.

As for the vehicles, in the city, we can definitely live with 1 car and plan to. We might actually get rid of the car altogether in the coming decade, use ride-sharing, other for travel if and when we need it. We'll see. Your point is a good one though, if we expect to have 1 nice car - it will cost more than $12k after 10 years of saving $100 per month. 

A good used, 5-year-old Honda (if that's all we need?) should only cost $12k though. Worse case, I figure $600 per month is the very most we should be paying to operate/own 1 car continuously. Otherwise, our tastes are too expensive! 

Yeah, having a pool can be expensive. Homes are definitely an expense. Lots of folks including many young prospective buyers simply don't realize that...


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## ian (Jun 18, 2016)

Our numbers may be meaningless to others.

4.5-5 years of retirement. Burn rate is steady at 68K per year (not including donations). We do a fair amount of travel. Two trips, two month plus or more each per year plus some last minutes in between. Other than that our expenses are low. We don't buy much, we don't eat out a lot, and we keep our vehicles for a long time. Our health related expenses are quite low. 

I started looking at our burn rate about five years prior to retirement. The only thing I did was add up net cash outflow on an annual basis. I had no interest in breaking it down. It was a way of comparing our pre retirement burn rate to the resources that would have post retirement. In retirement we still do not break our spending down. We only care about the bottom line. So far we are spending quite a bit less than we earn thanks to healthy investment returns.

Also keep in mind change. We downsized from a very large home. Home related expenses went down. On the other hand we moved into a rental condo for four years because the real estate market for buying was not to our advantage.

As others have said it is not what we do but rather what you plan to do in retirement that counts. Once you have a number, inflation adjust it, add some percentage for error. Then plan accordingly and move forward. But don't expect the plan to be static. Change happens. My tendency was to be over conservative in my financial plans but I guess that is better that erring on the other side of the fulcrum. We have friends who spend considerably more and we have friends who spend considerably less.


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## milhouse (Nov 16, 2016)

4 years away from retirement for me and a few more years for the missus. 
If I'm interpreting the question correctly, I don't see our core spend of ~$37k/yr (which excludes vacations and car replacement) and typical annual spend of about ~$50k/yr _needing_ to change drastically in retirement in the early years. (Health spend may need to go up eventually.) I think we'd line up well with the "Average" Phil and Sarah Statscan profile which I think would be a very comfortable retirement. 
However, our goal is to build up the cash flow towards the Ross and Helen Cooper range to allow for more vacation days. 
On the flip side, we probably could enjoy the Pam and Rob Taylor budget too. However, we'd have to watch our spend way more closely as mentioned in the article such as cooking more creatively at home rather than eat out and traveling less which we aren't too keen to do at this point.


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## Canadafan (Oct 19, 2014)

milhouse said:


> 4 years away from retirement for me and a few more years for the missus.
> If I'm interpreting the question correctly, I don't see our core spend of ~$37k/yr (which excludes vacations and car replacement) and typical annual spend of about ~$50k/yr _needing_ to change drastically in retirement in the early years. (Health spend may need to go up eventually.) I think we'd line up well with the "Average" Phil and Sarah Statscan profile which I think would be a very comfortable retirement.
> However, our goal is to build up the cash flow towards the Ross and Helen Cooper range to allow for more vacation days.
> On the flip side, we probably could enjoy the Pam and Rob Taylor budget too. However, we'd have to watch our spend way more closely as mentioned in the article such as cooking more creatively at home rather than eat out and traveling less which we aren't too keen to do at this point.


I llike the term 'core" expenses. Got me thinking. I run a spread sheet each year. While I dont follow as abudget as such, I do check back at year end and see how things are against my plan.
The "core" number I come up with , In of itself generous without being over the top.
Two cars a, much larger house then we will be staying with ( downsize eventually), and dont worry about $ here & there. our "core" is in-line with what I see so far at $4100/month or $50K/year. To retire I need to add in $5K for medical/dental plus 10K for travel. That is a generous vaction number and leves buffers for ,random expenses. So: I m still at my original all-in of $65K after taxes/year.
Understanding that at retirment the "core" will drop , smaller house, one car, less clothing & other employment expenses.I have to pay to park and dress well for my job.That said: If I strip out any extras/month beyond eating and driving, I could cut the "core" down to $46K/year. The other $4K is entertainment, day trips etc.$14K/year is our house operating cost, utilties, taxes, ins and a small contingency for maintenance.
In conclusion up to now Im seeing a strog corelation from this short sampling to the MacLeans poll and this CMF blog. many are in the same general area, if not leaning towards the upper end of middle.


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## Nerd Investor (Nov 3, 2015)

I've never framed it as what I need but what I _want_. If I shoot for the level of retirement income/expenses I want, then even if I fall short I will still have much more than I need.


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## canew90 (Jul 13, 2016)

We are mid 70's and our after tax expenses have ranged from $44k to $75k the past 4 yrs., not consecutively. Plus we bought a new vehicle (paid cash) which was not included in our general\living expenses. We do spend 4 months in AZ which has reduced our annual expenses slightly as the cost of living is less (of course if the Cdn$ keeps dropping it could change).


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## ian (Jun 18, 2016)

We do not include income tax, large capital expenditures such as a car, etc. as part of our annual burn rate. . All of it is done net of tax. We pay little attention to the monthly spend other than taking five minutes to add it up. It can be extremely variable based on how we pay some expenses. Our focus is on the annual rate.


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## kcowan (Jul 1, 2010)

Our annual spend was $95k in 2005 but that included $40k in penthouse rental. Then in 2007, we bought a condo in PV and spent 6 months there, while subletting our penthouse for 5 months and our annual spend dropped to $45k. This lifestyle switch sure gave us more flexibility. That is why I as able to relax on the portfolio front and move from trading to a value dividend approach.

Now after 11 years of doing this, we are shifting to wealth transfer, increasing gifts to kids and grand-kids and charitable giving. During that period, we bought 2 used cars for $27k total and have put under 30K km on both together. We live in walkable communities.

We also considered buying a beachfront rental property but concluded that the numbers only work if we evade taxes. We figured the risk was not worth the reward. Plus at our stage in life, we like renting and buying ripe bananas.


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## ian (Jun 18, 2016)

We experienced a significant change in lifestyle after retirement. We sold a large home that was expensive to operate because we no longer wanted it. We rented for four years. Then we bought, but is was a very much downsized home in terms of floor space and monthly operating costs. Again, not a monetary decision but rather a lifestyle decision.

I really think that you need to consider any lifestyle changes post retirement and how they may decrease or increase your burn rate. One of the last pieces of advice that our bank financial adviser gave us (before we fired her and the bank) was that most people who sell and buy after retirement spend more of their retirement home than they realized from the sale of their previous residence. Surprisingly we spend less than we thought we would even taking into account the changes that we have made. Our run rate numbers do not include gits/donations, RESP deposits etc.


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## AltaRed (Jun 8, 2009)

ian said:


> We experienced a significant change in lifestyle after retirement. We sold a large home that was expensive to operate because we no longer wanted it. We rented for four years. Then we bought, but is was a very much downsized home in terms of floor space and monthly operating costs. Again, not a monetary decision but rather a lifestyle decision.


I'd love to downsize but that isn't going to happen with my spouse any time soon. I see another 5-10 years in our outsized house because that is the basis of much of her identity and joy (as is HGTV, Houzz, and the like). Life is a series of compromises and this is one I have accepted. She relents on my travel bug so all is fair. We'll muddle through.....


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## ian (Jun 18, 2016)

Downsizing was easier for us. We sold our large home. Ordered an 8X8X16 container from PODs to be delivered to our driveway. With minor exceptions, anything that did not fit in the container was discarded-given away, etc. Much of our furnishings were old and were designed for a large home so we were happy to loose them. 

We travelled for 7 months and then did a 3 month furnished rental. By the time we did get out possessions back and moved into a rental condo we still had too much. Came in handy as the Calgary flood hit. Some folks working on our condo building had lost everything in the flood. We were able to donate lamps, pictures, bedding etc. to them when we heard of their situation. Others in the building did the same...I think they ended up with some very good items. Our home preferences changed over that ten month period so it was a very good process for us.


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## Canadafan (Oct 19, 2014)

Lots of good numbers first few days. Assuming we are all in the same general relm of lifestyles. Near or at retirment, raised a family. Reasonable income thoughout working life etc.
House paid off.
So I see on average ( so far) for basic & core needs plus a modest vacation each year. A number of $65K to $70 K would be ample.
Keep in mind that most of those on CMF are interested in finances in the first place and as-such probably living better then the average Canadian stats say.
Back to the Macleans story, of $24 K as minimal, $57 K being mid and $101 K being luxury , Id say the group of responses still fit in that range.


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## ian (Jun 18, 2016)

Agreed. We got there by working 10-12 hours a day, accepting challenges and responsibilities, avoiding consumer debt, saving diligently, never concerning ourselves about keeping up with the neighbours or buying new furniture and automobiles, and not being hesitant to take advantage of opportunities even if they involved some short term sacrifices of one sort or another. No doubt this is not dissimilar to others on this forum. We did not wake up in our late 50's and early 60's to magically find ourselves in this position.


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## AltaRed (Jun 8, 2009)

ian said:


> Agreed. We got there by working 10-12 hours a day, accepting challenges and responsibilities, avoiding consumer debt, saving diligently, never concerning ourselves about keeping up with the neighbours or buying new furniture and automobiles, and not being hesitant to take advantage of opportunities even if they involved some short term sacrifices of one sort or another. No doubt this is not dissimilar to others on this forum. We did not wake up in our late 50's and early 60's to magically find ourselves in this position.


Pretty much my story to a 't'. I did forego an opportunity to join Brett Wilson's team back in the late '90s when First Energy Capital was pretty much an unknown boutique entity. But I knew the REALLY crazy hours would most likely have broken up the family (like it did for Brett). There is a limit to everything.


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## Zipper (Nov 18, 2015)

$5K a month net does it for us.

Biggest takeaway. .....Make sure the mortgage is long gone before retirement.


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## Koogie (Dec 15, 2014)

We're only semi-retired but I have been tracking our spending pretty religiously for the last 8 - 10 years. Our "cost of living" is about 42K a year. That is for 2 people, living in a paid for house in S. Ontario. I tend to pay us (we work for ourselves) a total of about 75-80K a year, gross. After taxes and costs, most years that is about 72K net. Take away the TFSA contributions, that leaves us with about 20K of discretionary spending. Some years that gets spent entirely on travel, some years a larger portion gets spent on the house.

I can't see full retirement being much different for us. I can see upping it maybe 10K a year some years to have a bit of extra fun, especially at the beginning. But, we're in our late forties/early fifties so patterns of behaviour are pretty set. For instance, I am unlikely to change my preference from a can of Heinz beans on sale to tins of beluga caviar.


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## Canadafan (Oct 19, 2014)

Koogie said:


> We're only semi-retired but I have been tracking our spending pretty religiously for the last 8 - 10 years. Our "cost of living" is about 42K a year. That is for 2 people, living in a paid for house in S. Ontario. I tend to pay us (we work for ourselves) a total of about 75-80K a year, gross. After taxes and costs, most years that is about 72K net. Take away the TFSA contributions, that leaves us with about 20K of discretionary spending. Some years that gets spent entirely on travel, some years a larger portion gets spent on the house.
> 
> I can't see full retirement being much different for us. I can see upping it maybe 10K a year some years to have a bit of extra fun, especially at the beginning. But, we're in our late forties/early fifties so patterns of behaviour are pretty set. For instance, I am unlikely to change my preference from a can of Heinz beans on sale to tins of beluga caviar.


Great self anlysis "Koogie". And nice revelation of expenses related to the tread. Thanks very much for that.
Using your math equates to $72 Net with some goingto savings. Again in-line with the mid $60K average we are seeing.
You last line is the best, and those who say One can not predict the future, perhaps dont understand the meaning of average fixed costs. Like you said, unless you have major changes to lifestyle, things more or less stay the same.: "zipper" previously posted $5K/month ..again in-line with the $60K numberI did mention previously our fixed costs, come out to $42,800/year again right in-line with "Koogie"
Thanks for those who have added to this thread so far and please continue.Id love to hear some exceptions, yet so far most are right in-line.
Clearly "we" could do wel on mid $60k/yr yet most are planning for more: aka buffers, safety etc.
THAT could be a whole new thread: it has been studied & reported most recently. "majority of those who are retired now and have been for more then 15 years, have more $ in retirment worth then when they retired"
The artical was in Globe and mentioned why are retirees not spending enough.
Simple answer: We dont know when the odometer will stop turing and dont want to run out.Hence the buffers.After all, assumong a choice, we would all want buffers.
My intent of the question is to best define the middle of the road average. "buffers" obvioulsy an individual choice based on age, health, lifestyle and expected future lifestyle.Thanks again those for the very valuable information.


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## james4beach (Nov 15, 2012)

I don't intend to make anyone laugh here, I'm in my 30s but am setting up my finances for "early retirement" (by which I really mean that I will work occasionally, live largely off my capital, and occasionally bring in new income).

I live on under 40K a year as a single person. I estimate my annual retirement expenses at 45K to 50K in today's dollars.


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## AltaRed (Jun 8, 2009)

Add in another $20k for having fun in retirement. 

I would hate to retire and manage, implicitly if not explicitly, a budget. One should be able to do things on a 'whim' because time goes way faster than one realizes. 12 years in so far, and I don't expect to be having as much fun 11 years from now (when 80).


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## tdiddy (Jan 7, 2015)

Interesting to see all these numbers based on the age old Canadian assumption of home ownership. Would be worthwhile to have numbers for renters as well, especially for younger generation who may not own a home nearing retirement.


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## Canadafan (Oct 19, 2014)

james4beach said:


> I don't intend to make anyone laugh here, I'm in my 30s but am setting up my finances for "early retirement" (by which I really mean that I will work occasionally, live largely off my capital, and occasionally bring in new income).
> 
> I live on under 40K a year as a single person. I estimate my annual retirement expenses at 45K to 50K in today's dollars.


James4beach: great sounding plan and I do hope you make it work.
The yonger you start the better chance you have of gettnig there.
By know means "intend to laugh". I d be willing to bet most of those on here whom are commenting, started planning young.
Great start. Without a plan you will never know how you are doing and/or how to adjust.
One thing I can share with you; Im 59. Thought I would do exacly, what you are predicting. I exact detail, I was expecting to retire from fun time work and take on part time a year ago.
NOW, im still working and will consider how I feel next year at age 60.
What happened? A few things.
One my son moved away to a great position and we helped him get into a small condo. He pays the mortgage & rents a second bedroom, for more or less what a decent rental would have cost him.
"helping" includes $$$ 
That was unexpected, yet 2 years later great plan. Property has gone up,. Im generous but not silly. We are part owners as well.
Two: I became 58 yers old and realized, I m not ready to retire. I like my job, am paid very well and do find myself getting bored at times.
Three: The part time opportunities ( my $ bridge to age 65) , are not as secure as I m happy to risk.
Im involved in comunity environmental groups/events and tat does keep my busy, but I actually like my job.
For years I heard the "older guys" say "im not ready to retire" & I scoffed at that statement. My M.O. was to retire ASAP.
Now that Im here, I realize not as old as those old guys were and "not redy to retire"...LOL
Back to a mid 30 yr old. I gaurnetee your life plans will change over the coming decades. You are single, that could cchange everything. Add in some kids and the math and outlook becomes a whole new world.
HOWEVER: The retirment math is still the same: You will need to save early , steady and long to accumulate enough to retire, regardless of what or when that comes.
Rule of thumb save 10% into RRSP . on a monthly PAC and wait a few decades. You wil then have enough. Guarneteed more the if you have not.
Eventually your investments will earn more then your pay.
You Talked $45k-$50K in todays dollars. IMHO a great target. Add a spouse and the numbers dont double but about 1.333 times aka the mid 60s we have talked about previous.
Why + 1/3 and not double: You both live in same house. Food cost go up but not double. Personal care near double as well as vactions etc.
Anyhow the 1/3 for the second person is a guess,and backed up by thinsg I have seen in print here & there.
All the best james4beach and stay tuned.


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## james4beach (Nov 15, 2012)

tdiddy said:


> Interesting to see all these numbers based on the age old Canadian assumption of home ownership. Would be worthwhile to have numbers for renters as well, especially for younger generation who may not own a home nearing retirement.


I'm a renter. My 40K to 50K includes the cost of renting a good apartment.

IOW, if I had $1.2 million right now, I could stop working and do everything I do today, and more. Unfortunately however, I do not have $1.2 million.



Canadafan said:


> You Talked $45k-$50K in todays dollars. IMHO a great target. Add a spouse and the numbers dont double but about 1.333 times aka the mid 60s we have talked about previous.
> Why + 1/3 and not double: You both live in same house. Food cost go up but not double. Personal care near double as well as vactions etc.
> Anyhow the 1/3 for the second person is a guess,and backed up by thinsg I have seen in print here & there.
> All the best james4beach and stay tuned.


Thanks! And yes I can see how the spouse/partner would be more efficient, not doubling my expenses. It's also an advantage in case of renting an apartment, because one bedroom apartments (like I have) are particularly expensive. A two or three bedroom apartment adds tons of space for just a bit more money. In my current building, going from 1 to 2 bedrooms would only increase my housing cost by 20% while providing housing for 100% more people!


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## tdiddy (Jan 7, 2015)

james4beach said:


> I'm a renter. My 40K to 50K includes the cost of renting a good apartment.
> 
> IOW, if I had $1.2 million right now, I could stop working and do everything I do today, and more. Unfortunately however, I do not have $1.2 million.


Impressive, renter here as well, my rent nearly covers your entire annual budget. 

In the examples though they talk about a family owning a home in Victoria/Vancouver. Then mentioning budgets of 57K/year. Assuming a 4% withdrawal rate, this hypothetical family could have about half their net worth in real estate in retirement. Somewhat of the elephant in the room for their financial health imho.


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## OnlyMyOpinion (Sep 1, 2013)

tdiddy said:


> Impressive, renter here as well, my rent nearly covers your entire annual budget...


Seems like a lot tdiddy ($40k/yr is $3,333/mo), but it may not be, depending on income. 

I think rule of thumb is no more than 30% of your gross income should go to rent. That would mean a monthly gross of $11.1k/month. 

Looks like paying $3.3k/month would equate to payments for a $525k mortgage these days (TD calculator using 5.59% 5yr closed, 25yr)


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## tdiddy (Jan 7, 2015)

OnlyMyOpinion said:


> Seems like a lot tdiddy ($40k/yr is $3,333/mo), but it may not be, depending on income.
> 
> I think rule of thumb is no more than 30% of your gross income should go to rent. That would mean a monthly gross of $11.1k/month.
> 
> Looks like paying $3.3k/month would equate to payments for a $525k mortgage these days (TD calculator using 5.59% 5yr closed, 25yr)


Its a bit less than that (pretty much standard for 2 bed in Van), less than 30% of gross for spouse and myself, and the condo is probably worth about 1.1million so comparison vs mortgage is pretty favorable.


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## ian (Jun 18, 2016)

I believe that the issue for many is realizing that some sort of a retirement savings plan is necessary and then taking the first steps to implement the plan before it is simply too late.

I have a SIL/BIL who have failed to do this. He is still working in his 70's with a mortgage that has 15 years to go. No savings, no private pension. Another BIL woke up in his early 50's and has been working side jobs for the past 15 years to ensure a comfortable retirement even if it is in the 65/70 age range. He is desperately hoping for a buy out from his employer. His saving grace is that he has maintained his health and his employment.

Much easier and less risk to start at at a younger age.


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## My Own Advisor (Sep 24, 2012)

I have to wonder Ian how many others are in this boat? In their 70s working because they have to, not because they want to?


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## ian (Jun 18, 2016)

I really do not know. For some it it because of life circumstances beyond their control. For others, it is a result of a lifetime cavalier attitude to money, finances, and a strong bond to credit card debt, second and third generation car loans, and of late HELOCS.

For some very odd reason, not certain why, I always had this dread of ending up homeless on the street. Foolish I know, but it caused me to pause and think about where I wanted and needed to be in future years and what was necessary to get there. It could be because I was in a maturing industry that was in downsizing mode for the last 20 years of my employment. I was always very aware that I could get the chop just as easily as others who did.


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## james4beach (Nov 15, 2012)

tdiddy said:


> Impressive, renter here as well, my rent nearly covers your entire annual budget.
> 
> In the examples though they talk about a family owning a home in Victoria/Vancouver.


Maybe it's just the huge difference between renting a whole house, vs small apartment. I recently went on a date with a woman in Vancouver who rents a 1 bedroom apt close to English Bay (excellent area) for about $1700. Even with utilities and insurance that's only 22K annual housing cost, but for one person.


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## Daniel A. (Mar 20, 2011)

My Own Advisor said:


> I have to wonder Ian how many others are in this boat? In their 70s working because they have to, not because they want to?


In the Huffington Post a survey by Franklin Templeton this week.

A fifth of Canada's working baby boomers have nothing saved for retirement.
40% of baby boomers expect government pension will be the primary source of retirement income.
Half of pre-retiree's have saved 100,000.00 or less, age group 50-65.


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## Retiredguy (Jul 24, 2013)

Daniel A. said:


> In the Huffington Post a survey by Franklin Templeton this week.
> 
> A fifth of Canada's working baby boomers have nothing saved for retirement.
> 40% of baby boomers expect government pension will be the primary source of retirement income.
> Half of pre-retiree's have saved 100,000.00 or less, age group 50-65.



It's a full boat indeed. Approx. 1/3 seniors receive GIS. Just one story. My brother age 69. receives OAS 590, CPP 614, GIS 440, Plus about 40 per month GST rebate. Fortunately he bought an apt years ago. The apt, such as it is, is only worth about 40K. Also of course, free dental, glasses, prescriptions.... etc.
He has never drank, smoked or used drugs and was never out of work in his younger days but when he did loose his job because the mill shut down, he tried being a small time entrepreneur which was minimally ok for a while but he eventually stopped because it really wasn't making anything. A stroke in his mid 50's wasn't catastrophic but left him with a slight limp. His first wife was a horrible alcoholic and it killed her rather young. His second wife an immigrant, was a very good person IMO, hard worker, entrepreneur (worked out of home) and also held a decent but not high paying (16 per hour) full time job with a well known Canadian company for many years BUT then got hooked at the casinos. She got very sick and died at age 60. He did receive some inheritances overs the years 40K, 65K and 40K but those got frittered away. With the last one I encouraged him to open a s/d TFSA with me as PA and I made a few equity purchases hoping to get the amount up a bit so that he could have 200-300 a month, more in retirement. I gave him regular updates and fortunately made some money. Within a few months he decided to take out 15K (half of the original amount) and one day after reporting to him that a little money had been made he spontaneously phoned the brokerage and sold some stock to take out another chunk. He had no idea what he was selling/doing. I decided for whatever reasons he wasn't comfortable having me try to help him with the account/money . I told him so and stopped trying. He took the rest of the money out and its gone.


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## Thal81 (Sep 5, 2017)

To answer the original question, I'd say about $27k in today's dollars. 

I currently live on about $22k/year (no rent, condo is paid for). I figure I'd want an extra $5k of fun money for either a big trip per year (I don't enjoy traveling that much) or to pay for lots of local activities (you can have so much fun with little money!). 

I honestly have no idea how people spend $70K-$100k a year, it just blows my mind...


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## Canadafan (Oct 19, 2014)

Thal81 said:


> To answer the original question, I'd say about $27k in today's dollars.
> 
> I currently live on about $22k/year (no rent, condo is paid for). I figure I'd want an extra $5k of fun money for either a big trip per year (I don't enjoy traveling that much) or to pay for lots of local activities (you can have so much fun with little money!).
> 
> I honestly have no idea how people spend $70K-$100k a year, it just blows my mind...


Great reply and congrats on finding a happy point you can realize that $ spending has no upper limit & more does not need better.
Regarding your question: It does depend on the actual location and fixed costs ( I do hope to down size)
My present situation. Bottome line, expesnses ( not counting anythig to do with a car)
Utilities ( electric, gas, phone, cable) = $600/month. A smaller place & could reduce down to $500/month.
House taxes & Insurance = $500/month
Food ( 2 of us, national average is 300-400PP) $800/month : I have special food needs at that are expensive & eat very healthy.
SO at that point; Without doing anything at all other then leving and eating our bottome line fixed costs are $1800/month = $21,600 ( your basic bottom line as well)
The big $ gobbler is a car & we have 2 ( will go down to one in retirement ) Insurence, gas & maintenance =$900/month & that does not count replacement : now up to $32,400.
I need to cover my own meddical plan, as my employer does not have post retirment dental etc $5k/yr
Since my wife & I worked for over 40 yrs, an annual vacation budget is in need ( add $10K), now total is $47,400
Add on lifestyle costs:
Since a house/condo requires on-going etc, even if it is only minium ( excluing renovation projects) $100/month =$1200/year
and one does need to live and take care of basci needs, aka personal care items ( shaving, hair cuts,tooth paste etc etc) $120/month = $1440/yr
The we like to be entertained now & again. A movie here & there, dinner out, even a trip to a park costs $$360/month = $4320/year
Since we dont wear the same cloths for ever, new cloths come into the story now & again, and we both belong to a gym $50+$75/ month = $1500/year.
BTW $600/year for clothing for 2 people is very minimal. A new winter coat and boots for both and more or less chews that up. Realizing one does not buy a new coat each year. However clothing is being replaced on a regular basis. My working clotihing budget is actually near double that.
So, lets recap: 
Basic basic plus 2 cars ( without replacing) = $32,400
Medical & vacation = $15,000
Additional lifestyle costs = $8460

So far = $55860 ( net) 

Now, we dont "buy" a lot of toys or have extravigant lifestyles ( my 10K travel budget could be moved +/- depenting on things that come up)
That said: Things do get bought, furniture wears out, somtimes one might buy a new something, family gifts, parties, wedings etc etc.
ONe random trip to to the hardwear store and $200 is gone.How about a hobby , assuming not expensive , but even meeting with someone here & there costs $.
Im using $300/month for that randome stuff
Now that big pile of steel we call a car: Regardless ( we buy 2-3 yrs old and drive until the wheels fall off) still depreciate & need to be replaced. easy $500/month
That takes you to $65K/year and neither my wife or I are involved in any major sports, clubs or events that cost big bucks.
Keeping an open mind: this exercise has shown that even with one car, you can get by on $40K or so. ( not counting medial/dental)
PS My hobby is hiking , which asside from a snack & maybe parking , costs next to zero.
Id be interested to hear the details of the $27K


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## Thal81 (Sep 5, 2017)

Interesting read Canadafan. I understand that I have a somewhat low cost of living, and keep in mind my numbers are for a single person living in a condo, while it seems your numbers are for a couple living in a house, so that's a big difference. 
The one part I don't get is the 5k medical plan. How is that needed? Health care in canada is pretty much all paid by the provinces, other than medication you'd buy at the pharmacy. And an annual visit to the dentist for a clean-up is like $200. A few years ago I had a one-time $2500 dental job to take out wisdom teeths, but things like that are rare. Unless you have special health care needs, maybe you'd be better off without that plan and pay out of pocket as needed, but of course I don't know your complete situation.
I don't mind sharing numbers, so here is the budget I did for this year (the precise numbers are known quantities, others are good estimations):
Car insurance: $837
Condo insurance (furniture, liability, etc): $350
Car Repairs/Maintenance: $500
Food: $4800
Alcohol: $780
Fuel: $1040
Condo fees: $2628
Property taxes (city + school): $2787
Internet: $756
Cell phone (voice only by the minute): $150
Clothes: $500
Misc. Pocket money ($50/week): $2600 (money for random lunch out or beer with the guys at work, see a movie, stuff at the pharmacy, etc)
Electricity: $680 (yes, it's that cheap where I live)
Driving permit + car plates: $300
Fun money: $1500 (a spending budget for 1-time fun items that are not needs, but wants. Like, computer games, sport equipment, house decorations, wtv).
Total: *20208*. 
I blew the budget to 22k last year due to some expensive car repairs and an unexpected trip. For the last 3 years, my spending was all between 20-22k, so that's where that number comes from. The 27k required in retirement is by adding an extra 5k on top, since I won't be working I figure I'll spend more to keep busy. And no, I don't have the value of buying the occasional car in there, I probably should. My current car is 12 years old, I intend to keep it for a few years still, then buy a 2-3 year old used car that I'll keep for a long long time.

I guess I'm somewhat frugal, more so than I was a few years ago. Striving for FIRE will do that, heh  However I don't feel like I'm missing out or depriving myself. It's just a matter of making lots of small choices that end up making a big difference, like making your own lunches for work instead of spending $50-60 a week on unhealthy cafeteria food. Buying some basic workout equipment rather than a gym membership. Not buying the $1000 smartphones. Not doing 2 trips a year to 5-star resorts.
And yeah, I purposefully left out my current income, it might freak people out.


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## Canadafan (Oct 19, 2014)

Thal81 said:


> Interesting read Canadafan. I understand that I have a somewhat low cost of living, and keep in mind my numbers are for a single person living in a condo, while it seems your numbers are for a couple living in a house, so that's a big difference.
> The one part I don't get is the 5k medical plan. How is that needed? Health care in canada is pretty much all paid by the provinces, other than medication you'd buy at the pharmacy. And an annual visit to the dentist for a clean-up is like $200. A few years ago I had a one-time $2500 dental job to take out wisdom teeths, but things like that are rare. Unless you have special health care needs, maybe you'd be better off without that plan and pay out of pocket as needed, but of course I don't know your complete situation.
> I don't mind sharing numbers, so here is the budget I did for this year (the precise numbers are known quantities, others are good estimations):
> Car insurance: $837
> ...


Great reply & I welcome the detail, helps anyone reading relate:
I do track & know the exact numbers on the very fixed costs like house ins etc
So I edited in brackets Bold mine relative to yours.All numbers are annual as I assume your are:

Car insurance: $837 ( $2640, two cars with collision)
Condo insurance (furniture, liability, etc): $350 ( house ins $729)
Car Repairs/Maintenance: $500 ( $4800 includes plates etc)
Food: $4800 ( 9600)
Alcohol: $780 ( $300) , I dont drink, but my wife has the odd glass of wine
Fuel: $1040 (3600), Two cars minium driving, to and from work etc
Condo fees: $2628, (House paid, est $1800 etc, light bulbs paint here & there)
Property taxes (city + school): $2787 ( big house $5200)
Internet: $756 ( includes tv cable, etc (1920)
Cell phone (voice only by the minute): $150 ( 2 cell phone, all-in $1800)
Clothes: $500 ( 1600 now, will be much less in retirement)
Misc. Pocket money ($50/week): $2600 (money for random lunch out or beer with the guys at work, see a movie, stuff at the pharmacy, etc)
Electricity: $680 (yes, it's that cheap where I live)..( not here $2640) + Natural gas ( $960)
Driving permit + car plates: $300 ( same as yours , but I included in car repair 

So again: as you said, house vs condo , huge difference. obviuos are utilities & taxes.
Two cars vs one hit on gas, wear and replacment big time. That's why going down to one car when retired. No reason to have two cars sitting collecting dust.

Your medical question is a good one:
My exiting job has an all inclusive medical benifit plan that runs out at retirement;
You are correct most thingsa re covered under Gov plans etc, Dental, hearing and eyes are not. 
Both my wife & I need glasses, our dental. Even minium for a cleaing and x-ray every 3 years is closer to a grand for both of us, not counting repairs.
On the dental issue. Assuimg you are much younger,probably do not have the dental issues most of the boomers have. Move forward to late 50, early 60s. cavities are not an issue at all. "tooth wear" is an issue.
Our teeth simply need resurfacing. Try $2-300/tooth. Random here & there.
On the meds. Yes most are covered but a lot are not & all are co-pay even with a plan , until age 65. So if you want to retire early be aware of that one.
General medical: If you intend to travel,"out of province" coverage is a risk preimium worth paying.
Anotehr thing youg people are not aware of is critical care coverage: Shulld you get a serious illness and need serious hospitalization. very little is covered. A 4 bed ward if you are lucky. ugrading to proivate or semi private also could be worth while.
Another big bad monster few think about: I went through this with my mom. She was terminal with cancer. Guess what. if your not being treated you dont stay in a hospital!
There are hospice and otehr type own things. If you need home care in your final days. Just do some quick math. Nurses make $40/hour+ X 24 hours= a lot of money
There are premiums you can pay for that: Called Critical home care coverage.
BTW: All car repairs are unexpected and keep coming...
Hope this is helping some to look closer at what things cost. Too much attention is focused on "what you will have at retirement" the key to that is IMHO what you will need.
When the numbers match you can retire.


All-in: The have a top end coverage incluing dental, home care, out of province, semi-provate upgrade, larger accpeted drugs, al of the "quasi medical stuff , like massage therapists, mental therapsists etc etc.
IS $350/month for 2 people that equates to $4200/year. And all of those mentioned coverages are co-pay, so round up to $5K/year.

You could subtract dental and self insure etc. That I will consider. The "fees" for the out of Province and critical care etc are so low, not worth takng the risk.
ON the missing out or depriving. My wife & I do not live an extravigant life at all: BUT we dont bargin shop or worry about prices.We have been blessed with the ability to earn well and save well.
Yes we could carve out probably 10% of all groups. I dont drink or smoke & I have celiac disease and as such have a very expensive well controlled diet.
So...My retirement goals are to live well, hence the many random extras etc, when calculating.
I have always underestimated savings and over estimated expenses. Always happy at end of year.
PS, Your info leads to that of a single guy. I hope you find a like minded life partner ( financial). My wife & I could spend much more, then like yourself would not be considering retiretirment.
Keep up the good work: My only advice, assuming you are still quite young. Keep an open mind around the health care & medical costs. Not as "free" as people think.
My wife's glasses are probably $200/year. Mine a little less.
If you grind your teeth, they will be warn down andneed repair. A mouth gard can be obtained for $400 or so. Will save you $1000s later in rebuilds


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## My Own Advisor (Sep 24, 2012)

@Thal81, wow, you've done well spending only that...

Car insurance: $837 (we're double that because we own 2 cars, but will sell one later next year)
Condo insurance (furniture, liability, etc): $350 ($0 but we also have a mortgage and home insurance that costs $2k per year).
Car Repairs/Maintenance: $500 (we budget about $2k per year).
Food: $4800 (family of two, we spend $600 per month and therefore close to $7,200 per year)
Alcohol: $780 (we spend ~$1,000 per year)
Fuel: $1040 (x2 cars we budget $200 per month or $2,400 per year)
Condo fees: $2628 (our mortgage runs $1,600 per month)
Property taxes (city + school): $2787 (ours in Ottawa is $4,500 per year)
Internet: $756 (give or take about the same)
Cell phone (voice only by the minute): $150 (much higher, closer to $800 per year)
Clothes: $500 (budget about $2k per year)
Misc. Pocket money ($50/week): $2600 (money for random lunch out or beer with the guys at work, see a movie, stuff at the pharmacy, etc) (probably double)
Electricity: $680 (yes, it's that cheap where I live) (that is crazy cheap....we're about $1,200 per year)
Driving permit + car plates: $300 (same give or take)
Fun money: $1500 (a spending budget for 1-time fun items that are not needs, but wants. Like, computer games, sport equipment, house decorations, wtv). (probably double)
Total: 20208. 

*Our total > $50,000 per year right now* and _even higher_ if you include we must save for retirement in the first place (i.e., we try and max out our TFSAs ($11k) per year; we try and max out our RRSPs (mine is done, my wife's has a long ways to go). Between the mortgage and saving for retirement, we spend tens of thousands of dollars per year we don't intend to spend in retirement. In fact, one of our salaries today effectively is used to kill debt and save for our financial future.


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## ian (Jun 18, 2016)

The only breakdown we have done on our spending is five years prior to retirement and then some monitoring post retirement. We simply add up all of our after tax cash outlflows. There is no point in comparing our budget to others because of the multitude of variables not to mention lifestyle and socioeconomic differences.

The one thing we do do is review our spending, spend on things we enjoy, and attempt to get as much value as possible for every dollar that we spend. Both consumption and giving. Does not matter if it is a cell phone plan or several months of international travel. It made no sense for us to sweat all of the individual components since many of them are what I would call base spend.

We knew what our run rate would be. We bumped it up by 30 percent to account for post retirement travel. But our living expenses decreased significantly in retirement. As it turns out our first cut at the number, plus or minus 10 percent, was the most accurate even with the travel. The process we used us was fast, almost back of the envelope, but certainly accurate enough from our perspective. It now takes all of five minutes a month to run a tape on spending-an hour a year. This is not to say that we do spend additional time trying to determine the best cell phone, internet plan, home or auto insurance offer for us. We do. We need all of these so the effort goes into getting it right and and proving the costs every year or so rather that trying to record and itemize it.


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## tdiddy (Jan 7, 2015)

Thal81 said:


> I honestly have no idea how people spend $70K-$100k a year, it just blows my mind...


A bit of hyperbole here perhaps? A significant proportion of families spend more than 70K/year. If most stopped our economy would probably collapse. To each their own of course, but its important to keep things in perspective


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## Eclectic12 (Oct 20, 2010)

ian said:


> ... For some very odd reason, not certain why, I always had this dread of ending up homeless on the street. Foolish I know, but it caused me to pause and think about where I wanted and needed to be in future years and what was necessary to get there ...


It sounds like it served you well.
For my dad, it was not a dread of this but seeing so many "retired" people working part time. He wanted to be done working when he retired.


Cheers


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## sags (May 15, 2010)

We spend about $95K a year in retirement and it doesn't matter how much a person has............they would always like more.


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## Canadafan (Oct 19, 2014)

sags said:


> We spend about $95K a year in retirement and it doesn't matter how much a person has............they would always like more.


Is that 95K/yr gross or net?
Thanks


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## sags (May 15, 2010)

Canadafan said:


> Is that 95K/yr gross or net?
> Thanks


$95K gross and about $80K net with our deductions and pension sharing. That would also include the value of our health and other employer/retirement benefits.


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## Canadafan (Oct 19, 2014)

sags said:


> $95K gross and about $80K net with our deductions and pension sharing. That would also include the value of our health and other employer/retirement benefits.


Great place to be, clearly one of the largest on here so far and approching the "luxury" end of the range.
back to the Macleans article (retired couple)
That being $42K as basic , $57K mid range & $101 as luxury.
Interesting, there is a much larger gap from the basic/mid , then Mid to luxury.
Since they are talking "gross pay" that would explin the non-linear scale
BTW that study was a few years old, placing todays dollars more like 
$50K, 65K & 110K ( Gross $)
Thanks all for replying, this blog has given me lots of insight to many points of view.
Notably, that one can get by on much less if need be, and like sags says more is always possible 
Akin to a gold fish in a bowl. Same fish in a larger bowl will grow to fit his water.
Take away my over-sized house , two cars & I know we could retire on probably 60% of what I " think" we need.
Im thinking $80K gross, = $68K net. Then again Im not yet retired.
Still swiming in my big fish bowl.


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## ian (Jun 18, 2016)

Keep in mind that there can be big difference between income in retirement and spending in retirement. Both ways!


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## sags (May 15, 2010)

What is often not calculated is that senior couples pay far less taxes and premiums than other people.

Beyond the standard personal deduction, we both have an age deduction which is roughly $7,000 each, and we don't pay CPP or EI premiums anymore. 

We also don't pay union dues or health care premiums from our monthly benefits. In addition, retirees may have a disability deduction of about $7,000 for one or both.

And then.......seniors can split pension income to lower the overall tax rates.


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## sags (May 15, 2010)

$90K is only $45K each though. It is comfortable but not wealthy.


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## AltaRed (Jun 8, 2009)

sags said:


> What is often not calculated is that senior couples pay far less taxes and premiums than other people.
> 
> Beyond the standard personal deduction, we both have an age deduction which is roughly $7,000 each, and we don't pay CPP or EI premiums anymore.
> 
> ...


The age deduction is subject to clawback though depending on one's income. It disappears at about $86k. The pension amount of $2000 (or $300 federal tax credit) is not means tested, but one must have legitimate pension income either directly or through splitting.

Extended health care is either a plus or a minus depending on whether it remains an annuitant benefit being partially funded, or the annuitant must fund it 100% oneself, or go without. My former employer continues to pay in the order of 60% or so of the premiums so it is a good deal for us.

So yes, many costs go away once one retires BUT there are a lot of new expenses with an extra 40-50 hours a week to fill up with desired activities and/or travel. Our cash flow expenses actually went up in retirement.


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## tdiddy (Jan 7, 2015)

Good points above. Our goal is to top out at ~80K each in retirement (long ways off, assuming we keep renting, perhaps slightly less if purchase something). Beyond that tax clawbacks and progressiveness makes me less inclined to work longer. 

If all goes well I hope to increase my travel budget as the single largest expense, at least in the initial stages of retirement.


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## milhouse (Nov 16, 2016)

AltaRed said:


> ...there are a lot of new expenses with an extra 40-50 hours a week to fill up with desired activities and/or travel. Our cash flow expenses actually went up in retirement.


How one fills up those freed hours in a way that's fulfilling to them is one of the key variables. I see our spend going up because we're saving to bring other activities into reach like more travel, attending more events around town, etc. However, props to retirees that are fulfilled with cheaper hobbies like just enjoying the outdoors, fishing, volunteering, etc.


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## AltaRed (Jun 8, 2009)

Retirements can be very different.... even very different to what one who is currently in their 50s currently contemplates for themselves. IOW, it depends on which set of glasses one is wearing at the time. While it is good to have a handle on what one believes to be their 'most likely case', it will often evolve to be quite different some years in. What I am doing today 12 years into retirement was not even a notion in my 50s when I was still working.


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## milhouse (Nov 16, 2016)

Most definitely. That's one of the main risks I would suggest really early retirees consider. 
I think back on what I was interested in during my early 20's to late 20's to 30's to my mid 40's now and I find it an interested exercise. It's the full range with some things staying consistent, some things falling off the table, new ideas getting planted.


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## Canadafan (Oct 19, 2014)

milhouse said:


> Most definitely. That's one of the main risks I would suggest really early retirees consider.
> I think back on what I was interested in during my early 20's to late 20's to 30's to my mid 40's now and I find it an interested exercise. It's the full range with some things staying consistent, some things falling off the table, new ideas getting planted.


 I would agree 100%
The way we see our world is subject to change and almost certian to change with time.
Also agree some ideas are firm. New ones come up and old ones drop off.
Personal health/fiitness changes with age, as does political, spiritual and social views.
My last 11 years free time ( hobby /health) has been filling ever more with my involvment with an an evironmental group. That never even existed prior to 2007. My 'Hobby" of hiking, planting trees and organizing nature events, costs me zero and uses an infinite amount of time. Simce my health changed ( I have celiac disease diagnosed 6 yrs ago) my travel opportunites and plans have reduced substantially.
Yes one can travel with any disease, but for me I must be able to trust the food source and/or bring my own.
I work out a gym & there am inspired by friends whom are 10-15 yrs older then me and still having a good routine, relative to thier age & better then many younger.
On the economic side of things: back to the blog: Having worked for 40+ years and developped a spending/saving pattern dont see much changing that way.
My wife & I live well, but not outrageous relative to our income.
I eluded to a few years back a few examples of things changing yet averaging out.
"cable" when it came-in was a minium charge, no internet at about $7/month. Now with the invent of internet & multiple cable add-ons that bill is above $100.
In contrast we,back in the day went out most Fridays to enjoy the bar scene, cost was not a concern. now THAT expsnse is zero.
Like was said some things drop off & new things come along.I do feel confident in saying that within a small range the general fixed expenses wont change much. The entertainment, vacation, hobby stuff is absoloutly a huge variable.
So, how about a view of a few different camps:
1. Those who are young and retirment is a wishful distant plan
2. Those like myself, within a year or two of retiring.
3. Those well into retirement

The orrginal question was "expected expsnese costs at start of retirement?" 

Im thinking one great approach a few I know who recently retired ( wthin last 2-3 years): They retired with a cash flow plan to match the last years net income. Meaning if you can survive on it while working should be ample once retired.The many variables, vacation, fun times, hobbies and social interests are all controllable.There are publised report that say any range from 60% to 80% of gross income could work. I fiind "net" to be much more useful.


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## ian (Jun 18, 2016)

Travel expenses increased. Shelter costs went down considerably because we downsized, got rid of one vehicle, then rented for four years, then bought again. The only expense was seven months of international travel but this was offset in part by not having any home expenses. We had sold our home and stored everything in a container. When you stop paying all home expenses you really do appreciate how much it costs to turn the key. Renting for four years was financially advantageous and it complemented our lifestyle. Rented is a good option but alas I suspect many have grown up in this stigma that owning is always better than renting. Not our experience during period of slow real estate and declining rents.

I have zero faith in those rules about living on 50/60/70 percent of your pre retirement income. Absolutely meaningless. Your burn rate will depend on your lifestyle, the percentage will depend on your pre retirement income. We did not pay any attention to it. The only calculations we made we taking a total of our after tax spending in the years before retirement. You don't spend percentages. You spend after tax dollars. One expense that did increase significantly over prior years was our giving. But we cut out the ones that had a very high expense ratio in favour of the one that we were confident would deliver the best bang for the buck for what it is was supposed to be doing.

Prior to retirement we spent time re-assessing (and firing) our bank and our stockbroker. We also worked with a tax accountant to understand the best way to structure our resources and income in order to minimize tax going forward into retirement. Both of these actions had a positive impact going forward. We got rid of one vehicle on the assumption that we could always rent a second for a few days if needed. It never was. More ongoing after tax savings.

Prior to retirement we did not spend our income. Our expenses in retirement stayed constant however the mix was different. We are starting to increase our spending and expect to do so going forward.


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## kcowan (Jul 1, 2010)

ian said:


> When you stop paying all home expenses you really do appreciate how much it costs to turn the key. Renting for four years was financially advantageous and it complemented our lifestyle.<snip>
> 
> I have zero faith in those rules about living on 50/60/70 percent of your pre retirement income. Absolutely meaningless. Your burn rate will depend on your lifestyle, the percentage will depend on your pre retirement income. We did not pay any attention to it. The only calculations we made we taking a total of our after tax spending in the years before retirement. <snip>
> 
> ...


Yes this mirrors our experience as well. All bets were off. FAs were no help. And the budget was bottom up based on need. We did a detailed budget and it was close in total but the line items were wrong.

The best result has been the positive effects of snowbirding in Mexico. The COL is 60% cheaper than Canada. We live high and manage to get the budget up to 40% off. After 15 years retired, we are into Blow That Dough. Partly because of the early transfers to heirs and charities. But also no longer sweating the details of individual purchases.

If anyone had told us that this was possible, we would have laughed.


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## TomB19 (Sep 24, 2015)

Amazing thread. Thank you!


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## rl1983 (Jun 17, 2015)

Has anyone or does anyone take inflation into consideration? Being 65 currently and enjoying retirement might be ok, but say if you are 40 and looking to retire in 25 years, how much more expensive is it going to be? Recently, everything is going up at a drastic rate. I'd hate to see what the future holds for the price of anything, including a loaf of bread.


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## birdman (Feb 12, 2013)

ian said:


> T
> I have zero faith in those rules about living on 50/60/70 percent of your pre retirement income. Absolutely meaningless.
> 
> +1 !!
> I retired 17 yrs ago at age 55 and was fortunate that at retirement I had a good job with an annual income of 100 to 150,000 plus a yr. Had a great lifestyle with children, house, skiing, fishing, camping, sports, gardening, hiking, etc and just before retirement spent about $50,000 or so net per year or about 30% of my income. 17 yrs later still enjoying the same activities and spend about the same but maybe add on $10,000. PA in travel or the occasional special gift to helping out the children. Property taxes, utilities, insurance, gas have increased but not much noticeable change in other costs. Also, we don't seem to go out for nice dinners as often and have more dinners with friends. Mind you, we don't really keep a close track on expenditures but still spend less than our annual net income.


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## lightcycle (Mar 24, 2012)

rl1983 said:


> Recently, everything is going up at a drastic rate.


Really? We've had ~2% inflation for the last 15 years, which is *well* below the historical average. I remember in the 70s, inflation averaged 10-12% a year!


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## kcowan (Jul 1, 2010)

Yes since we retired in 2002, we have been blessed with very low inflation, and, by avoiding fixed income, we have enjoyed superior investment returns. What is not to like?


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## AltaRed (Jun 8, 2009)

lightcycle said:


> Really? We've had ~2% inflation for the last 15 years, which is *well* below the historical average. I remember in the 70s, inflation averaged 10-12% a year!


We more recent retirees have been blessed with low inflation. Even at 3% inflation, it would take 24 years for prices to double (rule of 72). I should be dead by then. Knock on wood I won't have to face 10% inflation with doubling of prices every 7.2 years. 

That is a reason why a number of shrewd retirees carry "insurance" through a healthy component of RRB (real return bonds).


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## Canadafan (Oct 19, 2014)

AltaRed said:


> We more recent retirees have been blessed with low inflation. Even at 3% inflation, it would take 24 years for prices to double (rule of 72). I should be dead by then. Knock on wood I won't have to face 10% inflation with doubling of prices every 7.2 years.
> 
> That is a reason why a number of shrewd retirees carry "insurance" through a healthy component of RRB (real return bonds).


The interesting ting about inflations is as follows IMHO) and as anything subject to debate aka a great on-line blog:

A well managed diversifired portfolio, should be set up to target a few points above inflation.
Im with RBC wealth mangment, and they as of past few years are targetting 6% ( after fees), long term average.
last year (2017), we came in at just under 10%, which was great> Now saying that with much more equity exposure the 10% could have been 15%..BUT The risk goes along with that.
Now we are getting clobbered by incresing rates and declining bond (face value). That however is a short term adjustment, as the bond funds do bing higher yeilds along with higher rates.
Back in the 1970s/80s, inflation was crazy well above 10%, But even a GIC was paying 12+
So while inflation is not the friend of retired folks, the investment pie is not all inflation sensitive:
Example: CPP & OAS although a small section of a retirement plan, are inflation indexed ( yes not fully, but indexed non the less).
Invested assets , which is what many on here seem to have aka RRSP/RRIF etc are not inflation protected, but properly invested can be some what.

The worst case scinario are those who set up retirement with ultra-tight expectations, with ultra conservative investments: In that case, the returns barely keep up with inflation if at all.

The needs today lets assume the $65K is a fair number,. Even at 2%, 25 years out will be just over $100K/year.
Being realistic: assuming one retiresd at 60 yrs old: That 25 yrs brings one to 85.yrs old. Good news or bad. Most of the traveling you are doiing now, high costs sports, or other expesnsive stuff will not be happening past mid 80s.
Before the up roar starts: Yes I appreciate not eveyone mid 80s becomes "old" and stops traveling etc: But my observations for many years around me, the harsh reality is, mid 80s the oddometer starts to show a lot of wear.
Saving grace?? As nursing/retirment homes cost a lot of money.
It has been the majority on this board and others, not to count your home as part of retirement funding. That-is assuming you are well off enough to have that luxury.
My $65K net, is on top of a paid off house. Eventually we will down size , go smaller and reduce fixed costs and to up the $$ reserves. 
Just a thought , that model does in effect have some inflation protection built in.
My advice to anyone: Over estimate your costs expectations, add some reserves, and under estimate your income. If the math works then you can afford to retire.
Inflation? There are many models that can be run, including monte-carlo , but all assume slightly above inflation for returns. That is the key.
I am blessed with a small Public sector pesnion, that is 75% to inflation indexed. At retirment that pension will be 1/3 of my income pie. RRSP 1/3 and CPP/OAS the other third.
While I have not done the complicated section income stream, simple logic will equate that the Work pension & CPP/OAS will become a larger percentage OR I will need to have better returns from RRSPs etc.
One quick stroy to put inflation in context:

At retirment a relative of mine had a company profit sharing plan, and retired with a whopping $120K ( in 1976) : Interest rates were 12%++ and a very good income back then was $12,000/year.
So in effect the "pension" with just interest would pay more then a good wage in perpetuity.
That $ at that time was a HUGE amount!
Today, $120K with "just interest" would be lucky to pay $3000/year. 
The person did pass away , and the $ went to the estate. ( Not me BTW). So the outcome is unknown.
For giggles Ill run a spread sheet to see what the portfilio would look like today assuming: The draw was $6000/yr plus inflation. ( draw would be the $12K-CPP-OAS- other funds assuminig they existed)

A great real life "rear view mirror example"


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## ian (Jun 18, 2016)

We tend to focus on bottom line. All of our calculations are based on after tax spending. Real returns on investments adjusted for inflation. Future spending adjusted for inflation. Cannot see any other way of understanding what our true financial picture is. In some instances I would think that one would have to increase the inflation factor especially if you were renting in low vacancy urban markets.

BTW...we are with PHN-RBC and have been very happy with the advice and the results over these last five/six years.


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## latebuyer (Nov 15, 2015)

I'm single and I estimate current costs about $30,000. By the time I retire I will have a paid for condo so costs will go down somewhat. Still I am estimating about $45,000 (before tax) because inflation is a killer (I am only 45) and i'd like to travel. Right now I don't travel a lot.

Just a comment that while housing costs are brutal for a single person, I think you do save on clothes, groceries and potentially transportation. I know my grocery costs are under 200/month and i've seen quite high estimates for groceries. Still I expect my vacation costs will be higher then a couple if I am travelling alone.


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## robfordlives (Sep 18, 2014)

Ten years ago when I hated my job I thought if i can generate $2000 a month with paid off home I would "retire" and make some income via side jobs. Although my situation isn't changed that much from then I now believe I need approx $50,000 per year pre tax to live a comfortable life.


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## 1980z28 (Mar 4, 2010)

I may be in a different boat then most

I am 57 and retired for a year now,,,

Before i retired i purchased a total of 126 acres of land,,,in 2009,,,,built house 1200 sqft,and 2 story garage 2000 sqft on 26 acres this was a 8 year build,,,,paid cash
in 2017 purchased tractor backhoe,atv,jeep ,tandem dump trailer,paid cash
also purchased everything for house and garage ,,,paid cash
i have no debt when retired
have own well and septic,cut wood for heat in garage,,grow crops,,work on projects in garage,,,i worked as a mechanic for 38 years,,,also walk hike everyday at least 7 km,,,i am on ocean so also fish,,(lobster,crab season now,,,did also have some seal flippers)cod and moose ,,easy to get here

My cost to live per month is appox 1100,,,it includes tax,food,insurance,fuel for all vehicles ,phone,web,cable,
Health is excellent so no cost yet,,,,i get up at 5;30 am and bed at 9PM,,,sleep like a rock as i am outside 80% of the day

To live this way i receive appox 48k in dividends each year,,,i reinvest what i do not use,,,i also keep a cash(savings)account in the 75 to 80k on hand,,,,i am 100% equities 
No pension,not sure when to take cpp

I love outside and keep very busy around property ,,also we travel around province as day trips,,,very large place lots to see in NL,,,i love it here:excitement:


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## prisoner24601 (May 27, 2018)

Canadafan said:


> Great reply and congrats on finding a happy point you can realize that $ spending has no upper limit & more does not need better.
> Regarding your question: It does depend on the actual location and fixed costs ( I do hope to down size)
> My present situation. Bottome line, expesnses ( not counting anythig to do with a car)
> Utilities ( electric, gas, phone, cable) = $600/month. A smaller place & could reduce down to $500/month.
> ...



Canadafan - This is a really useful thread. I'm a year or so away from retiring, just me and wifey who is already retired (kids are on their own), new net zero energy house with 1 car. We are at $68K net and $85K gross broken down using your categories:

*Basic 32,700/year*
Utilities, IT 360/mo.
House Taxes/Insur	950/mo.
Food 1,000/mo.
Car, Reg, Insur 430/mo.

*Medical + Vacation	18,600/year*
Extended Medical	300/mo.
Travel/Vacation 1,250/mo.

*Additional Lifestyle 16,600/year*
House upkeep 540/mo.
Personal Care 200/mo.
Entertainment 150/mo.
Hobbies 300/mo.
Gifts, Shopping 200/mo.


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## prisoner24601 (May 27, 2018)

1980z28 said:


> I may be in a different boat then most
> 
> I am 57 and retired for a year now,,,
> 
> ...



Sounds awesome z28. I have a similar situation with paid for house, acreage, shop etc.. but with higher property taxes. No pensions for me but savings are decent and through off $50K+ in dividends and interest which will cover the basics. You have it figured out with keeping busy on the homestead and trips around beautiful NL! All the best,


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## robfordlives (Sep 18, 2014)

A few people have cited travel budgets nearing or exceeding 20K per year. Just curious but how are you spending that much? My wife and I will wait for a flight deal....tons of warm overseas places routinely go for 600pp taxes all in, and then rent an airbnb for $1500 a month type thing. Even some place like Barcelona is damn cheap. In Thailand that will get you a penthouse in one of the nicest buildings on town. Even some place like Barcelona is damn cheap. So for under $3000 you are gone for a month. Don't need a car in alot of vacation spots and I don't consider food while there to be a vacation expense. In fact as others cited Canada is very expensive grocery wise so in virtually every vacation spot groceries will be less than in Canada even accounting for currency. 

A guy at work told me his parents are taking a six month cruise....$120,000 for the cruise. Just insanity. I would go nuts after a week


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## AltaRed (Jun 8, 2009)

Lots of ways. 5 star safaris in Botswana, Namibia, etc with And Beyond, and we will only travel business class any great distance to get there. We want to enjoy our trips at age 70 and be able to hit the ground running after a lie flat bed overnight flight. 14-21 day river cruises with Scenic, Viking etc, in Europe, Asia, etc. don't come cheap. An expeditionary trip to Costa Rica and Panama Canal on a large yacht with Smithsonian lectures and going ashore in the jungles via Zodiac costs some money. Our trips are typically $20-30k each and we sometimes do 2 per year. We leave in a few weeks on a Viking ocean cruise to Scotland, Norway and Iceland on one of their new 930 passenger ships during the solstice.


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## ian (Jun 18, 2016)

It is very easy to spend $20K year in travel. Especially if you travel often. Yes, it depends on where and how you travel. For the past four years we have done 2 two/three month trips a year plus a few quick ones in between. We are careful travelers and careful spenders. Here are two examples. Last Dec. we snagged a last minute AI to Puerto Valarta. $850 each, all taxes in very early in the month. Daughter wanted us to join her family on a Christmas trip to a Cancun AI. That was $2700 each for the week. We done weeks in Australia (expensive) and Africa (expensive) and spent months in Thailand/Vietnam (relatively inexpensive). So....the numbers can add up based on selection and duration.


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## Canadafan (Oct 19, 2014)

Canadafan - This is a really useful thread. I'm a year or so away from retiring, just me and wifey who is already retired (kids are on their own), new net zero energy house with 1 car. We are at $68K net and $85K gross broken down using your categories:

*Basic 32,700/year*
Utilities, IT 360/mo.
House Taxes/Insur	950/mo.
Food 1,000/mo.
Car, Reg, Insur 430/mo.

*Medical + Vacation	18,600/year*
Extended Medical	300/mo.
Travel/Vacation 1,250/mo.

*Additional Lifestyle 16,600/year*
House upkeep 540/mo.
Personal Care 200/mo.
Entertainment 150/mo.
Hobbies 300/mo.
Gifts, Shopping 200/mo.[/QUOTE]

Interesting & back to my basic direction. First thanks for the kind words for the blog. Some are useful for some and others not. Just the way things are.
If I take out the travel you have at $15K/yr from the $68k comes back to the $50/55K or so we have seen over & over. 
Vacation just as hobbies are completely discretionary & that is why it is so important to strip that out when looking at the numbers.
Im within a year or so from retiring and need a number to feel compfortable with.Again...I see $65K to $70K all in NET, to be ample.
The years that someting comes up requiring a lot of $ not expected, I can cut back on our vacation, if need be.Missing from your numbers are car replacment BTW. Again a very verried choice. Being a practial type I see a 2-3 yr old car in the $25K-$30K range, every 10 yrs. aka about $300/month to replace depreciation etc ( includes forward inflation). You can get a 2 yr old volt for $30K as of right now. just for example.


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## ian (Jun 18, 2016)

Required retirement income and expenses in retirement is the furthest thing from one size fits all. We have changed our retirement lifestyle during the past five years. The burn rate has essentially been the same. Just different categories. We continue to spend more that some of our friends, and a great deal less than others. It is all about financial parameters, personal preferences, and choice.


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