# What do you expect your yearly expense to equal?



## Edgar

When you retire(d), what do you expect your monthly/annual expenses to equate to?


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## birdman

$55,000. per annum after tax PLUS extraordinary large expenditures(eg new vehicles, vacations in excess of 6,000. per annum, major home renos over $6,000., large gifts, etc) No mortgage or loan payments. There is just my wife and I and we are retired.


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## Edgar

Would you care to break down your 55k? Im curious to see how your expenses are divided and what additional expenses you expect to incur/disappear.


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## birdman

No exact numbers but it goes pretty quickly and we really don't keep detailed records. It is something along the following lines:
Ppty taxes 2500.
Ski condo taxes 800
ski condo strata fees 2500.
truck ins 1200.
car ins 1200.
Ski passes 800.
Xmas gifts 1500.
birthday gifts 1500.
Gas 6000.
house ins 800
heating & A/C 2500.
trailer, util trailer, & ATV ins 500.
regular home improvements 3000. (hedge pruning -700., appliance replacement -1000, new BBQ, new patio set, new roto tiller, computer, plants, riding mower, etc.
vehicle maintenance 1000.
food 7000. a real guess
entertainment 3000. a real guess
gym & sports 2500. indoor tennis club & gym 
travel 6000. also do occasional larger trips costing 10/15,000 not included 
clothing 1500. dress shoes, court shoes, hikers, etc are pricey
ski and racquet equipment 1000.
health related 2500. mostly physio and massage (sports related)-also eyeglasses & prescriptions
TV, phone, internet, cell 2400.
water (tolls & imp. levy) 1000.
personal expenses 1500. (wifes haircut at 90. every 5 weeks is the main culprit)
TOTAL (I think) 54,200.

I know what I spend but not exactly sure of all the details but the above seemed to work out pretty close. Not included is the 3700. PA I receive from condo rent which pays for the strata fees and taxes and this money just goes into the pot as well. Since retiring at age 56 our fixed expenses have pretty well remained the same but we have spent considerably more on travel including a number of quite extensive trips which are not included above. Also helped our children and had some major home improvements including a new deck (10,000), new heat pump and furnace (12,000.), new roof (12000.), new eves (2500.) all in one year which is not reflected. There is always something. 
Also, we live an active lifestyle with both of us heavily involved in racquet sports (I compete nationally), ski, hunt, fish, hike, garden, etc. None of these are cheap and someday, say by age 75 or so, they will start to wind down. Every year we have a somewhat extraordinary expense of around $20,000. which is not accounted for. Examples over the past 5 yrs or so are weddings x 2 at 20,000. each, home improvements of 40,000. as mentioned above, trip to Africa (10,000), 5 weeks in Turkey & Jordan $15,000, new car $30,000., new kitchen appliances ($6,000.). Will need a new truck next. Also, we have a larger home 2100 sq ft on each of 2 levels and a large .70 acre lot which is fully landscaped. I guess these will be downsized sometime in the future. Would also like to help the kids paydown their mortgages one day - time will tell.
As you can see, we have lots of discretionary expenditures but as long as we enjoy them and can afford them we will continue along our present path. Its all a matter of choices and `how you want to live your life`. 
You should probably just PM me if clarification is required.


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## fraser

Our burn rate is $6K per month after tax. This also covers travel. This has proven to be accurate over 3 years. 

Each month I add up all the bank charges, which includes all credit card payments. We do not bother with categorizing the amounts. It may change if we decide to buy a condo instead of renting.


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## tygrus

At your age its more wise to figure out how you are going to get the income you need rather than how much you will need. 

You can count on CPP and OAS providing a steady of diet of cat food in the future so don't even put those in your calculations.

Rumor is that the TFSA limit will double next year. If it does, do whatever you can to get the $70k to put in there and then invest it and drip it and you will have your retirement at 50 with $50k annual income untaxed. Thats the most assured way to get where you want.


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## Jacq

Edgar, this is hard to quantify since everyone is different and has different priorities and values. What might be reasonable spending to me would be way too high for you or vice versa. 
Having said that, in full retirement mode - after downsizing (which means no mortgage), also means no car payment (haven't had that for years) and no debt payments (also not for years), I'm counting on my base costs to be around $24-30k/year. In my opinion, everything above basic living expenses comes down to value choices and so variable based on the individual. You can get a rough idea of base expenses by looking at the statscan survey of expenses where you see that the average person runs around $14k in housing costs and about the same in transportation. Get your house and car paid off and you're looking at a savings of about $20k or so in retirement.

My spreadsheet includes travel at a percentage increase annually of 10%, housing, food and other at 2% which is consistent with my experience in the last 5 years that I've been tracking. Some time in your 50's (I'm not there yet, but close enough), you realize that holy smokes, you will never see Machu Picchu - the Parthenon - the Louvre - unless you do it soon. These are the things that can blow any budget.


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## rikk

Edgar said:


> So, I am a LONG LONG LONG way from retirement ... One of the things that I've been weighing out consistently is how much passive income on a monthly/yearly basis I would need to maintain a comfortable standard of living ...


Short story ... I suggest you start tracking your expenses, not to the penny, but within reason and continue to do so to determine a monthly/yearly amount. It's not that difficult to figure out what might change going forward. That's how I determined the income I'd require to retire financially independent (including what I/we would require if my wife retired early). Things changed, new career, I/we continued working beyond that minimum requirement ... more savings for me/us :encouragement:


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## cainvest

As others have already said, there is no good way to estimate based on what others spend. It's best to track your own lifestyle expenses over the years, at least get a good estimate, and then think of what else you want to do in retirement vs your current lifestyle.


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## PoolAndRapid

..


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## Edgar

I appreciate all the feedback pertaining to me, but honestly, I created this thread out of the interest of wanting to see what other CMFers are projecting. I understand that my projected expenses may greatly differ from someone elses based on the standard of living I want, how much I want to travel, where I want to retire, etc. It's probably my fault for posting a big into paragraph about myself .


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## Itchy54

We have been tracking our expenses for three years, and we spend about $3000/month after tax. This however does not include medical/dental which is currently covered with my hubby's job. that will add, on the high end, about $250/month.
This also does not include our December holiday (but does include quick visits to the island to see the outlaws and other road trips) which comes in at about $5-$6 thousand.
Our plan is to spend at least $10 thousand a year, likely more while we are young, travelling.
Happily pensions will cover our living expenses, so all the money we have saved and invested is our travel and happy money...
Could retire yesterday but I think hubs just got a new job...silly boy. I work part time and that pays for the holidays right now. Great job that feels like fun and not work, and I can have it as long as I want.

summary: after work our everday expenses will be about $3500 (this should include anything we could have missed over our years of tracking)
Travel , let's say $15,000/year , so another $1250/month

$4750/month...will round that to $5000 just because.


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## AltaRed

Most people, if they have the resources to do so, would likely spend as much in retirement (or more) than they did while working their last 10 years. By the time a couple are empty nesters, they will have gotten rid of mortgage payments and will have started to travel (if that is their thing to do). Once retired, they have more time to spend on more travel, or recreational/hobby things.

Last year was a bit expensive for us, furnishing a new (to us) house in a new location and purchasing one new vehicle. If I strip some of that out, our average expenditures including taxes was about $110k and it looks like it will be about the same this year. That includes circa $30k of travel (2 significant trips a year). I think it is pretty easy for an average middle class couple to spend circa $80k per year (all inclusive).

Added: To put this in context, I have been retired 8 years and spouse 1.5 years.


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## Jets99

I recently had done a monthly budget. Total basics comes to $3,756 per month. That's with two Universtiy kids at home. The numbers are based on actual monthly bills for Hydro, gas, water, taxes, insurance, TV, Internet so very accurate. Winnipeg winters and exorbitant property taxes are a factor.

These are the basics for us so does not include trips which we take at least once per year somewhere warm for one week. And does not include extras for kids. But I think it's a good start for retirement budgeting. Think I missed anything?

Hydro & Gas	173
Water	60
House Taxes	348
House/Cottage Insurance	155
Cottage Lease	67
Car Ins (2 cars)	239
Car Gas	250
Groceries	800
Eat Out	200
Dental/Prescr/Glasses	300
Jets/Bombers	200
Beer	30
Clothes	200
Sat TV	100
Internet	40
Cell Plans	80
Home Phone	40
Hair Doo	75
Gifts	100
Keep the wife happy/ slush fund	200
fix house/cottage	100
*Total Basics	3,756*


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## sags

We are retired, living the good life, and spend every dime we can get our hands on..........

Last year it was about $85,000..............


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## Nemo2

Our average for the past 6 years was around $35K.......last year being around $40K (which included 2 'stand alone' weeks in Europe last year, plus 2 transatlantic cruises).......this year, (with ~2 weeks in Europe done already and with a pending 4 week+ Northern European/transatlantic cruise factored in), is estimated to be our most expensive yet...about $50K.


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## My Own Advisor

Wow...all that travel and only $40-$50k?

I've estimated in today's dollars, we'll need $54,000 to retire on after-taxes per year. Retirement is another 15+ years away and that would be in our mid-50s. I think that would be a great time to call it quits. We'll see. We need at least 1) $1 M in the bank in assets and 2) a paid-off home with zero consumer debts to make that happen.


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## AltaRed

It appears some are not including income taxes in their spending projections. While I agree that is not really a 'budget' factor while one is working since everyone will be saving at different rates, e.g. 10-50% and therefore marginal tax rates will vary widely, income taxes is a necessary spend during withdrawal stage and should factor in one's retirement projections. However you project it, e.g. 4% SWR or otherwise, projecting the amount of income tax is not that hard to do. Simply fo a 'what if' with your tax software with some kind of balance of pension income (DB, DC, CPP, OAS), eligible dividends and cap gains.


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## Jon_Snow

We are currently spending anywhere from $2000 to $3000 per month - I think $2500 is a good estimate of our monthly spending. Our monthly income is around $14000 (dual incomes + dividends), so we are saving in excess of 80% of our income right now. We are obviously living well below our means, the purpose of which is to build up our assets quickly so that I can retire ASAP. 

I hope by the time we are both retired that we will be able to loosen the purse strings somewhat - although at our current spending level we enjoy our lifestyle. At some point we will be building a cottage, so that will force us to spend some of our money. I can't envision a scenario in which we could ever spend 50k per year - perhaps if the travel bug ever bites us - but for now, annual trips to the Baja are enough for us... and we can do it on the cheap. 

We are currently trying to decide how long my wife wants to continue to work - she says 10 years, I'm lobbying for 5.


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## marina628

Our expenses we estimate with keeping a home in newfoundland and Ontario and renting somewhere 3-4 months in winter is $83,000 AFTER TAX per year.We are renovating the newfoundland house now so it will be practically new and our Ontario house is only 4 years old. We budgeted 10k a year for maintenance on the homes on top of the normal property tax ,utilities. There is also $10,000 in there for vacations and a new car purchase every 6 years. We are practically retired now with exception of my husband working one day a week which generates about $13000 a year and we have our rental incomes and dividend income. We are earning much more than that now and next year once our daughter is done school we plan to put that budget to the test.


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## Daniel A.

I figure if I know lots of people with lots of assets that I can use free boat cruises, vacations in the sun, summer parties, man who needs assets . LOL


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## kcowan

Our budget has been running between $85k and $95K for the past 10 years. That includes a rental penthouse that accounts for $43k so I guess we could net that out to $42k to $52k including an annual trip to Europe for a month (or Florida in the early years). Life is good and we can live forever!


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## Nemo2

My Own Advisor said:


> Wow...all that travel and only $40-$50k?


It's not where you travel, but _how_ you travel........we don't care for hotels, so we rent cheap studios/rooms with kitchen facilities through sites such as HouseTrip & Wimdu, often in 'non-touristy' sections; we're not 'restaurant people' and prefer preparing our own meals, (which gives us exposure to local markets)........we like to amble around cities and look at neighborhoods and the exteriors of old buildings, (we avoid 'entry fees' whenever possible).......sometimes we'll buy a transit pass and ride around, getting off and on, and checking out various areas.

On the cruises, (and my wife just checked the latest price for the transatlantic repositioning section of our next trip.....they're now asking twice what we paid), we get the cheapest cabin, (it's only used for sleeping anyhow).

We don't pay extra to frequent the 'speciality' restaurants, don't use the (expensive) spa, don't drink, (we used to have wine with dinner but some time last year my wife went through a period of unexplained heartburn, so in an attempt to isolate the possible cause we cut out certain things.......after a couple dry weeks we both said that we couldn't care less if we drank again.......the only one we've had in ages was one glass aboard ship on her birthday last October).....which brings us to the offered 'specials' aboard...$50US per day, per person, for 'unlimited drinks'.......we don't piss money away at the casinos (I'd hazard a guess that winners, such as Marina, are few and far between)......we figure there are people who travel on the same ships, visit the same ports, see the same oceans/seas that we do, and we'll bet they end up paying ten times what we spend.

Bottom line...we spend less and travel more....without feeling at all deprived.


Edited to add: My wife is currently checking out CruiseCritic, (a CMF type site for cruisers), and noted that someone paid $170US for a massage......(perhaps it was Al Gore?)


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## fraser

We travel frequently. There are many ways to reduce your cost of travel and still travel in the fashion that you prefer. We usually combine cruises with land trips and inevitably book them in the final payment window when prices are slashed. The trick is to be flexible. When our South American cruise was cancelled last December, we had a Thai trip booked within two weeks and left 10 days later. It was not in the plans rather it was on my bucket list and great airfare came on the screen! Liked it so much we are going back again after Christmas. But it was winter in Calgary.....we had a great deal of incentive. We also book some things on UK travel sites. Prices can be lower but you usually need an accommodation address if the package includes air.


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## RBull

This is an interesting thread for me as I retired 2 weeks ago, a few days after my 55th birthday. My wife has been retired for a couple of years. 

Our "planned" budget is approx $72K after tax, based on a conservative real return of 1% on investments. If we are able to do another 1-2% on that it will have a nice impact on our lifestyle. We're fairly thrifty but hope to do a fair bit more traveling and eating out etc, than we have done in the last 10 years or so, when our financial situation changed a lot. Our normal expenses over the past couple of years are about $2500/month before considering any travel beyond a few overnight trips, car replacements, major house repairs etc. However, we have just spent a considerable amount completely renovating, refurnishing and putting an addition on to our home where we plan to live for approx 20 years, as our health allows. 

I'm liking what I'm reading so far on retired peoples lifestyles and expenses, especially all the parts about last minute travel, combining cruise and land etc. That's definitely our style. 

Best wishes to all who are there now and those working towards a good retirement.


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## OhGreatGuru

Edgar said:


> When you retire(d), what do you expect your monthly/annual expenses to equate to?


Less than my income on a rolling multi-year average.


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## Nemo2

OhGreatGuru said:


> Less than my income on a rolling multi-year average.


The Micawber Principle.


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## Maltese

Having less money than others on this forum I expect my retirement to look different than theirs. I'll be retiring within the next few months and expect to live on a net amount of $37,000/year indexed to inflation. According to my budget, this amount will cover my basic living expenses as well as a nice trip yearly. Thankfully I enjoy free activities such as walking and don't need expensive activities to be happy.


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## Nemo2

^ Over the past 6 years we've averaged slightly less than that without feeling we're missing anything........hiking up the spending a tad now, (but still on the cheap), because of the realization that "The clock is ticking".


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## My Own Advisor

@Nemo2,

You sound like you have a great game plan.

Yes, where and how you travel can make a huge difference in what you spend....

My wife and I did that in San Juan, PR one day this past winter....used the hop-on and hop-off bus....ride around, getting off and on, and checking out various areas.

We don't pay for fancy rooms or hotels when we travel, usually B&Bs, unless we find a great deal. No need for specialty restaurants for us, although one nice meal in a city when we travel is enough for us. Some great memories of places that way.

I don't gamble either...waste of money and besides I don't win; unlike our professional Marina!

This was my estimate in 2014 dollars for retirement:

Looking at our finances, here is a quick list of expenses (needs and wants) I have today and some of the same ones I expect to carry forward in retirement:

Property taxes (~$350 per month)
Home maintenance
Home insurance
Home utilities (e.g., heat, hydro, water, cable, phones)
Car payment (1)
Car maintenance (2)
Car insurance (2)
Contributions to savings fund
Food/groceries
Clothing
Personal insurance
Healthcare
Household supplies
Travel and entertainment
___________________

$4,000 – 4,500 (max.) per month, after taxes.

Here are the expenses I’m not expecting to have before I retire or in retirement:

Mortgage
RRSP contributions

I guess we'll see how it all plays out!


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## sags

You also won't be paying for CPP contributions, EI contributions, union or professional dues, work expenses,.......and you gain another 2,000 each in pension deduction, 6,000 each in age tax reduction at age 65, and senior discounts all over the place.

We didn't quite replace 100% of our working income.......but have a lot more money to spend on ourselves than we ever did before.

It strikes me as kind of odd that seniors get discounts everywhere.....when it is working families that need them more than we do.


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## fraser

One variable in your expenses will be whether you rent or own. We recently switched from owning to renting. It may be an interim step. 

With renting, our expenses have increased. However, our investment income has also increased.

Many other expenses have been reduced or have been eliminated. Recently gave one of our vehicles to our son. Did not really need it, and he needed it more than we did. That alone saved me about $850. in insurance and probably $350 in mtce (it was an older model)-so about $100 month.


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## dBII

*A little late to the party*

I wanted to weigh in once my personal year was completed (June 30). We did several road-trips, a week in Cuba and, what I would consider a non-frugal year. I know there is lots of fat that needs to get trimmed off my expenses in retirement, but I'm not 100% there yet. I worked 2 days per week over the last year, plus a couple of 2 week site trips and minus a couple of personal unpaid vacations.

Anyway, the year looks something like this:

Food $347.44 
Restaurant $123.49 
Car Gas $115.06 
Truck Gas $176.48 
Cash $715.63 
Work $136.58 
Misc $1,609.66 
Car Insurance $77.17 
Truck Insurance $89.54 
Motorhome Ins $52.42 
Telus $119.79 
Hydro $108.58 
Shaw $119.04 

Total was $3800/mo or about $45600/a
The "Misc" was the killer for me. I'm still trying to figure out where all of those Home Depot/Walmart/Liquor store purchases came from.

That is maintaining a Vancouver Island lifestyle for my wife and myself with not many extravagant desires. I'd say we're on track, but it may involve some belt-tightening. I just turned 56 and doubt I will be working full time any more. This lifestyle is just too easy to get used to and I think I'd rather sacrifice a few luxuries than go back to fighting that 9 to 5.

Fortunately, our net income ($56k) was higher than our expenses and our net worth statement came out to an increase of $54k over the year.


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## OnlyMyOpinion

dbII -nice summary. Our monthly rollup on wine and beer is sometimes scary too, but its discretionary as well. Cdn Tire and Home Depot have to be necessities (I tell the wife).
Wondered if Telus was mobility or land line - we saved with a home bundle (Telus tv, land line and internet). Land lines are becoming an extinct species these days though.
We went from 2 to 1 vehicle when a deer graced the front end of the Malibu a year ago. A thoughtful sacrifice by the poor critter though as it has materially reduced monthly car costs. Look out on our street and there is not one other neighbour with only 1 vehicle - 2, 3 and even 4 per household is the norm.


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## cannew

Our average expenses are:

Accessories $1,200
Auto Expenses $4,500
Fees $ 200
Clothing $1,700
Entertainment	$4,300
Food $6,000
Gardening $1,500
Gifts $1,800
Holidays $25,000
Home Exp $1,500
Insurance $2,500
Medical $1,500
Pet Expenses $ 500
Taxes $6,000
Tel\Cell $1,500
Utilities $2,500
Total $62,200 yearly

The Holiday is high because we usually spend 4 month in the US during winter.

Not too concerned about cutting expenses, in fact I expect costs will continue to rise and we'll end up spending more each year. Thank goodness for our Rising Dividends. ps: we don't have any pension other than cpp & oas.


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## marina628

Nemo2 said:


> It's not where you travel, but _how_ you travel........we don't care for hotels, so we rent cheap studios/rooms with kitchen facilities through sites such as HouseTrip & Wimdu, often in 'non-touristy' sections; we're not 'restaurant people' and prefer preparing our own meals, (which gives us exposure to local markets)........we like to amble around cities and look at neighborhoods and the exteriors of old buildings, (we avoid 'entry fees' whenever possible).......sometimes we'll buy a transit pass and ride around, getting off and on, and checking out various areas.
> 
> On the cruises, (and my wife just checked the latest price for the transatlantic repositioning section of our next trip.....they're now asking twice what we paid), we get the cheapest cabin, (it's only used for sleeping anyhow).
> 
> We don't pay extra to frequent the 'speciality' restaurants, don't use the (expensive) spa, don't drink, (we used to have wine with dinner but some time last year my wife went through a period of unexplained heartburn, so in an attempt to isolate the possible cause we cut out certain things.......after a couple dry weeks we both said that we couldn't care less if we drank again.......the only one we've had in ages was one glass aboard ship on her birthday last October).....which brings us to the offered 'specials' aboard...$50US per day, per person, for 'unlimited drinks'.......we don't piss money away at the casinos (I'd hazard a guess that winners, such as Marina, are few and far between)......we figure there are people who travel on the same ships, visit the same ports, see the same oceans/seas that we do, and we'll bet they end up paying ten times what we spend.
> 
> Bottom line...we spend less and travel more....without feeling at all deprived.
> 
> 
> Edited to add: My wife is currently checking out CruiseCritic, (a CMF type site for cruisers), and noted that someone paid $170US for a massage......(perhaps it was Al Gore?)


I don't go to the casino on the cruise ships at all ,maybe to play penny slots for a few minutes before bed and my last cruise my spa bill was $900 so hubby got smart and he rubs my feet for a lot less lol.


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## Nemo2

marina628 said:


> my spa bill was $900


Our 15 day Civitavecchia (Rome) to Ft. Lauderdale repositioning cruise last Fall, (not including airfare, but covering the base cruise cost plus all taxes/obligatory gratuities), cost $1,571 for both of us, ($875.50 per person). :biggrin: (Plus we received a $75 onboard credit.)


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## marina628

Nemo Oasis of the Seas Massages cost $75 more than any other cruise ship I went on ,75 minute was $199 plus 18% tip ,if it were nto for the fact their pillow were horrible I could have survived but had to go every other day  It was nice to do the ship but one I won't be booking again.


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## Nemo2

marina628 said:


> Nemo Oasis of the Seas Massages cost $75 more than any other cruise ship I went on ,75 minute was $199 plus 18% tip ,if it were nto for the fact their pillow were horrible I could have survived but had to go every other day  It was nice to do the ship but one I won't be booking again.


It's also, @100k tons, too big a ship for our tastes......even the 80K tonners we've been on in the past year, and are scheduled to sail with in a couple months, are way bigger than we'd like..........the French vessel we're booked on in the Spring @~ 47K tons is still too big.......much prefer those in the 20K ton range.


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## My Own Advisor

$1,600 for a couple on a 15-d cruise? That's crazy good Nemo2.


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## Nemo2

My Own Advisor said:


> $1,600 for a couple on a 15-d cruise? That's crazy good Nemo2.


The Fall cruise is a back-to-back...(Copenhagen - Copenhagen loop, followed by Copenhagen - Miami); for the 14 day Repositioning portion we paid $399 p.p. plus taxes/gratuities for a total of $1,353.80...(latest price for this segment is $752 p.p. plus taxes/gratuities).

http://repositioningcruise.com/index.cfm


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## Canadafan

*Retirement expenses?*

This question is IMHO one of the most important and most elusive in study material.
there are shelves of books published on how much to save to accomplish XYZ pot of $$ at various ages. what is missing are the data on typical needs.
I have done various investigations , including Stats Canada which publishes numbers from sensus reports.
i have had frank discussions with retirees. And the obvious self examination of existing expenses.
Bottom line: Have come up with a substantial range, although comon.
That being a net income range of $40,0000 to $50,000: Including all-in , even randome things that always come up.....Excluding any vacations.
Meaning, on the higher side, assuming an annual vacation budget of $10000' one would need $60,000/ year.( net after all taxes).
Alternatly on the lower side and assuming a $3000 vacation budget, would be $43,000 / year.
I would like to hear comments and validation of these numbers.
keep in mind these are my bundled averages and obviously soem could be less and some could be more.


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## Canadafan

*yearly expenses at retirement*

Many ways to calculate and evaluate. 
I even looked into stats Canada.
Bottom line came upwith a range of ( net numbers)
$40,000 to $50,000 /year, plus travel.

For a low of say an enexpensive vacation of $3000 at the low end numbe rmeaning $43k/yr all in
To say: a $10000/yr vacatin budget and the top end of $60k/yr all in


Obviousluy these are a range of what I have found to be an average. Yes one can be lower and the upper end is limited only by how you want to live.
My numbers assuming a retired couple, living in a house with no mortgage.

Comments?


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## PrairieGal

I am budgeting $30,000/year in today's dollars. That is for a single person with a mortgage free house, and my pets will be gone by then.


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## rikk

On 1jan14 I put $20K into a savings account from which I've withdrawn my expenses over the year ... I've been guesstimating my yearly expenses at about $20K, seemed an easy way to check. I topped that up with $5K a month ago and today have a balance of $3.9K. Assuming no contingencies (none so far), I expect my 2014 expenses will be about $22K. House, jeep, boat paid for ... my wife and I share most expenses. House cost including cable, internet, landline, pay as I go is about $1300/month. Was a quiet year for me ... e.g. local travel, bars, pool, beers, bands, outings, lots of time spent on the boat in the 1000 Islands.


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## cougar

For the past 4 years since I retired we have been living on $50,000 or less ( house is paid for but still raising 15 year old daughter-so for the 3 of us). This figure does include travel as well-and until this year when my daughter started high school it also included private school fees. So I expect once our daughter leaves home(RESP fully funded) then we should be able to live on 50,000 or less per year in today's dollars. I find that $4,000+ dollars per month goes a long way since we don't live an extravagant lifestyle-i.e. share one small car, eat out occasionally, travel frugally( for eg we often do house exchanges) but have also paid for cruises etc. We tend to be frugal shoppers for groceries etc and save the extra for travel. I think it all depends on the lifestyle you want-if you eat out everyday, drink wine everyday, take expensive trips or need 2 vehicles in retirement you may need more.


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## 1980z28

Will retire in two years,now 54

Purchase a total of 126 acres 4 to 5 years ago,built house on 26 acres ,not finished yet maybe 75%,own well and septic system

It will be in around 15 to 20k max cash needed

Grow root crops,fish,1 moose(hunt),chickens,etc also have 2 GSD`s

Heat will cut my own wood,have 50 acres of trees

Will also do a small hydro generator and storage batteries

Dont drive much maybe 5 k per year for the last 10 years

NO KIDS living at home I hope


----------



## LBCfan

I thought my expenses would equate to what I spent, but I guess I could be wrong.


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## My Own Advisor

cougar said:


> I find that $4,000+ dollars per month goes a long way since we don't live an extravagant lifestyle-i.e. share one small car, eat out occasionally, travel frugally( for eg we often do house exchanges) but have also paid for cruises etc. We tend to be frugal shoppers for groceries etc and save the extra for travel.


That seems to be a nice goal for us, $4k in today's dollars after-tax. With no debt, our current incomes could go a long way but we have this darn mortgage thing in the way  Hopefully another 10-15 years of diligent saving and my wife and I will "be there"!


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## RBull

Nemo2 said:


> Our 15 day Civitavecchia (Rome) to Ft. Lauderdale repositioning cruise last Fall, (not including airfare, but covering the base cruise cost plus all taxes/obligatory gratuities), cost $1,571 for both of us, ($875.50 per person). :biggrin: (Plus we received a $75 onboard credit.)


Do you mean $1751? Are your numbers transposed or is your pp price wrong?


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## Nemo2

RBull said:


> Do you mean $1751? Are your numbers transposed or is your pp price wrong?


Oops....incorrectly transposed. :redface: $1,751 it is/was.


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## RBull

Well we've been retired for just over 6 months now so thought I'd give an update. It's all good. 

For this period we've lived on approx. $28K actual which is less than planned amount (36K), although we do have plans to "burn" the leftover soon with more southern sunshine! We're living well on that with lots of travel, since all of our normal home, autos and living expenses totaled roughly half of this amount (14K). 

In fairness this is too short a period to truly assess living costs, however so far we are encouraged that our planned $72 net annual income/expenses will afford a nice lifestyle. 

However we will be flexible with our withdrawals and when there is a market pullback plan to reduce the discretionary part of our spending to help preserve capital, since we are mid 50's now. 

Good luck to all those working towards your goals and everyone already there.


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## RBull

Nemo2 said:


> Oops....incorrectly transposed. :redface: $1,751 it is/was.


LOL, still a great price! 

We regret now that we didn't book the B2B TA on our recent Rome trip. Would have been $1600 for us for the 14 nights too!


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## My Own Advisor

That's pretty good RBull....living on that amount and that includes travel. Frugal but certainly not cheap. Great position to be in, in your mid-50s. I hope to get there one day. 

No doubt no debt in retirement is key.


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## Nemo2

Our net expenditures for the year are ~$40,500......which includes a trip to Budapest/Paris, 28 days on two BTB cruises plus 3 days in Copenhagen; also a deposit of $700 on next April's repositioning cruise from Santo Domingo to Barcelona, flight from Toronto to Santo Domingo, accommodation in Lisbon and Oporto, and the flight home Oporto-Toronto.


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## RBull

My Own Advisor said:


> That's pretty good RBull....living on that amount and that includes travel. Frugal but certainly not cheap. Great position to be in, in your mid-50s. I hope to get there one day.
> 
> No doubt no debt in retirement is key.



Thank you very much My Own Advisor. You're always quick to respond and supportive in your comments. I am sure you will one the folks meeting their goals and enjoying the fruits of your planning and discipline. 

Frugal but not cheap probably describes us very well. 

For 6 months so far this has worked well. We spent ~13K on travel during that time, however burned an additional $2.5K flying on points. A good amount of our time is idled away figuring out what we want to do and where we want to go! $20-25K annually may be a reasonable travel amount to expect in the future. 

Debt was key for us; retiring it in 1995 and then just lived well but below our means and saving. Our peak incomes were much higher for quite a few years until our mid 40's, so we've had diversity of income levels, and now projected incomes are a little over half of then. Still we can live well on this and it's all working out very nicely so far. And we're very thankful to be here.


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## My Own Advisor

@RBull,

I learn from folks like you, HP, Royal, Donald, Daniel, etc. the list goes on in this forum and have tailored our financial plan accordingly.

With good health, I hope to enjoy the fruits of my planning ways. Time will tell 

I figure if I don't take an opportunity to listen and learn from others, I will not only make the same mistakes (others have made) but it will also not force me to think, act and behave for myself. That's a loss. I've been given a brain, might as well use it.

I hope to be debt-free in another 6+ years. That will be a HUGE burden off us. That puts us in our mid-40s. We are investing, killing debt and trying to have lots of fun (i.e., dinners out, travel) at the same time. It's quite the balance but I think we are getting there.


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## RBull

You're in great shape and doing exactly what I do/did. Balance. 

Live well today and plan/execute for the same in the future. Be in control and make good decisions. Keep learning.





My Own Advisor said:


> @RBull,
> 
> I learn from folks like you, HP, Royal, Donald, Daniel, etc. the list goes on in this forum and have tailored our financial plan accordingly.
> 
> With good health, I hope to enjoy the fruits of my planning ways. Time will tell
> 
> I figure if I don't take an opportunity to listen and learn from others, I will not only make the same mistakes (others have made) but it will also not force me to think, act and behave for myself. That's a loss. I've been given a brain, might as well use it.
> 
> I hope to be debt-free in another 6+ years. That will be a HUGE burden off us. That puts us in our mid-40s. We are investing, killing debt and trying to have lots of fun (i.e., dinners out, travel) at the same time. It's quite the balance but I think we are getting there.


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## pwm

I will have been retired for 10 years next April. Our living expenses last year (2013), were $30k, plus $10k income tax. Total B4 tax income was $95k, so the surplus gets reinvested. 

My opinion: We don't need any more tax breaks for seniors, it's the young working families that need the help.


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## Jon_Snow

MOA, you definitely have your head on straight. 

It's early days yet for my own retirement, but expenses that I anticipated to be between $2500 and $3000 have actually been much closer to $2000 monthly. And it feels like we are not being particularly frugal. Just living a healthy lifestyle without excess... I'm fitter than I've been in ten years, cooking and cleaning with a smile on my face while my wife still chooses to work... off to our warm weather place (which costs us nothing apart from some cheap airfare) in a few days. It's been wonderful. 

Without debt or kids... well, we have SUPREME control of our expenses. We could pare things down further if needed. But with my wife still pulling in 6k every month, investment income over 4k there is obviously no need. If anything, we are going to have to force ourselves to crank up our lifestyle or else we will be leaving a FORTUNE to heirs that DON'T EXIST. :biggrin:


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## steve41

Surely this question is the wrong one. Shouldn't it be....

_"Based on my age, accumulated RSP/TFSA/nonreg, outstanding loans, tax regime, expected ROR, pensions and my most optimistic end of life estimate, what (optimally) should my yearly expenses be?"_


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## Jon_Snow

I think the original question is just fine. This is meant to be a "in the ballpark" type of discussion I think. Steve, we know you love the minutia type stuff.


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## fraser

nemo2.....if you are spending time in the beautiful Duoro Valley you might want to look at Casa Cimeira. It is a wonderful B&B. And if you rent a car avoid renting from Guerin!

Our after tax budget included travel. We were right on for the past two years. This year ending next month we will be slightly over budget. Time for a slight increase. We use the cash method-simply add up our ATM withdrawals and epayments from our bank statement. We do not include CRA payments in our budget.


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## RBull

steve41 said:


> Surely this question is the wrong one. Shouldn't it be....
> 
> _"Based on my age, accumulated RSP/TFSA/nonreg, outstanding loans, tax regime, expected ROR, pensions and my most optimistic end of life estimate, what (optimally) should my yearly expenses be?"_


Yes, this is how I interpreted it and accordingly how we plan and are living.



fraser said:


> Our after tax budget included travel. We were right on for the past two years. This year ending next month we will be slightly over budget. Time for a slight increase. We use the cash method-simply add up our ATM withdrawals and epayments from our bank statement. We do not include CRA payments in our budget.


We use the same cash method.


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## steve41

So "What should my expenses be?" equates to "What are my expenses?" Interesting.


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## Nemo2

fraser said:


> nemo2.....if you are spending time in the beautiful Duoro Valley you might want to look at Casa Cimeira. It is a wonderful B&B. And if you rent a car avoid renting from Guerin!


Looks lovely, (logged onto Trip Advisor and checked out the pics).......it's been about 26 years since I was last in Portugal, and my lady's never been......this trip we're traveling light and getting around by train & bus mainly, (although we might consider a daily car rental if needs must.........what were the problems with Guerin?).

Here are links to the places we've already booked, (Lisbon costs probably about 2/3rds of the Casa Cimeira price, and Oporto about 1/3rd.......frugality is our middle name).

Lisbon Studio
http://www.housetrip.com/en/rentals/343131?destination_id=160294&destination_name=Lisbon

Oporto
https://www.airbnb.ca/rooms/3852493?guests=2&s=kH9-


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## Nemo2

steve41 said:


> So "What should my expenses be?" equates to "What are my expenses?" Interesting.


_ "...no doubt the universe is unfolding as it should."_ Desiderata. :wink:


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## steve41

Yabbut.... it unfolds differently for Larry Lunchbucket than it does for Donald Trump.


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## Nemo2

steve41 said:


> Yabbut.... it unfolds differently for Larry Lunchbucket than it does for Donald Trump.


"A place for everything and everything in its place." (Homilies abound today. :wink: )


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## fraser

If you get a chance take a drive for at least one night in the Duoro Valley. We picked up the car at the airport. Brakes were iffy. Not up to the usual standards. Yes, B&B's are more expensive in the valley compared to Porto. This one remains in our memories as one of the best. We ended up high at the top of the valley with six other couples from around the world. And this place was difficult to find. They put on an amazing optional dinner. In our experience worth the splurge.


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## Nemo2

fraser said:


> If you get a chance take a drive for at least one night in the Duoro Valley. We picked up the car at the airport. Brakes were iffy. Not up to the usual standards. Yes, B&B's are more expensive in the valley compared to Porto. This one remains in our memories as one of the best. We ended up high at the top of the valley with six other couples from around the world. And this place was difficult to find. They put on an amazing optional dinner. In our experience worth the splurge.


'Tis added to the bucket list.....our time may all be pretty much accounted for, but it does look great, and if we get the opportunity.....

Thanks for the tip! :encouragement:


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## cougar

I was just reading an article in the December Moneysense magazine called the Cost of Happiness( you might find the article online too) According to this article an average retired couple according to Statscan spends $57,415 per year, below average would be $42,600 and the moderately wealthy would spend about $101,270. Interesting food for thought to compare each couples spending categories to your current( if retired) or projected spending if retiring in the future.


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## My Own Advisor

I read the same article. In the end, it's all about your lifestyle, both during your working years and in your retirement years. This article was more reinforcement of that.

I am strongly reconsidering my current lifestyle, work is good sometimes, but it would be nice to work on my own terms. When I get enough capital saved to do so, I will. 

No doubt retirees can chime in on this one in here, how good it felt when they had "enough money" or what some people call it: [email protected]#$ you money


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## fraser

I think that those 'average' numbers are meaningless. There are simply too many variables in play.


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## RBull

Yeah, I think Fraser is right although it was interesting looking at the average retired spending and the 2 real world examples, along with category spending. I didn't realize taxes were included in the spending numbers quoted above, until I read the article. That's not something I included up thread. 

I can't imagine taking the time to categorize all of our spending for a year. I started that after reading the article and quickly realized it would take many hours and maybe days to compile, so I didn't bother. LOL I've never done a detailed personal budget like that in my life. However I could come close in analyzing our spending off the top of my head.


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## fraser

We do not categorize our spending. Nor do we include income tax.

Ours is a very simple approach. We use our bank statements. We add up our epayments and our cash withdrawals to arrive at the number. Have done this on a monthly basis for the past three years. It takes all of five minutes. 

We start the next month with an accumulated surplus or deficit from the prior month and close off at the end of the calendar year with a total budget variance number. We use the cash method even though we have prepaid some 2015 travel expenses. Nor do we period adjust auto/ condo insurance premiums.


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## Beaver101

Goal is to reduce expenses to the basic income exemption amount at retirement ... will be difficult without any planning ahead of time though but achieveable since work expenses would be drastically reduced.


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## gibor365

fraser said:


> I think that those 'average' numbers are meaningless. There are simply too many variables in play.


That's right! Usually we travelling every year 2-4 times abroad and only on travel can spend 10K and can spend more than 30K.... on sport and recreation we spend now 20-25K .... we used to spend on food about $1,000 - 1,500 per months,,,,,now trying to loose weight and spend less.... thus every year is very different from another... the only think I watch that our expenses is not exceeding our income


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## gibor365

Just did some calculations.... considering that when we gonna be retired or semi-retired, kids will be living independent life, to live same lifestyle like now, we'll need around $70,000 - 80,000 in annual income after taxes...
The major saving will be on trips abroad , esp to Europe ...because now we can travel only when kids not in school/university when prices are the highest.... also 2 weeks trip to Europe as a couple will be 30-40% cheaper than same trip with 2 kids....


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## rikk

Ok, it's end of 2014 ... I like many above aren't up to tracking all my spending, there are better things to be doing imo. As posted somewhere above, at the beginning of 2014, I opened an additional savings account with PCF (open as many as you want) and deposited $20K to be used for 2014 spending, which I did. Also as posted somewhere above, I deposited an additional $5K a few months back because it was looking like I might hit the $25K. I'd guesstimated my 2014 spending at ~$22K using past guesstimates ... it totaled $22,293.10. The total isn't relevant for discussion, just suggesting a really easy way to find out about what you're spending and so baseline about what you'll need in retirement ... enjoy the new year :cheerful:


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## My Own Advisor

Your point is a good one Rikk, find a baseline and understand that, that is what is important, not all the details in the weeds.


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## john macintosh

I use Mint to track my expenses. It's a free online account consolidation service provided by Intuit. It automatically categorizes all of your spending. 

I've been doing Mint for 2 years now, with 28K spending in 2013, 27K in 2014. Seeing my patterns after a few more years will really give me confidence in how much money I'd want in retirement. I just go with the default categories, and don't get super-fussy about trying to re-categorize, for example, a Costco purchase into grocery, pets, clothing, and household (and alcohol, if I'm at a US Costco). Still it's good enough that I know that my household's basic needs to pay the bills, maintain the house, and provide food are about $18,000 a year, for 2 adults. "Basic" still includes some arguably non-essential items like pets, cell phone, and internet. The remaining $9000 that we spent last year went to a car (gas, insurance, snow tires, etc.), a $1600 bike, hobbies, gifts, a 1 week trip to Florida, and a $2000 basement renovation (upgraded flooring and bit of drywall). 

My estimate: $37,000. I figure with 18K for basic needs, 9K for optional frills, we are totally happy. Retirement is definitely going to involve winter snow-birding, though, so I'm going to say an additional 10K a year to rent a place for 3-4 months every winter. We might partially offset that by renting our own place when we're away (x-country ski athletes, I'm looking at you), and it's also possible we'd buy a place if we found a location we loved and the numbers worked out better than renting.


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## RBull

My Own Advisor said:


> Your point is a good one Rikk, find a baseline and understand that, that is what is important, not all the details in the weeds.


If you're on top of your money like most people on this site would be its simple to know where your money goes. I would never take the time to input all transactions to categorize them, as it has no purpose/benefit to us. 

In retirement all basic expenses are even simpler (with no debt hopefully) and no work related expenses. The variable for folks with the means and the desire is the discretionary spending. We just decide how much we want to spend in advance of the year; in addition to pension income and ensure we have this amount in a savings account. And then spend away.


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## piapetersson

*Investment for future*

Simply when one gets retire, the only thing that worries him/her is about future of their children,grandson etc. To enjoy retirement to its fullest without any worries is to invest earnings in a way that returns you benefit always.


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## fraser

Have to agree with RBull. Inputting and categorizing expenses for us would be a big waste of time. We are on top off our expenses and sources of income.

We simply ensure that our retirement expenses are less than our retirement income, net of tax and our equity us growing faster than the rate of inflation-preferably much faster.


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## janus10

cougar said:


> I was just reading an article in the December Moneysense magazine called the Cost of Happiness( you might find the article online too) According to this article an average retired couple according to Statscan spends $57,415 per year, below average would be $42,600 and the moderately wealthy would spend about $101,270. Interesting food for thought to compare each couples spending categories to your current( if retired) or projected spending if retiring in the future.


I looked at the article and the Statscan survey. The article assumed that the seniors in the Statscan survey were retirees which it shouldn't. Just because you are 65 or over doesn't mean you aren't still working.

Secondly, you can go to the Statscan results and filter it by region or even some specific cities.


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## jimbob.seeker

I'm a little late for this party. I currently have no debts. In early 2014, I tallied up my expenses from the previous year and I estimated what my wife and I would need to cover all our expenses in retirement including maintenance on my house and car, a very modest annual vacation, entertainment, etc. The monthly total was $3,500 - $4,000 for just my wife and me. So the annual expenses would be $42,000 - $48,000.


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## kcowan

I have completed my actuals for 2014 and our expenses are only 58% of what they were in 2006 before we purchased our snowbird property in Mexico (inflation-adjusted). Who knew? We can really live forever! If I include the amortized capital costs (20 years) of the condo and the car, it is 66%.

Such savings were never a part of our decision to purchase.


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## My Own Advisor

Still well within your budget it seems kcowan, good on you.


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## kcowan

Thanks. I post this to make sure people consider all their options when planning for retirement. Snowbirding is often considered an extra cost but it may not be.


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## janus10

kcowan said:


> Thanks. I post this to make sure people consider all their options when planning for retirement. Snowbirding is often considered an extra cost but it may not be.


Any chance you could quantify where the savings came from and how many snowbird weeks / months contributed to that dramatic benefit? I doubt my wife could be easily convinced to vacation in Mexico, let alone snowbird, but perhaps there is another location comparably priced.


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## kcowan

janus10 said:


> Any chance you could quantify where the savings came from and how many snowbird weeks / months contributed to that dramatic benefit? I doubt my wife could be easily convinced to vacation in Mexico, let alone snowbird, but perhaps there is another location comparably priced.


When we did the detailed planning, we had a friend who moved from Vancouver to Mazatlan and were ab;e to get detailed information on items like insurance and eating out. We had the benefit of weekly sales flyers on line from Safeway in BC and Soriana in Mexico so we could compare many items directly. This work was done in 2003 when the there were 7.1 pesos to the C$. Since then the peso has stayed in the range of 12+-.5

The other factor is that Vancouver is pretty expensive but that was our reference point. I would suggest that many snowbirds would find the same thing in Florida, just not as dramatic. Of course now there are sites like Numbeo:

COL Comparison


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## kcowan

The other thing is that we were purchasing a property for $200 a square foot versus Vancouver at $1000 a square foot, and the property here was much more charming than the glass boxes that they are flogging in Vancouver.


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## Jon_Snow

That a great breakdown of COL differences between the two countries...

Confirms what I've always known - our Baja life is MUCH cheaper than our life in B.C...it's not as cheap down there as it used to be, but if you know to avoid the places catered to "gringos" and do what the locals do...


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## Itchy54

We head to Mexico for a month in the winter and it is cheaper than home, but we still have to cover our house expenses when we are gone (heat, electricity, cable, phone ....those are not worth shutting down for a month) The biggest cost is the flight. Where we go we walk everywhere, so no transportation costs. Fruit and veggies are a good deal. We eat out a bit and know where to go for a good deal and good food. The best part is being completely stress free....

Our condo rate included electricity, satellite tv from Canada , Internet ,gas. Huge bottles of water (the big blue ones)were 20 pesos (less than$2). The beach was a short walk away and there was a great pool. There was a washer and dryer. We will always rent as we like to go to different areas. Speaking with some owners last year made us happy about that, owning seemed like a bit of a hassle especially dealing with condo associations. It's easy to buy, hard to sell.

Going down for longer periods would be cheaper....long term rental rates and being able to cut off cable and phone at home would make a big difference. It would still be cheaper to stay home but who would want to do that! Goodbye snow and over rated holiday season!

Already planning next year....


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## JB99

Here is what I currently spent, note I also budget $350 a month for other stuff that my come up


House Costs - 
Property Taxes 380.00 
Hydro 72.00 
Hot water tank 33.00 
Gas and Water 140.00 
Bell Cell 164.00 
ADT 44.00 
Rogers cable 65.00 
Rogers Phone 42.00 
Rogers Internet 58.00 
Insurance House 35.00 
Sub Total 1,033.00 

Monthly Fixed Costs 
Car Loan 500.00 
Investment LOC 100.00 
Insurance Car 158.00 
Sub Total 758.00 

Discretionary Spending 
Groceries 800.00 
Transportation 200.00 
Entertainment 200.00 
Living 884.00 
Health 25.00 
Newspapers 50.00 
Booze 50.00 
Sub Total 2,209.00 

Total Monthly Costs 4,000.00


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## Dufresne

I've looked at our budget, and eliminated/reduced the current expenses ($8500/mth) related to the mortgage and kids, etc. We can maintain our lifestyle, once we are no longer paying off debt, saving, or raising children for $5000/mth. I'm glad to see that others are living well in retirement on the same, or less.
I believe that we are on track to accomplish this by my 60th birthday, 9 years from now. I'm really working on my fitness and health to ensure that my older years are both financially comfortable and healthy.


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## RedRose

Just to add a note to those leaving for the Winter months. This is the first time I Wintered for 3 months.
I had Bell suspend my services for a cost of $50 and no bills for 3 months. I will see what they pro rate when I return.
I also suspended Rogers with no charge but a $5 a month fee for the 3 months.

I could have taken the insurance off the car but left it on for peace of mind although it is stored in my garage.
I turned my heat temp down and my hot water temp and the water off, so hopefully those bills will be lower too.

I live alone so my COL is very low. I own my house so I just have the taxes of $400 a month.
I find I can live mostly on CPP OAS and a small pension.
I do have my investment funds but I haven't touched those or the dividends they are making yet.
I do need to maximize these funds to provide a steady income stream for my future.


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## kcowan

RedRose
We used to go for 2 months. Then in 2008, we decided to go for it for 6 months. We rent our place for 6 months through Remax so do not turn anything off.

The net effect is that our COL had declined significantly yet our quality of life has improved.

Each year our nest egg grows so we can live forever. Or make a big contribution to charity...

It takes some planning to do this but we did home swaps for 5 years so got used to securing important things.


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## OldPro

I keep skipping past this thread because I think it is such a laugh. No offense intended Edgar.

Here's the thing edgar. After how much time do you want to know what I expect my yearly expenses to be? What someone thinks they will spend in year one of retirement tells you what? What they are spending after 5 years tells you what? No one can predict the future and that is the time period you really have to worry about, not how much someone is spending today.

How's this. In my first years of retirement I spent around $12k per year (say 1990-95) but I was living relatively cheaply on a Greek island back then. Then later (say 1999-05) I spent around $60k per year but I was living in the UK where the cost of living is relatively expensive and I was vacationing in the rest of Europe quite a bit. Lately, (say 2006-2014) I've been spending between $30-50k per year in Canada including travel.

Now edgar, from start to finish ignoring the high spots, that's an increase of 300% over 25 years of retirement. Are you prepared for that? Don't worry about how much people are spending or planning to spend today edgar, that is no 'indication of future performance' as they like to say in investment advertising.


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## cainvest

OldPro said:


> Don't worry about how much people are spending or planning to spend today edgar, that is no 'indication of future performance' as they like to say in investment advertising.


It is valid providing you are planning to do about the same when retired. You can at least use that as a baseline, subtract work related expenses that disappear and add in hobby or other planned expenses to get you in the ball park.


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## OnlyMyOpinion

OldPro said:


> I keep skipping past this thread because I think it is such a laugh. No offense intended Edgar.


Being post #100 suggests that others have found the thread useful. For many, the question of 'how much I should expect to spend in retirement' goes into estimating how much they should save. The more feedback the thread gets, the more comfortable OP might be with their planning. I'm sure they will appreciate knowing you spend $30-50k/yr in Canada after 16 years of retirement (a range I've seen from several sources).
Clearly, as you point out it depends entirely on where, at what stage,and how you plan to retire. Maybe the thread has allowed some to decide they aren't saving enough (and so need to be more deliberate in understanding what something really costs them beofre they buy it per "Retirement and Financial Independence, do you have enough money?"). Maybe others have decided they'll just rachet back and live on $6k/yr


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## RBull

OldPro, it's great the thread gave you a laugh, and that you provided some information that might help others. 

I got the same chuckle from your post about the guy who was FI living on $6K per year.


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## My Own Advisor

I suppose people _could_ live off $6k per year. But why?


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## OldPro

Cainvest, it is ONLY 'valid' for today, it is not valid down the road was my point. Edgar can look at his own current costs and know what it will cost him if he is, "planning to do about the same when retired." He doesn't need to know what others are spending or plan to spend in their retirement if they are,"planning to do about the same when retired." 

OnlyMyOpinion, no doubt some people find just about any thread useful in some way. I have now been retired 26 years, not 16 and what I hope edgar and others get out of what I wrote is that my spending has varied by 300% (should have only said 150% as I started as one person and now am married) over that time. Don't look at the $30-50k I am spending now and think, 'hmm, that's still OK after 26 years, I can do that'. Look at the difference between what I planned for and had when I started and where I am now 26 years later.

I started retirement with $20k (one person). That was enought back then. But I'm now at say $30k (one person). So for someone looking at retirement today, what I am saying is my costs have increased by 50% over 25 years. Therefore, my question is to anyone looking at retirement today, are you planning for your costs to incease by that kind of percentage? Do you have inflation covered in your plan that will increase your income in retirement if you live long enough? See what I'm saying Only? Pensions that are not indexed linked (which applies to a lot of company pensions for example) aren't going to increase over time. What's more, the earlier you retire (I was 43) the longer you are likely to live and the higher your costs will become. So again, what you need today, 'is no indication of future performance'. You must not only look at what is enough today but also at what you might need in the future. Nothing I saw 26 years ago could have told me what I would need today. That's crystal ball time but you can reasonably expect your costs to increase over that kind of period of time.

RBull, leave the $6k out of it. The only connection would be that if someone doesn't plan for costs to increase, they may well end up living on the EQUIVALENT of $6k in 1992. 

What would be of real interest (or should be) to those planning to retire or in the early years of their retirement, is hearing from a lot of people with 15+ years of retirement already and how their costs have changed. I see the same regular posters here and there's nothing wrong with that but I get the impression that most are near retirement or fairly new retirees. Not many with long term experience of retirement. Kinda like consulting a lot of new mechanics about your car instead of mechanics with 20+ years experience.


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## OnlyMyOpinion

OldPro - I agree with you. Our recent experience has seen our parents in their mid-80's double their monthly living expenses by choosing to move into a seniors apartment due to mobility and cooking issues. Fortunately the sale of their home allowed them to do this. It is not something they had contemplated just 10yrs ago when they moved into their new house. To us it reinforced the themes of spending wisely, paying off debts, saving as much as reasonably possible for your retirement, and having flexibility built into your plans.


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## cainvest

I understand what you're saying OldPro, and yes, it's a best guess situation. The way I look at it is if I can get a baseline on my costs it gives me a "ground floor" estimate of what I'll need in the future and of course, inflation (i use 3%/yr) is factored in. What I plan to do in retirement could be vastly different (time and money wise) from others but it's good to see what variables others put into their equation as well as what plans they foresee. I know I'm fine money wise as I save much more than I need due to my frugal lifestyle and I am by no means starving myself for a potential future. I live a balanced life that fits my current needs and what I don't spend I toss on the retirement pile.

I know a few people that have been retired for a while and live vasty different lifestyles money wise. In both instances retirement is no different than the working years in that you need to have a budget based on what you have saved, hopefully its enough to meet your needs/wants. I have a number of hobbies, most are time based and not expensive to do so I can plan ahead knowing they won't cost me much. So will I change my mind in the future and decide to do a high cost hobby or activity ... maybe, who knows, but I'll have to look at my budget to see if I can when/if that time comes.


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## Canadafan

*What you need in retirement*

The question is valid , and the answers have invoked very relavent conversations.

To say that "today has no comparison to the future is not totally correct".

One only needs apply a histroical inflation rate, with some margins of error and you will be in the ball park.
I agree 100% that $20K in mid 1970s would need tripple that today, to account for inflation.

Keeping in mind 1970s & 1980 were the historical peaks of inflation. 
Our very long term average is around 2.5% and reently we have been in the 2% range.
So....If one used a 3%/yr/yr increas for targets, you would be both reaonably close and safe 20-30 years out.

Inflation must be built into the projection.
Back to the orriginal question: Most people do not up and move from one part of the world to the other when retiring , without major forethought and planning: So that argument is not even worth having.

My 2 cents worth: After months of calculating and interviewing. For my lifestyle. House paid off,no kids at home and $10K/year for travel, and reasonable car replacement ( when they wear out): $65,0000/year ( net) is ample. 
In 2015 Dollars. Planning forward at 2%/year inflation.
That number has buffers built in for "things that come up", as well as some $$$ in additional savings for "special things", that one can not even predict today....looking 20 years out.
One take away from the previous post "cant predict the future etc" , one should IMHO retire ( if possible) , on the safest edge of calculations.
For me the numebr is 65K , in reality we could get by on just under $50k.


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## RBull

OldPro said:


> RBull, leave the $6k out of it. The only connection would be that if someone doesn't plan for costs to increase, they may well end up living on the EQUIVALENT of $6k in 1992.
> 
> What would be of real interest (or should be) to those planning to retire or in the early years of their retirement, is hearing from a lot of people with 15+ years of retirement already and how their costs have changed. I see the same regular posters here and there's nothing wrong with that but I get the impression that most are near retirement or fairly new retirees. Not many with long term experience of retirement. Kinda like consulting a lot of new mechanics about your car instead of mechanics with 20+ years experience.


I was only thanking you for the laugh and not referencing $6K as anything to do with this thread otherwise. 

Yes I agree someone should always plan for inflation in their retirement. I use 2.5% in mine to age 95 and have built in a fair bit of discretionary spending so if things go haywire we have a good buffer to reach fixed/essential spending. Retirement planning 101, but people need to start somewhere with a base estimate. In reality most of that decision has to come from the individual themselves. They (should) know how much/what/where they spend money on and what is important to them in retirement. My number and your number isn't going to be right for them. I also suspect most people will be retired in Canada (or state otherwise) and not in the UK or Greece so the amount of your variability suggested may not apply. 

Certainly posts from those with more years in retirement may even have more value/experience/relevance. On that I suspect most would agree. 

I can only offer my experience in planning for and into the short retirement experience we have, as well as anything I have gleaned from friends, parents etc. It is probably easier today with the internet and more retirement planning tools available for people today than when you retired 26 years ago.


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## mind_business

I think OldPro and I are quite different. There are those that can take more risks than others, get through life with less planning than others, and trusts that all will be OK. I don't see those traits as weaknesses, but rather strengths to help you get the most out of life. Myself on the other hand am a planner, risk analyzer, and need to be relatively sure that all will be OK based on calculated risks ... to the nth degree. 

I can relate to RBull's post above. We both have assumed specific living costs at retirement, along with taking a very conservative approach to make sure our money will last until we're 95 ... again with calculated assumptions on inflation, etc. This type of planning, along with those stories I've read here and elsewhere as to what people can expect to spend during retirement, have helped formulate my own assumptions ... which are constantly evolving as I change over the years.

Being in my late 40's, my plan is targeted for FI by 55. I have no idea if I will retire at that time, but it does offer many freedoms of choice when the time comes. I'm the type that needs to be busy and productive, so I will need a different outlet at the time I do decide to retire. The one thing that I'm certain about is that I will know when the time is right to retire. I have no concerns that I will be chasing the next dollar year after year beyond when I should retire. What I will be chasing is enjoyment and satisfaction. Once those are no longer there, I will look for something else to do.


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## OldPro

This will be my last comment on this subject. It's starting to go around in circles now.

Planning for 2.5% inflation is fine if it stays under that. But if you take a look at say 1969-89 you might get a shock. http://www.inflation.eu/inflation-rates/canada/historic-inflation/cpi-inflation-canada.aspx
The only foolproof way I know of to plan for inflation is to have inflation proof income. For example, an index linked pension is inflation proof but a defined benefit fixed pension is not. Generally speaking, rental income is inflation proof. The stock market and dividends is not. So forget 'inflation planning' as a number you guess at and start thinking 'inflation proof' which is a whole other thing.

Canadafan, you write, "So....If one used a 3%/yr/yr increas for targets, you would be both reaonably close and safe 20-30 years out.", even after you acknowledge the high inflation of the 70s and 80s. What if you had based your calculations on the 50s and 60s and then retired at the beginning of the 70s? How do you know you are not doing the equivalent of that now? You cannot state, 'safe 20-30 years out'. You're guessing.

So it depends on what someone means by 'planning for inflation'. What the inflationn % will be is crystal ball time. Don't try to guess where inflation will go, know where your income will go regardless of inflation. That's planning for inflation. And as I said, the earlier you retire the more it matters. If you retire at 65 and die within 10 years you could just about plan nothing. If you live for 25 plus years after retirement you will find you are living in an entirely different world from the one you retired from.

Our income is around 80% inflation proof. We can live comfortably on about 50% of our total income. So we should never have a problem unless we do something really foolish like take on debt. It's funny mind_business that you see me as being more willing to take risk than yourself. I am in fact not risk adverse in life in general but that doesn't mean I take risks when it comes to financial planning. Even back in 1989 when I retired, I realized that my income had to be inflation PROOF and that I couldn't just guess at where it might go. Being willing to take risks in life doesn't mean you take risks in everything you do.

RBull, most people probably won't stray far from home in retirement as you say. But there are assumptions in saying that as well. For example, is buying a park model in Texas (your folks) or Florida (oh so common) seen as so unlikely? Suppose someone bought a winter home in Florida in 2006 at the height of the real estate market. That house is at around 50% of what they paid right now. Suppose they need to sell for some reason. They are going to lose a pot of money which was probably in what they considered their 'good buffer' of money they would have in case of problems. It's gone, never to return.

The money in your primary residence doesn't matter, in that whether it goes up or down is irrelevant, you will always have a roof over your head. But money in a second residence does matter since it in fact represents a 'buffer' of capital if you need it. The problem is what happens if you lose that buffer. If you had been posting on a retirement forum back in 2007-2009, you would have seen lots of folks posting about how they had been hit by the recession and lost money on the stock market. Many were crying, 'woe is me, I'm going to have to go back to work since our income projections have been blown away and our capital has vanished in a puff of smoke and we can't sell our condo in Florida either and now we can't afford to go and use it either.' We don't have to look very far into the past to see how easily a plan can be blown up by the fickle finger of fate.

I had no sympathy for those who lost capital and income on the stock market. That's gambling and as anyone knows, if you gamble you can lose. A house in Florida is a gamble. A primary home is not a gamble. Heck, the absolute sure inflation proof life is to own a piece of land big enough to grow your own food and keep a few pigs, goats and chickens on. Not an exciting life becoming a farmer in your old age but hey, it's inflation proof. Maybe those planning to go back to school in retirement should be checking out gardening and animal management courses.:biggrin:


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## OnlyMyOpinion

CPP is consumer price index adjusted each January, so if a person is getting decent CPP as part of their retirement stream that has valuable inflation protection. Oldpro, given your early retirement I suspect it is not a major part of your retirement income.


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## Davis

Inflation was a big issue in the 1970s and early 1980s as central banks believed that they could stimulate their way out of unemployment. When that approached failed, a fundamental shift occurred in monetary economics to a new consensus that seeks price stability. As a result, the Bank of Canada, and most central banks, now targets 1-3 percent inflation per year. Over the last 20 years, the average yearly increase in the consumer price index has been 1.82 percent. It has ranged from 0.31 percent in 2009 to 2.91 percent in 2011. Inflation never exceeded the Bank's 3 percent ceiling between 1996 and 2015.

You can assume 3 percent or more to build in extra safety, but don't do it on the basis of inflation in the 1970s as there is no reason to believe that the Bank will return to the failed monetary policy of that time. 

I prefer to be explicit in my safety provisions in my plan, rather than making unrealistic assumptions. Over 20 years, overstating inflation by 1 percent year will cause your expenses to grow in real terms, and undermine your ability to enjoy income now.


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## RBull

OldPro, you're assuming my parents bought a park model in Texas. They didn't. Also your example of US real estate cherry picks an usually bad period and likely understates current values. Someone who bought 2-3 years after the date you picked may be happy with that decision now. It's highly doubtful we will ever buy US real estate for a host of reasons. In any case I wouldn't consider it as a buffer. 

I am not looking for sympathy from anyone with respect to negative market fluctuations. Likewise, myself I have no sympathy for those who do little to save, don't financially educate themselves, don't prepare for retirement, or rely solely on government handouts. 

IMO, knowing where your income will go is crystal balling for many people, the same as estimating inflation. Many people will not have an index linked pension or not just rely solely on CPP or the govt handout of OAS or GIS. They include invested funds to generate income that isn't guaranteed to meet inflation, or recognize some govt handout may not be there in the future.

Again IMO, assumptions have to be made in most cases such as the longevity and sustainability of CPP, OAS, or even rental income (my experience in the 80's was quite different from what you purported), health costs etc. In this case perhaps the best a person can do is research and set reasonable assumptions giving themselves a significant spread between projected income and projected non discretionary expenses, with as much income indexed as possible, or even eliminate something like OAS from their plans as I have. In building our assumptions I did look back at inflation over the previous 40 years and also considered the same facts Davis states, and ended up somewhere in between. 

I see my home as a roof over my head for as long as we can enjoy and maintain it. As far as an asset (if its needed) in the future it's a gamble the way most any other asset is. YMMV


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## cainvest

OldPro, I think you're missing the point ... budgeting for the future is just a guess but one can still try to make the best guess they can. What else should the average person do, not guess at all?


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## mind_business

cainvest said:


> OldPro, I think you're missing the point ... budgeting for the future is just a guess but one can still try to make the best guess they can. What else should the average person do, not guess at all?


To my point on the previous page, people are different. We don't all think the same. We all have the 'best' strategies. Some are detailed planners ... some aren't. The important thing for everyone is to figure out what works best for them. I think OldPro might be frustrated that not everyone agrees with his methods, but that's OK ... again we're all different. Choose your own path.


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## RBull

mind_business said:


> To my point on the previous page, people are different. We don't all think the same. We all have the 'best' strategies. Some are detailed planners ... some aren't. The important thing for everyone is to figure out what works best for them. I think OldPro might be frustrated that not everyone agrees with his methods, but that's OK ... again we're all different. Choose your own path.


Completely agree with your post #110 and this one.


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## fraser

I absolutely disagree that a primary home is not a gamble. 

Itis a gamble. The odds vary with location, ie single industry town, or economic climate. We sold a few years ago with the intent of buying again. We were looking at condos but are still renting. Our landlord has a 2.5 percent ROI on our condo. Unfortunately that is before a large assessment that ate up six years of that profit. Capital appreciation? This condo in Calgary is decreasing in value. 

Our return on our investments over the past three years have been 15,17 and 10 percent net of all fees. Ater tax returns would be approx 12, 13' and 8 percent respectively.

Many people assume that a home is the best investment you can make. This is no longer a certainly, in fact the assumption is very much in doubt. Each time we have considered buying over the past two years it was the math that pointed us strongly in the direction of renting. We are thankful that we did. 

We have made money on our primary residences in the past but it is very unclear to me if we could have done better by taking the total home ownership costs that we would otherwise have spent, deducting rent, and investing the balance.

Since becoming empty nesters and retiring our view has changed dramatically. The challenge if a home is a very large part of one's net worth is liquidity, balancing risk, and the ability to quickly re allocate the assets. Selling a home can be difficult, costly, and it is an all or nothing decision.


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## janus10

I looked at our current expenses and consulted with my wife to see if she agrees with this tally. This is our best estimate at this time.

*HOUSING	Projected Cost*
Gardening	$50 
Cell phones $70 
Electricity	$125 
Natural Gas $100 
Water and sewer	$60 
Cable	$100 
Water Tank Rental	$30 
Maintenance or repairs	$200 
Property Taxes	$280 
Internet	$50 
*Subtotals	$1,065* 

*TRANSPORTATION	Projected Cost*
Vehicle replacement fund	$250
Insurance	$150
Licensing	$15
Fuel	$180
Maintenance	$100	
*Subtotals	$695* 

*INSURANCE	Projected Cost*
Home $50
Health	$75
*Subtotals	$125*

*FOOD	Projected Cost*
Groceries	$400
Dining out	$200
*Subtotals	$600* 

*PERSONAL CARE	Projected Cost*
Medical	$50
Hair/nails	$100
Clothing	$50
Toiletries	$25
*Subtotals	$225 *

*ENTERTAINMENT	Projected Cost*
Vacation	$500
Movies	$50
Concerts	$15	
Live theater	$15
*Subtotals	$580* 

*LOANS	Projected Cost*
Credit card Annual Fee	$10
*Subtotals	$10 *

*TAXES	Projected Cost*
Federal	$181
Provincial	$50
*Subtotals	$231 *

*GIFTS Projected Cost*
Family	$200	
*Subtotals	$200 *

Grand Total is $3,731/month which leaves $169/month unaccounted for based on a $3,900 monthly income consisting of $10,000/year dividends from non-registered portfolio and $36,800/year RRSP withdrawals.


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## OldPro

Janus, I'm a bit confused. Why are you taking $36k out of your RSPs? 

What I am reading from that is that you do not have an income stream to cover your costs. Instead you are eating capital to live on. Am I missing something?


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## IFITSTOBEITSUP2ME

In the spirit of responding to the original OP Title. We are intending to sell up our non revenue properties and go full time RVing for a while. We are anticipating our yearly expenses whilst in that mode, to be somewhere in the $4000 per month range which includes the amount we intend to continue to max out two TFSA's each year. Quite likely we should have a few hundred bucks wiggle room in that budgeted amount. Of course over time, we will need to increase accordingly for inflation. Our budget is aimed at $4000 or less a month to live on but we are aiming for a return potential of 150% or more of that figure.

Would love to see more folks posting in line with the title of the thread and maybe a little info on how they intend to live when retired as it's all relative into how much we will need to live that way and where we are located cost of living wise.


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## OldPro

What your expenses will be in the first years of retirement IFITSTOBE, will probably bear no relation to what they will be in future years. Inflation is not the only factor and trying to predict decades into the futre is simply a crystal ball guess. For example, you may get tired or RVing and decide to do something else with your time. Whatever that is, it can make a big impact on what your expenses will be when you do it.

It is for that reason that I see no sense in asking about what expenses will be. The answer for year one can be given by anyone but all that gets you is a list of varying amounts. So I would ask you in all seriousness, just what it is that getting answers to the original question would tell you that is of value? I can easily guess that the answer would be, " $10k - $100k+. Beyond discovering that the average for those who post here is $X per year of income, what will it tell you?


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## Jets99

Janis , our monthly forecasts are only 25 bucks apart. My forecast was $3,756 in post#14. Yours is very detailed as was mine so I feel like this somewhat validates my numbers. I will revisit my numbers and post an update. 

I recently had my retirement plan updated with an advisor who feels I am on track for pulling the plug in 3 years but questioned my monthly expenses feeling my estimate was low. On the other hand had no guidance on where he thought I was under estimating or missing items. 

One factor not built into my numbers is impact my two university age kids have on budget beyond the obvious one time expenses. 

This thread is excellent but with estimates all over the map and not many detailed posts with a breakdown of numbers. Those comparisons are most interesting.


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## OnlyMyOpinion

OldPro - why does anyone join the Canadian Money Forum? Presumably some come to get informed about how others are managing, saving, investing, and spending their Money.

So, responding to ifitstobe _"Would love to see more folks posting in line with the title of the thread and maybe a little info on how they intend to live when retired as it's all relative into how much we will need to live that way and where we are located cost of living wise"_: I can offer the example of a couple, for 10yrs from age mid 70's-80's lived in Oshawa in their own, paid for new home, moderate hobbies and travel - they lived comfortably on $3500-4000/mo over that period. Now in their mid 80's, recently moved in a retirement home for easier mobility and prepared meals - budgeted cost is $6,000/mo for the next 10yrs (plus cost of living increases).


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## steve41

Once more... surely this is not the question you should be asking. 

Rather than 'what are my expenses?' the question should be 'what should my expenses be?' If they are too high, I will be on the dole at 75 and if they are too low, my rotten kids will inherit a ton of money.


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## RBull

^Once again, the voice of reason appears. 

100% agree.


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## RBull

OldPro said:


> Janus, I'm a bit confused. Why are you taking $36k out of your RSPs?
> 
> What I am reading from that is that you do not have an income stream to cover your costs. Instead you are eating capital to live on. Am I missing something?


Janus didn't respond but since I am planning a draw down of capital also I wondered what you were thinking.


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## OldPro

I'm still waiting for someone to tell me what knowing how much anyone thinks their expenses will be in their first years of retirement will be, is of any use to someone else.

Jets99, how does someone else's numbers 'validate' your numbers? Or why do you need them validated at all? I would expect that you can figure out for yourself what your numbers are, you have already done so apparently. Let me ask you this, what if I look at your numbers in post #14 and say to you that in my opinion, you could eliminate your water cost entirely; cut your property tax in half; reduce your car insurance and gas; reduce your clothing budget; reduce your cell phone costs and get rid of the landline; reduce gifts and keep the wife happy for $100 per month; how does that sound to you? 

Re your advisor saying your budget estimate is a bit low, is your advisor retired? On what experience is the advice based? Do you go to an auto mechanic who has no experience of reparing cars? Retirement advisors to me are a joke. They are MONEY advisors but have no experience of retirement LIVING. So called retirement planning is all about finances. I understand the need for that but disagree entirely with the basic ASSUMPTIONS they start out with. You don't need an advisor to tell you that if you change nothing and want to continue to spend money in the same way you do now, you will need the same income as you currently need. 

What good does a detailed breakdown of someone else's expenses do you unless they are in exactly the same situation with the same expenses as you have? You want to maintain a land line phone and 2 contract cellphones, someone else gets rid of the landline and only uses 2 basic cellphones on a pay as you go plan for $240/year total. You both have phone service but you are spending more to have it. Why? Does your advisor ask you that question? 

As Steve41 writes, the questions your ADVISOR should be going over with you is, 'what should my expenses be?' Again, duplicating in retirement what you spend now is easy to answer and you don't need anyone to tell you the answer to that. Figuring out what to CHANGE in retirement and how and why is what matters.

OnlyMyOpinion, I agree people come to a money forum to talk about money generally speaking. However, when talking about money+retirement, it is a specific area of discussion and has far more to it than RRSP vs. RRIF to consider. The how much and how to spend it are at least as important as the how to invest it.

RBull, I was taught by my Father that there are 2 things I should never do. First, never go into debt other than a mortgage. I have never paid one cent in interest since I was born except on a mortgage. I bought my first car for cash. I bought every car I ever owned for cash. If you don't have the cash, you can't afford to buy it! That's what I was taught. Try figuring out how much the average Canadian pays in interest over a lifetime. http://www.dailyfinance.com/on/how-much-interest-will-you-pay-in-your-life/#!slide=2950905 Then figure out how many years of their life they had to work to pay that interest. I look at paying interest as GIVING money away to someone else. Money that you had to spend your limited time earning. If a car is worth $40k today, how can it make any sense to pay $40K + interest. You are simply paying more than the car is worth. 

The second thing he told me was never spend your invested capital. So if I want a new car, I have to save that from income and set it aside to buy a car. I don't take $X from an RRSP for example and buy it. Figure out how much time you spent working in order to earn the amount you will withdraw from a RRSP. Figure in after tax hours. Invested money is for providing an income, not for spending.

I no longer have any RRSP investments, I took it all out years ago. I took out the maximum I could each year after I retired and not have it put me into the next tax bracket. Obviously, the more there is to take out and the fewer years you have to do it in, impacts that tactic. But regardless, I did not use it as income to be spent. I re-invested it as I took it out in something else that would provide more income than I previously had. My income has GROWN over my 25 years of retirement from $20k to $65k NET. That did not happen by spending capital. I do not have to worry as again Steve41 says, 'going on the dole at age 75' because I estimated my expenses too low. Expenses CANNOT exceed income. It's carved in stone.

So for a simple example, If I had $1k in income from investments in year one, plus money in an RRSP, I had to live on the income I had that first year. If I took $X out of RRSP and invested it elsewhere for the next year, my income became $1k + whatever addditional income the re-invested RRSP money brought me. The capital remained untouched while the income went up a little. Each year the same thing applied. Going back to the comment by Steve41, there was no real question for me. My expenses were not , 'what should they be', they were 'what CAN they be' and the answer to that was of course 'no more than my income'. The capital remains inviolate.

I think RRSPs are great. But it's how you then withdraw them and then what you do with the money that makes them great. IF you don't spend the money but instead invest it elsewhere. So when I read what Janus wrote, what I think I am reading is that Janus does not intend to live on existing income but instead, intends to spend RRSP money to supplement existing income. Result, spend capital which is not likely to ever be replaced.

In real simple terms it's really like eating the chicken that laid the golden egg.


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## mind_business

OldPro said:


> I'm still waiting for someone to tell me what knowing how much anyone thinks their expenses will be in their first years of retirement will be, is of any use to someone else.


There are a couple of ways to use the information supplied by others.

1) Wait for a few hundred replies, then do some statistical analysis. Or, you can just use Stats Canada's info.

2) Get people to describe their current, or anticipated lifestyle, types of cars they own, how expensive is their neighbourhood is, etc, etc. This would put their 'expected' retirement spending into perspective relative to 'how they really live ... or expect to live'. 

3) Or realize that neither will happen so might as well let people talk about their planning, spreadsheets, etc. People attracted to this type of discussion forum usually enjoy planning-on-top-of-planning.


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## OnlyMyOpinion

OldPro said:


> The second thing he told me was never spend your invested capital...Invested money is for providing an income, not for spending...
> The capital remains inviolate...In real simple terms it's really like eating the chicken that laid the golden egg.


If you can cover your yearly expenses in retirement without touching any of your saved capital, then you either have lots of capital, and/or other material sources of income, and/or or live frugally. There's nothing wrong with this.
But there is also nothing wrong with spending a combination of income and saved capital. It means you don't need to have as much saved and/or don't need to live as frugally.
When the lights go out, the only difference is that you will have left all of your capital to your estate, while others will leave less (or none) to their estate. Its an individual choice.


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## RBull

OldPro said:


> RBull, I was taught by my Father that there are 2 things I should never do. First, never go into debt other than a mortgage. I have never paid one cent in interest since I was born except on a mortgage. I bought my first car for cash. I bought every car I ever owned for cash. If you don't have the cash, you can't afford to buy it! That's what I was taught. Try figuring out how much the average Canadian pays in interest over a lifetime. http://www.dailyfinance.com/on/how-much-interest-will-you-pay-in-your-life/#!slide=2950905 Then figure out how many years of their life they had to work to pay that interest. I look at paying interest as GIVING money away to someone else. Money that you had to spend your limited time earning. If a car is worth $40k today, how can it make any sense to pay $40K + interest. You are simply paying more than the car is worth.
> 
> The second thing he told me was never spend your invested capital. So if I want a new car, I have to save that from income and set it aside to buy a car. I don't take $X from an RRSP for example and buy it. Figure out how much time you spent working in order to earn the amount you will withdraw from a RRSP. Figure in after tax hours. Invested money is for providing an income, not for spending.
> 
> I no longer have any RRSP investments, I took it all out years ago. I took out the maximum I could each year after I retired and not have it put me into the next tax bracket. Obviously, the more there is to take out and the fewer years you have to do it in, impacts that tactic. But regardless, I did not use it as income to be spent. I re-invested it as I took it out in something else that would provide more income than I previously had. My income has GROWN over my 25 years of retirement from $20k to $65k NET. That did not happen by spending capital. I do not have to worry as again Steve41 says, 'going on the dole at age 75' because I estimated my expenses too low. Expenses CANNOT exceed income. It's carved in stone.
> 
> So for a simple example, If I had $1k in income from investments in year one, plus money in an RRSP, I had to live on the income I had that first year. If I took $X out of RRSP and invested it elsewhere for the next year, my income became $1k + whatever addditional income the re-invested RRSP money brought me. The capital remained untouched while the income went up a little. Each year the same thing applied. Going back to the comment by Steve41, there was no real question for me. My expenses were not , 'what should they be', they were 'what CAN they be' and the answer to that was of course 'no more than my income'. The capital remains inviolate.
> 
> I think RRSPs are great. But it's how you then withdraw them and then what you do with the money that makes them great. IF you don't spend the money but instead invest it elsewhere. So when I read what Janus wrote, what I think I am reading is that Janus does not intend to live on existing income but instead, intends to spend RRSP money to supplement existing income. Result, spend capital which is not likely to ever be replaced.
> 
> In real simple terms it's really like eating the chicken that laid the golden egg.


OldPro, obviously I do not know your father but would agree with respect to the paying of interest and paying cash for all else beyond home mortgage. This has been my practice as well, and was not taught to me or to wife by our parents; just something we learned at a very young age with our first little jobs and saving. We have not had a mortgage since age 35 and have upgraded homes several times since, and pay cash for all other items including cars. We abhor debt and see it as throwing money away. Money that can't be used for something useful. 

Some of what I was referring to was similar to your experience for your RRSP. I want to remove some capital, as well as income and reinvest elsewhere especially prior to other benefits that will or may be available at age 65, to minimize the potential negative impact of not doing that. However it is my intention to also spend down my capital in an orderly and safe fashion, since we have no heirs or other use for it. We see no good reason not to do this, since what good is the chicken to us after we are dead, and why would we leave so many eggs behind? The chicken will still be laying eggs until we die, just fewer of them. We are not looking to grow our income beyond the rate of inflation like you did. We have no need, and would only be living a more thrifty life now to have a lot more when we're older and less likely to want to spend it as much. 

Our expenses will be controlled to ensure we are not exceeding our overall plan updated annually. However if you define income as everything generated above capital I would disagree that you can't spend above this amount. It's in fact not carved in stone. For you it may be but that doesn't make it so for others. It depends on what your choices and plans are. If you plan to leave a legacy you wouldn't however, if you don't want to leave money you have capital to tap into or even deplete if your other income is adequate and secure, and as long as it done carefully leaving a safety net. 

This I guess is where we differ from you and your fathers approach, and evidence that there is no one approach that is right for all people.


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## janus10

OldPro said:


> What your expenses will be in the first years of retirement IFITSTOBE, will probably bear no relation to what they will be in future years. Inflation is not the only factor and trying to predict decades into the futre is simply a crystal ball guess. For example, you may get tired or RVing and decide to do something else with your time. Whatever that is, it can make a big impact on what your expenses will be when you do it.
> 
> It is for that reason that I see no sense in asking about what expenses will be. The answer for year one can be given by anyone but all that gets you is a list of varying amounts. So I would ask you in all seriousness, just what it is that getting answers to the original question would tell you that is of value? I can easily guess that the answer would be, " $10k - $100k+. Beyond discovering that the average for those who post here is $X per year of income, what will it tell you?


I would not even attempt to dissuade you from your thinking as your opinions tend to be strongly held. But, I disagree that for some people it makes good sense to ask because there may be facets of expenses, or those that no longer will be there, once a person retires. 

A good example is if you have no health care / dental coverage in retirement provided by your ex employer. Some people may have no idea what additional costs they may be faced with once they have to either buy insurance for partial coverage or fund it all out of pocket. Or, I have never paid for my own cell phone as my jobs have always covered the costs for me. And laptops. And I get a lot of benefits from travelling (frequent flyer points and perks, meals out, free hotel nights, etc.). This will have an impact on my life and a small percentage of others, too.

For the readers which are younger than I, it would be understandable for them to be less aware of what the differences are, just like it is understandable for people like you have been retired for so long that you've seen it is not just one final chapter but a series of them - perhaps even a new book or two.


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## cainvest

OldPro said:


> RBull, I was taught by my Father that there are 2 things I should never do. First, never go into debt other than a mortgage. I have never paid one cent in interest since I was born except on a mortgage. I bought my first car for cash. I bought every car I ever owned for cash. If you don't have the cash, you can't afford to buy it! That's what I was taught. Try figuring out how much the average Canadian pays in interest over a lifetime. http://www.dailyfinance.com/on/how-much-interest-will-you-pay-in-your-life/#!slide=2950905 Then figure out how many years of their life they had to work to pay that interest. I look at paying interest as GIVING money away to someone else. Money that you had to spend your limited time earning. If a car is worth $40k today, how can it make any sense to pay $40K + interest. You are simply paying more than the car is worth.


I guess it would have been really good if your father wouldn't have made an exception for mortgages, think of how much interest you would have saved by buying a house with cash!


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## OldPro

I agree mind_business, or in simple terms, the information is useless.

Yes, I agree OnlyMyOpinion, to each his own. But perhaps before saying it's OK to spend down capital, you might want to take into account that I retired at age 43 and only had an income of $20k at that time. IF I had spent down my capital from then, there is no question I would be broke by now. So for my 'own' situation, spending down capital would not work. 

It really is a different way of looking at retirement finances. Most look at having enough when they start their retirement to last till they die. Optimal as I used to always joke with my Mother as she got older was to spend your last dime on your last day. There's no need to leave money to anyone. But that isn't what I did. It is a valid strategy as long as you die sooner rather than later and have a relatively short retirement. It is the approach you are espousing and that MOST people take.

I retired as soon as I had enough income to live on. NOT when I had enough to last the rest of my life. I HAD to grow my income to continue my retirement. If I had not, at best I would now have less income (in buying power) than I did when I retired 25 years ago. But consider the difference between having enough income/capital for NOW and having what you feel is enough for the rest of your life. Which approach will see you able to retire earlier? That to me is the choice people make when they choose to wait till they have enough to last the rest of their life or at least think they do. I did not have ENOUGH to last the rest of my life when I retired.

To retire early, as I saw it, I needed to provide for living expenses, disposable income and savings/investment. I figured on a third for each. Then I figured on how little could I live on and still be happy enough. I decided (in 1989 remember) that I could manage on $7k for each third. So for the first several years I had to live 'frugally' as you say but frugally does not mean doing without. I could live on 10k and still eat steak and still have $4k to spend on wants rather than needs. I've explained how I lived so cheaply and yet in a luxury apartment with a swimming pool outside my door and a beach full of topless babes (well, some were babes and some were what I called 'beached whales') just down the street. So I could retire on $20k income, live quite well and still continue to build capital/income for future years.

Retire and hope to die before your money runs out vs. retire earlier and continue to build income. Two different approaches entirely. Your choice, to each his own.

RBull (and OMO), I don't want to leave money to anyone although my Sons will no doubt get something in the end. But that is by default rather than intention. What I want is to have eggs for as long as I live, however long that might be and to have them stay ahead of inflation. What happens to the eggs after I (and my wife) are gone is of no concern to me at all. The assumption that 'leaving a legacy' was the reason for not eating the chicken is a false assumption. And again, it is the only approach I can see that lets you retire much earlier.

I understand the strategy MOST people take RBull of having 'enough to last'. But it isn't the only strategy and I do not think it works nearly as well if you want to retire signifigantly earlier than MOST. I do agree entirely that, "there is no one approach that is right for all people." I'm just offering a different approach and explaining how it can work.

Janus10, no offense intended but I think you are reaching for an answer, rather than providing any real justification. Anyone who has company supplied anything will know that will end and they will have to pay for those things themselves in retirement. I had a lot of FF points when I retired and had never paid for a personal flight in perhaps 10 years by using them before I retired. I then used them to fly for around 6 more years after retiring. Believe me there is no shock like the shock of buying an airline ticket after 15+ plus years of never doing so and discovering what has happened to ticket costs over that period of time. But I survived just fine Janus and knowing or not knowing what those kind of costs might be when I first retired would have changed nothing. 

Cainvest, yes mortgage interest is the biggest stealer of your money the average person has. However, since it is pretty hard to accumulate enough to buy a house for cash unless your aunt dies and leaves you a bundle or something, the next best thing is to pay off the mortgage as quickly as possible.


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## OldPro

I think this comment gibor quoted (I don't know who made the original comment) and agreed with on another thread sums it up well.

"I have to admit that I don't know when I will feel comfortable enough or secure enough to be retired. ..., I will be honest I don't want to be wrong. I want KNOW I have more than I need, hope that I have enough."

I think that is how most people look at it. The idea of retiring when they have enough for NOW and a bit left over to grow their income for the future, doesn't even enter their mind. Also reading that, it makes me realize that most perceive risk in anything else. That's really what the quote is saying, ' I don't want to take any risk.'


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## AltaRed

Most people need a financial plan done by a competent planner for their retirement years to get a handle on what size of nest egg they need to retire in the style they wish to retire. A competent planner will take relevant taxation rates, benefits and clawbacks into account to generate the AT cash flows. It is a set of iterations to juggle capital numbers to generate cash flows or vice versa. 

Most people, other than the financial savvy types, like most here do not have a clue how to do it. When people ask me, I suggest they take what the think they need on a monthly basis, subtract CPP, and then take that number in an annual basis and multiply by about 35-40 to get a capital number at age 65. That is a simple approximation and gives an order of magnitude.

I use that factor as a suggestion to accommodate a 3% SWR on an AT basis. Very rough I know but it usually hits most people like a brick across the head spurring them into believing they'd need to save more or get a planner to run some real numbers for them.

For what it is worth, my retirement is nothing like I would have thought even 5 years before retirement. My spend is more than double what I thought it might be. That said, I am doing that because my finances allow me to do that. I could fall back to my original spend if I had too. Nice problem to have.


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## IFITSTOBEITSUP2ME

OnlyMyOpinion said:


> OldPro - why does anyone join the Canadian Money Forum? Presumably some come to get informed about how others are managing, saving, investing, and spending their Money.
> 
> So, responding to ifitstobe _"Would love to see more folks posting in line with the title of the thread and maybe a little info on how they intend to live when retired as it's all relative into how much we will need to live that way and where we are located cost of living wise"_: I can offer the example of a couple, for 10yrs from age mid 70's-80's lived in Oshawa in their own, paid for new home, moderate hobbies and travel - they lived comfortably on $3500-4000/mo over that period. Now in their mid 80's, recently moved in a retirement home for easier mobility and prepared meals - budgeted cost is $6,000/mo for the next 10yrs (plus cost of living increases).



Thank you OMO. None of us that join this forum I would hope think for one minute that we can get a firm "I need this amount to live on based on what someone else says". However, I'm pretty confident that there are tons of folks out there like me that are terrified if we pull the plug too soon what happens if we run out of money before we run out of air. On the flip side of that coin is what happens if we keep doing that "one more year" syndrome and never reach the true highlight of our twilight. Grandparents lived into their 80s and 90's but parents 55, 65 and hubby's dad 68. Hubby is now 58 body showing signs of heavy wear and tear from construction so do we calculate another 10 year lifespan or maybe 40+ ?

For me personally, and I'm sure I'm not alone, I find it useful to hear what folks expenses are based on lifestyle they lead, location due to cost of living areas, cook at home or dine out a lot, travel a lot, happy to spend time in their yards, one car/two etc etc. As has been pointed out based on many feedbacks as detailed as possible one can plus and minus and then average and hopefully come up with some kind of a reasonable range that might suit their future way of intended living, and allowance for potential changes in that along the pathway to the pearly gates. With all that said and done, I don't think for one minute we'll get a true handle on our expenses until we have probably got through the first 3+ years, and then consider any one off expenses that might have made year one more expensive and adjust for that. Unfortunately, if we aren't close to the right amounts from the start, we won't have that option of going back into our businesses.

Irrespective of that, the OP that started this thread asked the original question and my response at #121 was purely trying to keep in the spirit of the OP, the title of which grasped my attention to view the responses of.

My apologies to the OP if this is a bit off topic, but being new here, can someone tell me what is proper protocol regarding the following? I have read this forum on and off for several years, and there are some posters that just make a lot of sense to me, and I'd really really value their commentary regarding some of the investment mistakes I feel I've gotten our finances into on RESP, RRSP, TFSA's, and other accounts to and would love the opportunity to basically lay out our situation totally and get some useful opinions and different takes on it. I'm not sure though how safe our Identities are posting all that out there for the world to see, albeit we appear anonymous on the surface. Is it appropriate to private message those that we feel make the most sense to us as an individual? Sorry, like I say a newbie that sat on the fence observing for a long, long, long time before registering a few weeks ago, so if anyone open to assessing our finances and providing some commentary in confidence please let me know. It would be so appreciated, just feel I am getting myself in such a muddle and now trying that "the best way to eat an elephant is one bite at a time".

RBull, Oldpro, Steve41, OnlyMyOpinion, MindBusiness and many many others here, your commentaries as well as many others I apologize for not mentioning, your input and responses to others have been most valuable. Many concur with others, and yet an odd one offers a different viewpoint and some with all due respect, even comes across here as being rather Cantankerous = all very useful viewpoints when emotions kept out of the game.

Thanks to all from a newbie who's appreciated your efforts and writings and sharing of knowledge/experience over the years.


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## RBull

OldPro said:


> RBull (and OMO), I don't want to leave money to anyone although my Sons will no doubt get something in the end. But that is by default rather than intention. What I want is to have eggs for as long as I live, however long that might be and to have them stay ahead of inflation. What happens to the eggs after I (and my wife) are gone is of no concern to me at all. The assumption that 'leaving a legacy' was the reason for not eating the chicken is a false assumption. And again, it is the only approach I can see that lets you retire much earlier.
> 
> I understand the strategy MOST people take RBull of having 'enough to last'. But it isn't the only strategy and I do not think it works nearly as well if you want to retire signifigantly earlier than MOST. I do agree entirely that, "there is no one approach that is right for all people." I'm just offering a different approach and explaining how it can work.


Fair enough. To be clear it is not me making any assumptions about you. Nor did I suggest mine was the only solution. It was your golden rule suggested without knowing another persons affairs, that I challenged by offering another viewpoint and a reasonable alternative for some, including me. 

I think I understand fairly well what your retirement strategy and motivations were from what you have posted to date. If I was interested in the same goals and lifestyle I suspect I would have taken a similar approach. Well done in that regard, since it seems like you've done many things you wanted and have also not suffered in any way financially. 

We've not retired as early- my wife at 53 several years ago and me at 55 nearly one year ago, despite a very bumpy ride in the previous 10 years for a host of reasons. Earlier than many and we feel a great age to still be very active. We planned carefully for retirement, and like everyone hope it will work out and carry us through this stage of our lives. 

The experiences and information offered here is frequently interesting and helpful, and your posts have often breathed some new life and usually a new perspective into this forum. I enjoy being part of it.


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## OldPro

The issue I have with what you write AltaRed, is that according to you, I could not retire when I did and yet here I am 25 years later on, still doing fine. I have no doubt you would say that it would be impossible for me to retire on what I had. When I retired, I did so with a post-retirement income of $20k per year. What would your method say I would have to have in capital to retire at age 43 today?

For what it is worth, my spend is 3-4 times what it was when I first retired. That said, my finances allow me to do that and have done so without the need for a financial planner who would have told me I couldn't do it. Nor does my spend even equal my income. My income has increased as much as my spend.

The only part of your comments I agree with is that MOST people aren't financially savvy, but I think that includes MOST financial planners as well. Tell me how much you would say I need to retire today at age 43 and I will tell you how much I did it on in 1989. We can then allow for inflation over the last 25 years (1.71 on CPI) and compare your projected guess against my actual number.

IFITSTOBE and RBull, all fine, all fine. I like debate and pushing the envelope, nothing ever personal in anything I write.


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## cainvest

OldPro said:


> That said, my finances allow me to do that and have done so without the need for a financial planner who would have told me I couldn't do it.


So why do you think a financial planner would have said you couldn't do it?


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## AltaRed

OldPro, if you retired in 1990, you have benefitted from the biggest bull market of all time, both equities and bonds. A person could have been on 6-8% SWR and still be ahead. I say that specifically because: a) I know what my investment returns have been since then, and b) your comment about having more income today than when you first retired. No one is going to be able to count on even half the investment performance on a go forward basis.

IOW, your experience has almost zero chance of being duplicated. Bond returns may well be negative, GICs may barely keep pace with inflation and equities might return 5-6%. A DIYer might be able to work with 4% SWR, but not those with high MER mutual funds or thise with a %AUM advisor which is those most often who need help. Hence why I suggest the factor I do.


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## AltaRed

cainvest said:


> So why do you think a financial planner would have said you couldn't do it?


I will not answer for OldPro but I will opine that in 1990, a planner would have used historical returns and a typical, most likely, high MER portfolio. Also, it is not typical for one to retire at 43 and there is little historical data to comprehend such cases. IOW, OldPro is an outlier case. That said, I would be interested in what An actual planner might say about this.


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## janus10

RBull said:


> Janus didn't respond but since I am planning a draw down of capital also I wondered what you were thinking.


I did respond and that set us off on a tangent so I asked the mod to move that discussion to another thread "RRSP vs RRIF"


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## OldPro

I really do think the problem lies primarily in the assumption that life will not change appreciably after retirement. As much has changed in my life in the 25 years since I retired as did for at least the 25 years prior to my retirement and I can't control any of that. 

If for example you retire at 65 and die a week later, all the financial planning you did was totally useless. OK, so you plan to not die. But then you try to plan how much money you will need till you do die and people worry about not having 'enough' to last till they die.

Think about it! What people are trying to do is control their life and predict their future. But you cannot control all change or predict how long you will live, it's all just a guess. When I retired I told myself that I had enough for NOW and what would happen would happen. I took the optimistic approach that things would happen for the good rather than for the bad and they did in my case. But in reality, they could have as easily gone to the bad and I'd be up the creek without a paddle. But how is that any different than life for you today? You could get hit by lightning tomorrow, have you tried to plan how to avoid that?

Life in retirement is no different than life at any other time. Things go well or they go poorly. You catch a break or you don't. Your car blows up or it doesn't. The only question is what do you do when it happens? That's the only thing you can really control.

Look at the statement by IFITSTOBEITSUP2ME. No, scratch that, look at his/her handle. 'If it's to be it's up to me.' That suggests 'me' is in control of 'what's to be'. Really? Now look at the statement, " I'm pretty confident that there are tons of folks out there like me that are terrified if we pull the plug too soon what happens if we run out of money before we run out of air." Hang on a minute, IFITSTOBE, I thought you were in control of your life, what's to be is 'up to me' you say. Aren't you contradicting yourself here?

Why would you assume you will run out of money before you run out of air? Why not assume you will run out of air first? Both are possible are they not? Why even assume you have any control over either? Why worry about it at all if you can't control it? Can you control when cancer will occur or a heart attack? Can you control whether Canada will go into an ice age? All you can actually control is very little and that is only your own actions.

Hows that for a rant guys? I'm an Alfred E Neuman kind of guy. http://www.tonykieraldo.com/wp-content/uploads/2015/01/alfred-e-neuman.jpeg


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## OldPro

AltaRed, I do not gamble on the stock market and did not benefit directly from the Bull market at all. As for, "No one is going to be able to count on even half the investment performance on a go forward basis.", says who? Someone with a crystal ball? No one can predict the future other than beyond a best guess at the next few years. No one in 1989 would have predicted interest rates falling to 1% or 3% mortgages. No one today will predict interest rates rising to 20% or 21% mortgage rates. So what. History has proven such swings can indeed occur.

I can tell you cainvest that a planner would have said I couldn't do it no matter what formula they used whether one as AltaRed thinks they might have used or not. I simply didn't have enough capital to satisfy any investment strategy they might use. I just didn't choose to listen to them. A planner could not have predicted what I would do with my money and what opportunities might come my way or not. 

For example, when I was living in Greece, I discovered that Greek Government Bonds were paying 21%. What's more, they could be bought and held in a foreign currency and the income was tax free. My, my, park some money there real quick. No planner in Canada was going to suggest that to me. When I moved to Scotland, I bought a house. No planner was going to include that in a plan in 1989 and tell me it would sell 6.5 years later at over a 100% profit. Gee,that was lucky. Then I bought a house in the Okanagan area of BC in 2006 and sold it in 2008 just as the market began to drop but still made a 30% profit on the sale. Lucky again. 

This is what I am saying. Things change and you cannot predict any of it. You can assume the worst, you can assume the best. In reality you have no control over it at all. Not now, not in the future. I agree with AltaRed that I am what they call an 'outlier'. I think anyone can be an outlier. What happens though is most people choose not to be.


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## cainvest

AltaRed said:


> I will not answer for OldPro but I will opine that in 1990, a planner would have used historical returns and a typical, most likely, high MER portfolio. Also, it is not typical for one to retire at 43 and there is little historical data to comprehend such cases. IOW, OldPro is an outlier case. That said, I would be interested in what An actual planner might say about this.


Financial planners as basically just number crunchers, though they might put out some ideas on how to best optimize assets, taxes, etc. Now if you give them bad data they won't give you a good answer, in other words, the real work still needs to be done by you.

I sat with a FP not long ago and at first I let them make a best guess as to what my needs were and I imagine many people do this as they don't know how much they need to spend in a year. It was interesting that their guess of my yearly retirement income was twice as much as mine which greatly affected when my "proposed" retirement could start. Also remember that in the end retirement planning its a "best guess" situation, like so many other things in life.


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## cainvest

OldPro said:


> A planner could not have predicted what I would do with my money and what opportunities might come my way or not.


Exactly, they should not have to predict what you're going to do as that's a big mistake, you need to tell them what you are actually going to do. Of course one can just "wing it" and things may end up good or bad, most people are not willing to take that risk with the potential of being flat broke later in life.


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## RBull

IFITSTOBEITSUP2ME said:


> Is it appropriate to private message those that we feel make the most sense to us as an individual?


Yes, that would a typical approach, if there is some communication or questions you are looking to share.


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## RBull

None taken OldPro, and likewise with me on nothing personal.


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## RBull

janus10 said:


> I did respond and that set us off on a tangent so I asked the mod to move that discussion to another thread "RRSP vs RRIF"


Fair enough.


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## OldPro

cainvest said:


> Exactly, ..............................., you need to tell them what you are actually going to do. ..................


I keep saying, you cannot predict what you will do in the future. Everyone who retires 'takes the risk of being flat broke later in life' whether they realize it or not cainvest. Just as you take the risk before you retire. I can't believe that you would actually write, 'you need to tell them' as if you KNOW what you are going to do. Listen to what you are saying. You are saying you can predict your future.

I'm writing from 25 years into retirement and telling you that as much changed after as changed before retirement. I really wish some other 10 years plus retirees would post and confirm that for you. As many MAJOR changes occur after retirement as before. You cannot predict those changes.


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## RBull

I would also like to hear from those 10 year retirees to see if there is much change as you experienced, and suggest to expect OldPro. Perhaps your earlier "escape'"put you in a position where even more "change" would be expected.


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## OldPro

I agree RBull, perhaps my experiences since retiring at a younger age are scewed but unless at least several 10+ year retireees comment, we won't know. Having said that, I do think it is crazy to think you can predict the next 25 years no matter when you retire. Someone can be a year in and have a major medical issue, bang goes their plans and it may well have a large financiall impact. There are simply too many variables you cannot control.

Edit: Another thought comes to mind RBull. Some people are 'old before their time'. They may retire at 65 and do just about nothing for the rest of their life in terms of making any major changes. That only leaves changes imposed on them to deal with. I suppose those people would have a better chance of guessing the future. I'm just having this vision of oh so boring. I hope I never get that old. I'm 69 going on 39 for another 10 years.


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## Eclectic12

OldPro said:


> I keep saying, you cannot predict what you will do in the future. Everyone who retires 'takes the risk of being flat broke later in life' whether they realize it or not cainvest ... I'm writing from 25 years into retirement and telling you that as much changed after as changed before retirement.
> I really wish some other 10 years plus retirees would post and confirm that for you. As many MAJOR changes occur after retirement as before...


It seemed pretty clear from the types of changes posted that they were not predictable ... making it hard to tell a planner about it.




OldPro said:


> ... Just as you take the risk before you retire.


The other risk is betting one will have the health/longevity to make use of any additional funds that working longer might provide.


Cheers


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## cainvest

OldPro said:


> I keep saying, you cannot predict what you will do in the future. Everyone who retires 'takes the risk of being flat broke later in life' whether they realize it or not cainvest. Just as you take the risk before you retire. I can't believe that you would actually write, 'you need to tell them' as if you KNOW what you are going to do. Listen to what you are saying. You are saying you can predict your future.


I agree that if you don't know what you'll be doing in retirement a financial planner is of no use, and so would any of your own planning for that matter. 

*I* however, have a very good idea of what I'll be doing and can estimate what my expenses will be do to those activities ,vacations, hobbies, etc. Barring any apocalypse, financial, zombie or otherwise, I can be reasonably certain I'll have enough money to take me to the end of my life. Is there a guarantee that I won't run out of money, of course not, but its unlikely if I stay within my budget.

BTW, I talk to many retired people as my area is full of them and I also have one friend, like yourself, who retired very early and lives a frugal lifestyle totally off his investments. So what do these people do .... exactly what I'll be doing, enjoying their hobbies and such with no radical changes to their lifestyles. So what is so complex (or wrong) about predicting the most likely outcome of my future?


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## mind_business

OldPro said:


> I agree RBull, perhaps my experiences since retiring at a younger age are scewed but unless at least several 10+ year retireees comment, we won't know. Having said that, I do think it is crazy to think you can predict the next 25 years no matter when you retire. Someone can be a year in and have a major medical issue, bang goes their plans and it may well have a large financiall impact. There are simply too many variables you cannot control.
> 
> Edit: Another thought comes to mind RBull. Some people are 'old before their time'. They may retire at 65 and do just about nothing for the rest of their life in terms of making any major changes. That only leaves changes imposed on them to deal with. I suppose those people would have a better chance of guessing the future. I'm just having this vision of oh so boring. I hope I never get that old. I'm 69 going on 39 for another 10 years.


Everyone's experiences and personality traits 'skew' their perception of events. If I look at my parent's retirement (20 years in) they have done exactly what they had planned to do. Move to Kelowna to be close to grandkids, buy a sailboat, do some skiing and a bit of travelling. Nothing major has happened to them that's out of the ordinary. For that type of individual/personality, planning is important ... and yes, you CAN predict significant aspects of your future. 

You have described some of your experiences which I attribute more to luck than planning ... ie: selling houses significantly above your purchase price. For those personality types that like a bit more risk and excitement in life, then less planning and more doing ... ie early retirement, is fine ... but you also better be prepared to make up some revenue if you start running out of money. Again, your luckier investments likely helped to get you through the first 20+ years of retirement, but things could have gone the other way. I know I'm likely generalizing too much, but from your recent posts this is my understanding of how you managed to retire very early. Good to be you


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## janus10

RBull said:


> I would also like to hear from those 10 year retirees to see if there is much change as you experienced, and suggest to expect OldPro. Perhaps your earlier "escape'"put you in a position where even more "change" would be expected.


I know for my dad and his 2nd wife, and my mom, that retirement was not an up and down roller coaster but fairly similar from year to year. Not one of them had any retirement savings of consequence - my dad and his 2nd wife had DBP (plus OAS and CPP) and my mom a small DBP and OAS and CPP. There was not much variety in income, and there was not much variety in the way they lived. 

The biggest change, IMO, was when my dad got old enough to tire of having to maintain a house. Then they decided to sell up (and so unfortunately, my dad was never mortgage free except when he was house free) and rent an apartment.


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## janus10

OldPro said:


> So when I read what Janus wrote, what I think I am reading is that Janus does not intend to live on existing income but instead, intends to spend RRSP money to supplement existing income. Result, spend capital which is not likely to ever be replaced.
> 
> In real simple terms it's really like eating the chicken that laid the golden egg.


You would be incorrect, but understandably so as you would not have all of the information. 

Of course, I *must* take money out of my RRSP or face an unthinkable situation at 71. And, I would rather take money out of my RRSP to cover my expenses first rather than tap into my non-reg. 

Our RRSPs will be significantly larger than our non-reg or TFSAs. I may spend capital in the early years... I may not. I hope for the best, but plan for the worst. 

My projections, with a passive portfolio, suggest that even in the earliest years of retirement, we withdraw less than 4% of our portfolio value, and that goes down until it's around 1.6% before we hit 70. But, these are projections and not worth the pixels on my screen. 

As it turns out, we aren't 3 months into 2015 and already our RRSPs are at a valuation expected for the end of 2016 (keeping new contributions aside) and our non-reg is already where we projected it would be by the end of 2019. We don't hold anything exotic, nor has anything recently gone on a tear. It's easier to exceed expectations if you set expectations low - hope for the best, plan for the worst.

It is possible to have an active portfolio - one does not have to wait for dividends or interest income. I have a good friend, who is definitely well off, and he spends an hour in the morning going over just a few of the same stocks and puts some trades on, and he is done for the day. He may not get every day right, but he actively grows his portfolio with consistency.

I have a different, less active approach, but it works for me.


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## janus10

I've seen this mentioned in more than one place by more than one person - there is an age, say it's about 75, where retiree's expenses go down significantly. Daryl Diamond uses this premise when he calculates retirement income needs.

Is this because retirees HAVE to cut back spending because they become fearful they will outlive their money, or is it that their lifestyle has changed significantly so that they don't need or want to spend so much?

It wouldn't surprise me to learn that a big impact comes from those who have heavy reliance on their own savings vs. those which have inflation-indexed DBPs. 

My mom, and my wife's mother, haven't seen much change in their spending because there is very little income left for discretionary purchases. My dad, though, in the last 2 or 3 years said that once they sold the house, he found it quite easy to save a lot of money each month.


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## Canadafan

The orriginal question which we have gotten off track of was "what do you expect your yearly expenses to be when retired"
The tangenet has got into more of philosophy of "can we predict the future or not". First a quick comment on that then back to the title of this thread:

I have been doing personal/family buddgets for 37 years and at the end of year go back and review my numbers to fine tune for the coming year.
In reality unless you expect to make MAJOR chnages to your lifestyle, MOST expenses are predictable. My numbers on a reapeatable basis are within 95% to 99% accurate.
Consider the "expenses" are repeatable: being hosehold costs, property taxes etc etc. Food, Utilities, car gas, maintenace even car replacement can be predicted, assuming you dont after 35-40 years of your life start driving a totally differnt car. Even that is predictable ,as it would not happen by chance.
Taking that discussion into the question: What is required at retirement ?
I can look at my monthly budgeted expenses and see $3,900/month. Of that amount $2900 is very predicatable, year after year: Including groceries car & house mantenance etc.
The remaining comes under many misc items and entertainment, weddings, gifts etc.BTW, we have a house paid for 2 cars and no kids at home.
So if I was to come up with a drop bottom number , One could say $36,000/year net, but that would leave zero wiggle room. Closer to reality would be $48,000/year net + vacations. Since I want to carry a fair amount of vacation money. Im going to use $10K/year. Rounding upwards to $60,000/year net, a comfortable number under the previous assumptions.
Now comes the interesting part: How to address the "you can not see 25 years out". First lets look at what we can predict. there are 3 sides to the equation. 
expenses, income and age
Age is a certian until death. Hopefully in 25 years, I will be alive and 25 years older. That said. we will be driving around with only one car not two. We will almost for sure have down sized to a smaller residence. And would only do so to become less costly and more compfortable for the older age.
So all of the chrystal ball gazing sees a less costly lifestyle decades out. The majority of those I know in late 70s early 80s fall into that category.
Point being expenses although will be increased by inflation will not change upwards in huge steps.If anything , will decrease.

That leaves the income side of the story..and this thread was asking about expenses , so I will leave that for another time.
Bottome line for "future predications"
Im going to use a model of $65K/year net ( which has huge buffers built in) extrapolated at 2%/year/year.
My overall, retirment plan does not take into account the value of our house & includes estimating returns on average of a few points above inflation.
Back to the being able to predict the future: Old saying: "the best way to predicet the future to make it happen"...that for me invloves careful planning, reviewing plans and lookiing towards a retirement where by not much differnt will happen.
I have various hobbies and volunteer groups Im invloved in and would spend more time with those. All cost very little. Our travel would not change much.
Cant predict the future? A book written by Harry S dent in 1989 predicted decades of ultra low ( zero ) interst rates, the fall of Japan and many other economic truths that came to be. His presmis is all based on the babby boom and the power of the spending they bring about.

Why were rates at an all time high in the 1980s?? That is when most of the boomer and companies were in major expansion mode & money was hard to find.
Now?? Most boomers are getting into retirement , spening less and we are in a world wide cash surplus.Lots of $$ around and little places to put it for reasonable returns.
An artcile on Globe & mail the other day said "there are billions of $$ sitting in companies coffers waiting to be invested".

The ultra low interest rates have become a profit boom for companies.....now Im off topic.

anyhow: $55K to $65K /year is a reaonably safe number to use with lots of wiggle room.You do need to add inflation as time goes on.With the right investments you should always be able to average that much. making inflation moot.


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## janus10

OldPro said:


> I keep saying, you cannot predict what you will do in the future. Everyone who retires 'takes the risk of being flat broke later in life' whether they realize it or not cainvest. Just as you take the risk before you retire. I can't believe that you would actually write, 'you need to tell them' as if you KNOW what you are going to do. Listen to what you are saying. You are saying you can predict your future.
> 
> I'm writing from 25 years into retirement and telling you that as much changed after as changed before retirement. I really wish some other 10 years plus retirees would post and confirm that for you. As many MAJOR changes occur after retirement as before. You cannot predict those changes.


I've not consulted with a financial planner, but from what I've seen or read, they often ask, "What kind of retirement do you want?" Thus, I would imagine, if you aren't there to waste your and their time, is you tell them how you see your retirement (travel? leave a sizeable estate? 2nd home? sit on a rocker shouting at squirrels?).

I'm starting to wonder if OldPro is really "the most interesting man in the world". "He gave a pep talk so compelling, both teams won."


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## janus10

Hey Canadafan, have you ever tried to graph / plot retiree's expenses as individual datapoints or find the 2 or 3 big factors which resulted in the biggest variances (e.g. no vacation funds at one end, luxurious and/or multi-month vacations at the other end)? Just wondering if you had an empirical set of data which provided average/median expenses in retirement.


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## RBull

janus10 said:


> I know for my dad and his 2nd wife, and my mom, that retirement was not an up and down roller coaster but fairly similar from year to year. Not one of them had any retirement savings of consequence - my dad and his 2nd wife had DBP (plus OAS and CPP) and my mom a small DBP and OAS and CPP. There was not much variety in income, and there was not much variety in the way they lived.
> 
> The biggest change, IMO, was when my dad got old enough to tire of having to maintain a house. Then they decided to sell up (and so unfortunately, my dad was never mortgage free except when he was house free) and rent an apartment.


I have considered the retirements of my grand parents (both sides), my in laws, and my parents (still living) when thinking through and building our plans. There was little variation at all, they all lived very well, however at no time did they incur any significant health care costs. 




> I'm starting to wonder if OldPro is really "the most interesting man in the world". "He gave a pep talk so compelling, both teams won."


LOL, I like your humour, and you have me wondering now too.


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## OldPro

Well it seems pretty obvious that some really believe they can predict what they will do in retirement. Believe as you will. If I could predict my next 25 years as likely to have little variation from what I expect it to be or what it is today, I might be tempted to end it all tomorrow. I'd wait till tomorrow as being an optimist, I'd be hoping something exciting would happen in the meantime. 

As for the Dos Equis ad Janus10, there's nothing that hard about showing both teams how they can win. In fact, you have inadvertently hit on just how I managed to retire at 43. The best salespeople are the best because, they "gave a pep talk so compelling, both teams won", all the time.

Here's a simple exercise to show how it works. Let's suppose we divide a dozen of those posting here into 2 groups of 6 each. We put 10 dimes up for grabs with each group designating a spokesperson to make a 'bid' on buying each dime. The objective of both groups is to make as much money as possible with a dime being worth 10 cents and 'making money' being the difference between what they paid and what the dime is worth. In other words a profit. First bid will be alternated and no bid may be less than 1 cent or in other than 1 cent increments. Got the picture?

OK, so I hold up the first dime and ask for an offer. Group A has first bid and offers me 1 cent. Group B passes and let's Group A have it for one cent. I hold up the second dime and ask for an offer. Group B has first bid and offers me 1 cent. Group A passes allowing Group B to have it for one cent. This continues till both teams have 5 dimes for which they have paid 1 cent each. Both teams therefore have made 45 cents. Both teams have WON.

This excercise always causes debate because people argue that neither won as they came out equal and so it is a 'tie' rather than a 'win'. The winner would have to have come out with more than the other group. Is that true? What was the objective of the exercise? 'To make as much money as possible.' If you have 10 dimes worth 100 cents and you must pay a minimum of 1 cent for each, how much money is it possible to make? Answer, 90 cents. How much money was made? Answer, 90 cents. Therefore, as much money as was possible, was made. That was the objective, not to 'beat' the other group.

No one said it had to be adversarial. But most people assume it is adversarial. Why? If someone lets you make a 45 cent profit, do you actually have a problem with letting them make a 45 cent profit? If you take the adversarial approach, work out what will happen. A bids 1 and B bids 2, A bids 3 and B bids 4, etc. At some point A or B decides to pass and the other group 'wins' the dime. There is no combination under that approach however where 'as much money as possible' (which is 90 cents) will be made. Nor if it is adversarial will either group allow the other to make more than 45 cents. A might make for example 37 cents profit and B ends up with 24 cents profit. BOTH will have lost however. Still insist the group that made 37 cents won? Then tell me which group you wish to be in. A group that makes 37 cents, a group that makes 24 cents or a group that makes 45 cents? You can play win/lose in which case both actually lose or you can play win/win in which case both win.

What it takes however for both to win is trust that if you pass at 1 cent the other group will do the same for you when you have first bid. What that usually takes is someone who, "gave a pep talk so compelling, both teams won." 

Too easy Janus10, try to come up with something challenging. :biggrin:


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## kcowan

I think there is a schism between those who "roll with the punches" and those who pretend they can plan the future. There will never be a consensus but feel free to exercise your fingers!

In 13 years, we could never have forecast what actually happened! And when I retired 10 years before that but kept on working there was even more change.


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## cainvest

kcowan said:


> I think there is a schism between those who "roll with the punches" and those who pretend they can plan the future.


Yup, definitely appears that there are some perception issues, its one thing to see the other side but some can't seem to understand it.

Like I said before, I know lots of retired people who planned for retirement and are doing fine, no fortune tellers involved either ... just simple math skills.


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## OnlyMyOpinion

Canadafan said:


> The original question which we have gotten off track of was "what do you expect your yearly expenses to be when retired"
> The tangenet has got into more of philosophy of "can we predict the future or not"...... I'm going to use a model of $65K/year net ( which has huge buffers built in) extrapolated at 2%/year/year. My overall, retirment plan does not take into account the value of our house & includes estimating returns on average of a few points above inflation.


Thanks for the detailed comments and rationale. I particularly like that it sounds very much like the assumptions & projections that we have made for retirement


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## gibor365

> The original question which we have gotten off track of was "what do you expect your yearly expenses to be when retired" ...I'm going to use a model of $65K/year net ( which has huge buffers built in)


I think 60% of spending before retirement should be enough.... when our kids will be on their own, we gonna spend significantly less.... so, I also think $65K/net for couple without debt and owning house should be enough... in order to get $65K per couple in ON, gross income should be around 38K per person (or 76K combine) , can be a bit more if you are using TFSAs.


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## steve41

Does anyone know if Target is selling their dartboards at a discount?


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## cainvest

steve41 said:


> Does anyone know if Target is selling their dartboards at a discount?


I believe they are, check retirement planning, stock picking or management sections.
They can also be found at Staples very close to the "Easy" buttons.


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## OldPro

kcowan said:


> I think there is a schism between those who "roll with the punches" and those who pretend they can plan the future. There will never be a consensus but feel free to exercise your fingers!
> 
> In 13 years, we could never have forecast what actually happened! And when I retired 10 years before that but kept on working there was even more change.


There speaks another longer term retiree who realizes you can only "pretend they can plan the future."

Could it be that some people just don't want to see you can't plan that far ahead? Is that thought too scary perhaps rather than not being able to "understand it", do they simply not want to accept it?

"Man plans and the gods laugh". Instead of a dart board steve41, I suggest a Magic 8 Ball. Are you old enough to remember them? Mine has answered every question I ever asked it. http://ecx.images-amazon.com/images/I/51T0DnfCflL._SY300_.jpg

I just asked mine if you can plan retirement and here is what I got. http://www.magic8ball.org/wordpress/wp-content/uploads/Use_The_Magic_8_Ball_And_Have_Fun.jpg

I also asked it if those Staples Easy Button's really worked and got this answer: http://www.meganhallinan.com/wp-content/uploads/2013/09/photo21.jpg


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## cainvest

I think OldPro should consult as a financial planner ... it would be awesome to see peoples faces when he pulls out a magic 8 ball when they ask "do I have enough to retire today?"


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## OnlyMyOpinion

So just to be clear, you dartboard players and magic ball fans are suggesting that because one cannot know what life holds and what your expenses will be in retirement, that making an _estimate_ is a waste of time? If so, I'd suggest you stop posting on this thread and wasting everyone's time as well.:fatigue:


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## GreatLaker

OldPro said:


> There speaks another longer term retiree who realizes you can only "pretend they can plan the future."
> 
> Could it be that some people just don't want to see you can't plan that far ahead? Is that thought too scary perhaps rather than not being able to "understand it", do they simply not want to accept it?
> 
> "Man plans and the gods laugh". Instead of a dart board steve41, I suggest a Magic 8 Ball. Are you old enough to remember them? Mine has answered every question I ever asked it. http://ecx.images-amazon.com/images/I/51T0DnfCflL._SY300_.jpg
> 
> I just asked mine if you can plan retirement and here is what I got. http://www.magic8ball.org/wordpress/wp-content/uploads/Use_The_Magic_8_Ball_And_Have_Fun.jpg
> 
> I also asked it if those Staples Easy Button's really worked and got this answer: http://www.meganhallinan.com/wp-content/uploads/2013/09/photo21.jpg


Here's what my magic 8 ball said when I asked it about retirement planning:
http://www.brainyquote.com/quotes/quotes/d/dwightdei149111.html
"Plans are nothing; planning is everything."
Dwight D. Eisenhower

The act of planning makes us think about the issues enough that we can make better decisions, and if things change we can recognize it and take action if necessary. I can't predict the future, but all the analysis and planning I have done has given me more confidence and fewer worries about retirement.


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## OldPro

OnlyMyOpinion, no one said do not make an estimate. Make an estimate of what you feel you will need when you START your retirement. When you can generate that income, go ahead and retire. That only makes sense. You just can't know what you will need or have in the future. Do you really think you can predict that?

We are talking about 'pulling the plug' and people comment about being worried as to whether they have 'enough' or not. The assumption there of course is that you can actually KNOW when you have enough. Well, the answer is, you can never KNOW if you have enough. All you can KNOW is if you have enough for NOW. Asking how much others yearly expenses will be is intended to tell you what? I believe those who ask it are actually not asking the question they really want an answer to. 

You don't need anyone to tell you how much you need to live your life in the way you want to TODAY. You can easily tell me, 'I need $65k net to be happy'. There is no need to ask what anyone else needs. So either it is a pointless question or there is an UNDERLYING qestion that is really not being asked. The 'do I have enough to LAST' question.

I don't see it as a waste of time to point that out and move the thread from a pointless question to the one that really matters.


So what are your alternatives? Pull the plug and hope it works out or...........?


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## Eder

I've been retired going on 6 years....my expenses/year have varied from a low of $37,000 to a high of $487,000 ...both of these amounts were unexpected.


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## gaspr

Eder said:


> I've been retired going on 6 years....my expenses/year have varied from a low of $37,000 to a high of $487,000 ...both of these amounts were unexpected.


Well, at least you narrowed it down to a range...


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## kcowan

OnlyMyOpinion said:


> So just to be clear, you dartboard players and magic ball fans are suggesting that because one cannot know what life holds and what your expenses will be in retirement, that making an _estimate_ is a waste of time? If so, I'd suggest you stop posting on this thread and wasting everyone's time as well.:fatigue:


I had a spreadsheet that had three alternative scenarios on it. It made us defer some capital costs for a few years. But some of the alternatives did materialize.

The idea of having a plan is so you can quickly reassess the impacts of unforeseen events. If your plans work out exactly then you are having a very boring retirement IMHO.


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## gibor365

Eder said:


> I've been retired going on 6 years....my expenses/year have varied from a low of $37,000 to a high of $487,000 ...both of these amounts were unexpected.


Did you unexpectedly bought yacht?!


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## IFITSTOBEITSUP2ME

gaspr said:


> Well, at least you narrowed it down to a range...


With all due respect Oldpro, reading some of your responses and more importantly assumptions about myself, basically had me grabbing a kitchen knife and holding it to my throat. Obviously if I listen to you we shouldn't try to be sensible about gleaning knowledge from those before us, to hopefully plan for a successful retirement. Scratch that we shouldn't even contemplate retirement full stop. Are most people that feel 39 years of age like you or are we just privileged here?

Then I dropped the knife with the laughter I'm known for, thank you Eder and Gaspr for ending my reading tonight here on a very good note.

RBull, I'll be PMing you when I can gather my thoughts properly. Thank you for the offer, based on some of the readings here there ain't a hope I wanna post half of what I need help with, I'll likely end up not knowing whether I'm Sherlock or Holmes at the end of it.


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## Hiitsme

Before I was introduced to this thread I had been modelling expenses based on $50K today dollars/pre-tax/inflation. It seems from the more on topic posts here that this might not be unreasonable.


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## Canadafan

I think people first need to adress the original question and understand the original question of this thread:"What do you expect your yearly expense to equal?
"When you retire(d), what do you expect your monthly/annual expenses to equate to"

Point is ( a brief accounting 101 for those out of the loop), "Yearly expenses" are those which re-occur on a regular, relatively predicatable manner.
Such as heat hydro, phone, cable, groceries, property taxes, car maintenance/replacement ( depreciation) & even incliuding the variable expenses such as entertainment,clothing.

These items are relatively predictable, stable & can be extrapoltated with relative accuarcy using inflation numbers.
Who ever stated "expenses" went from a low of $30K to a high of $400K++ does not understand the proper use of the word expenses, notably with the tag infront of it "yearly expenses"

Spending beyond that on a ad-hoc basis , if considered a capital outlay and non-re-ocuring:
back to the orriginal question.
My annual re-occuring expenses were $20,000/year in 1991
Today are $48,000/year.
About 2.5X in 24 years.
Considering some of our highest average inflation rates are included in that time span, one can conclude that annual expenses are predictable.

Now if I decided to go on a world cruise at $50K , that would not move my expenses to $50k more/ year, unless I decided to do that every yer forward.
If I needed a $50K basment renovation because of some disaster, same argument.

Anyhow...just trying to clarify the context of the question. "random spending" Does not equal "annual expenses"


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## AltaRed

Canadafan said:


> Now if I decided to go on a world cruise at $50K , that would not move my expenses to $50k more/ year, unless I decided to do that every yer forward.
> If I needed a $50K basment renovation because of some disaster, same argument.
> 
> Anyhow...just trying to clarify the context of the question. "random spending" Does not equal "annual expenses"


Depends. If I planned to spend $50k in some way every year, e.g. renovation, vehicle, travel, then I would certainly include that $50k in as an annual budgeted expense. It wouldn't be a basic living expense, but everyone's yearly expense expectations/plans are different for different reasons.

A similar thing might be saying I want the comfort of nat gas for fuel versus chopping wood for the Franklin.


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## Canadafan

That I agree with 100%..iF I decided to carry the cost of a $50K renovation, vacation etc etc and could makse sense of that> Meaning it follows my previous 35+ years of living style etc, then for sure..that could be considered an extra expense.
One smaller but accurate number for me:
I have for all of my working life had medical/dental/health benifits covered as part of my employment package.
When I retire I will not: My checking so far indicates , reasonable replacement coverage ( to replace what I have now), can be bought for $500/month.That would then add $6000 to my expected retirement "expenses"..
One other secret: The abiltiy to have things average out. Meaning for example. back in the 1980s, before all of our technical toys. Cable was very inexpenseive at $15/ month.
Now cable includes internet, cell phone "expenses" and other comunications that we have convinced ourselves we need. My cost for that has gone up to well over $120/month .
Yet , because of many reasons, I can find countless things that I dont spend $$$ on anymore. We were on a very regualr basis going out dancing and drinking aka discos ( 1980s)..I can assure you that has disappeared a long time ago and will not come back.
The random things do come into and out of our lives, but unless you make a dramtic change of address, lifestyle or complete make over, the subtle changes will average out.
Back to my example , previous: My recorded expenses in 1991 were $20K/year: excluding vacation or any extra projects etc.
Today that number is ( for me) $48,000.
The inflation rate back in 1991 ( from web search) was in a range of 3.5% to 6%., with 4% being the average.
Had I predicted forward in 1991 to today (24 years) at 4% compounded/year to today would equal $49,200... still think you cannot predict things ahead.
Had I wanted to be very safe and used the 6%, the number would come to $76,000/year, predictably if using 50% more inflation a number 50% larger.
but not an unrealistic range like 30k vs 400K !
Knowing that inflation dropped dramatically even without doing the long drawn out calculations of each year/year % inflation, I know my number is very close.

That-said: If you have a handle on your expenses at the start of retirement and can have an income stream a few points above inflation , then your long term or very long term numbers can be substantiated.
Now: lets have some fun..move the $48k/year 24 years forward from now. What number to use? Inflation is near zero , but that is unrealistic. The long term averge is around 4%. So using that brings the number to $118,000/year.....24 years forward.
I also know some things will change, for example we have 2 cars on the road now, eventually that will drop to one, then zero.That expense will DROP, alternately some living ( old folks homes) costs may come into the story. That being the case, all of my house expenses will be gone.
Like I said things average out.
Before the argumnet rises "what if inflation rises to a crazy number like in the 80s"?, Well..my statement earning a few points above inflation will remove that risk.
Everyone's retirement income stream is very different & that is best left for another thread.


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