# You're retired - any significant expenses, especially fixed, you had not anticipated?



## janus10 (Nov 7, 2013)

I think it is relatively common, probably more so if you don't have DB pensions that cover all fixed and some discretionary expenses, to question whether you have accurately predicted what your expenses will be once you retire.

So, I was wondering if anyone can share some "lessons learned" about non-trivial expenses in early retirement (let's say before 60 years old).


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## gibor365 (Apr 1, 2011)

Not retired yet , but planning to retire soon . IMHO, major additional expenses will be drugs, glasses, dental, paramedical expenses , esp. if they're covered by your medical benefits...


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## AltaRed (Jun 8, 2009)

Retired at 57 ten years ago. The major surprise was significantly higher spending on recreation, travel and entertainment. The good news is such expenses are not fixed, i.e. they can be controlled if the need be. 

That was somewhat offset by lower costs elsewhere, e.g. commuting, clothing, work lunches, auto insurance. And of course, no EI or CPP payments either. I would budget for no change in living expenses (or potentially increased living expenses) for the first 10 years of retirement while one's health is good. I can see where my travel expenses could begin a significant decline by the time I am 75 (less interest in travel).


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## gibor365 (Apr 1, 2011)

> I can see where my travel expenses could begin a significant decline by the time I am 75 (less interest in travel).


 On the other hand, you are more flexible to travel  , it's much easier to find travel deals if you're retired.


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## pwm (Jan 19, 2012)

I've been retired 11 years. The biggest single expense which I have is income taxes. I sent CRA $20,000 last year and will be doing roughly the same in 2016 and from now on. I pay them 5 times a year. Every quarter and then again in April. When I was working, the deductions covered most of it, but in retirement I was faced with a choice. To be close to even in April I could have had all my CPP and the wife's OAS go directly from Service Canada to CRA. I decided to have nothing deducted and went with the quarterly installment option instead. This way I have the money in hand, and it gives me the illusion of getting some government benefits.


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## agent99 (Sep 11, 2013)

pwm said:


> I've been retired 11 years. The biggest single expense which I have is income taxes.


This is something to consider if you have a significant RRSP and eventually RRIF. The RRIF Minimum Withdrawal Rate has been reduced, but even still, it will be over an above other income from pensions and investment income. It could move retiree into a higher tax bracket. At one time, our CPP/OAS also just covered our taxes. But now with reduced MWR, not quite.

The other cost we have, is getting away from our winter. Many retirees go to the US, Mexico and elsewhere for an extended period. Besides the cost of renting or buying a winter home, there is also the cost of medical insurance and activities while away.


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## kcowan (Jul 1, 2010)

agent99 said:


> Many retirees go to the US, Mexico and elsewhere for an extended period. Besides the cost of renting or buying a winter home, there is also the cost of medical insurance and activities while away.


We have found that living in our own condo in Mexico saves us significantly compared to Vancouver in COL. Then we have been able to sublet our Vancouver place. So we are flush compared to our original plans.

Travel is up because we never go anywhere for much less than a month. Medical insurance costs are creeping up 14 years in.


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## houska (Feb 6, 2010)

I'm channelling several sets of one-generation-older relatives as I write this. Their surprises have included:

1. Significant unplanned dental work and hearing aids
2. Medical costs for treatment they could have had in Canada, but would have taken more waiting than they were prepared to give and so they paid their own way in the U.S.
3. Renovations, home care, and help around the property (rural land) that were needed faster, more, and more expensively than anticipated when one of the couple had health issues
4. Help to younger family members struggling to get on their feet after completing University
5. Setting aside funds so estate can pay capital gains tax on cottage after death, i.e. not leave relatives inheriting with a tax bill that would likely force them to sell the cottage


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## Eder (Feb 16, 2011)

I was quite surprised that my booze budget went thru the roof.


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## al42 (Mar 5, 2011)

Eder said:


> I was quite surprised that my booze budget went thru the roof.


Ha Ha Me too!!


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## GreatLaker (Mar 23, 2014)

Eder said:


> I was quite surprised that my booze budget went thru the roof.


Hopefully offset by lower work related costs like clothing and commuting. Seems like a more than fair tradeoff.
:biggrin:


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## ian (Jun 18, 2016)

No. What has surprised us is that our anticipated burn rate is spot on what we anticipated for the past four years. More luck than skill I suppose. More spending on travel, less spending on shelter. Plus, inflation has been low and our investment returns are better than anticipated.


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## gibor365 (Apr 1, 2011)

al42 said:


> Ha Ha Me too!!


I'm at pre-retirement stage , but it's already pretty high . Check thread about Beer Store, there are discussion how to make your own beer and wine


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## birdman (Feb 12, 2013)

Retired 15 years and utilities up 50%, water up 500%, insurance up 30%, more contracting out for home services (hedge trimming of 15' hedge $800.00, house painting of trim 500.00). Vehicle repairs seem expensive but fortunately don't happen that often. Also have a ski condo which is having a special assessment of maybe $7-10,000. and on and on it goes. Investments returns are lower due to lower interest rates and reduction of equity exposure as we get older. New cars and trucks also seem pricey. Overal though, no real surprises and cash assets still increasing annually so no problems.


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## carverman (Nov 8, 2010)

I'm retired and disabled. My disability expenses are far more these days than I anticipated 10 yrs ago. 

Add to that higher property, insurance and electricity/heating costs and dwindling investments as well as pensions being wound up with no COLA for the last 10 years..well it's enough to make a grown senior carver cry.

But I have to look at it from a philosophical POV, there is always someone out there worst off than me..and
someone once said "Don't take life too seriously..you will never get out of it alive!".


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## OnlyMyOpinion (Sep 1, 2013)

My first 1/1/2 years of retirement have required a lot of back-and-forth traveling across the country to look after ailing parents, help them move, hospital stays, etc. This has meant driving & hotels or flying & car rentals, sometimes for emergencies on short notice. Expenses for this have been about $5,000.
For us it is not a disaster since it basically replaces money we would have spent on traveling/vacations. But if you hadn't planned on traveling/vacation spending in retirement it could be an issue - or perhaps you simply wouldn't be able to be there with them.


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## gibor365 (Apr 1, 2011)

> Retired 15 years and utilities up 50%, water up 500%


 500%?! Did you build swimming pool?!


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## birdman (Feb 12, 2013)

gibor365 said:


> 500%?! Did you build swimming pool?!


No, water costs were negligible, maybe 2/300. a year then the irrigation district was forced to instal new water filtration and UV?? treatment facilities and at the same time we were placed on meters. We have .70 acre fully landscaped with veggie and flower gardens. Upgrading plus meters = $1500. PA


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## bass player (Jan 27, 2016)

Nothing unexpected yet, but I've only been retired for a few months.


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## AltaRed (Jun 8, 2009)

frase said:


> No, water costs were negligible, maybe 2/300. a year then the irrigation district was forced to instal new water filtration and UV?? treatment facilities and at the same time we were placed on meters. We have .70 acre fully landscaped with veggie and flower gardens. Upgrading plus meters = $1500. PA


<Rant> Off-topic, but those @^(*^ fiefdoms called irrigation districts. Why do we have to put up with parochial thinking? Christy needs to get a set of gonads that forces algamation and kicks the bums out..... </rant>


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## birdman (Feb 12, 2013)

AltaRed said:


> <Rant> Off-topic, but those @^(*^ fiefdoms called irrigation districts. Why do we have to put up with parochial thinking? Christy needs to get a set of gonads that forces algamation and kicks the bums out..... </rant>


There are 5 separate ones in Kelowna!!! = 5 managers, 5 Boards of Directors, etc. I believe each has its own pricing.


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## janus10 (Nov 7, 2013)

ian said:


> No. What has surprised us is that our anticipated burn rate is spot on what we anticipated for the past four years. More luck than skill I suppose. More spending on travel, less spending on shelter. Plus, inflation has been low and our investment returns are better than anticipated.


Plan for the worst, hope for the best. Looks like the first 4 years have worked out rather nicely - congratulations!


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## janus10 (Nov 7, 2013)

houska said:


> I'm channelling several sets of one-generation-older relatives as I write this. Their surprises have included:
> 
> 1. Significant unplanned dental work and hearing aids
> 2. Medical costs for treatment they could have had in Canada, but would have taken more waiting than they were prepared to give and so they paid their own way in the U.S.
> ...


Compared to our older relatives, we should see:
1. Nothing serious regarding dental work or hearing aids - at least not for another 15-20 years!
2. That's always a possibility - if it is serious enough, go elsewhere but be prepared to pay.
3. Our plan is to downsize and buy a relatively young home - e.g. no more than 10 years old.
4. Only 1 child went to university and she should be 2 years into her career. And, I already have forecasted the cost to help her with student loans.
5. No cottage - not even cottage cheese.


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## gibor365 (Apr 1, 2011)

janus10, just curious ... how much savings do you have in total before you retire? (exclude house and other real estate)?


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## janus10 (Nov 7, 2013)

gibor365 said:


> janus10, just curious ... how much savings do you have in total before you retire? (exclude house and other real estate)?


We are a shade over $1M and hope to see that increase significantly before we retire.


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## My Own Advisor (Sep 24, 2012)

janus10 said:


> We are a shade over $1M and hope to see that increase significantly before we retire.


That's total equity?

What is the portfolio goal vs. real estate (because you have to live somewhere....)?


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## yyz (Aug 11, 2013)

The question was excluding real estate .


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## janus10 (Nov 7, 2013)

My Own Advisor said:


> That's total equity?
> 
> What is the portfolio goal vs. real estate (because you have to live somewhere....)?


Well, its about $400k in cash and $600k in stocks, etfs, futures and a mutual fund (yes, I still have one!). No options currently. The high cash component is in case we experience a good trading opportunity.

The home is not part of the $1M obviously and we are looking to downsize once we retire. I'd like us to get our investment portfolio to $1.2M before we retire, but even if we are still at $1M, we should be fine. Once we downsize, our plan is to buy something about 40% cheaper than our home in a different part of Ontario and release some equity for our retirement. We have no desire to own additional real estate.

Somewhat off topic, I saw an article where some CPA (I believe) said a quick rule of thumb is that for every $100 from a DB, that is equivalent to $18,000. Since I have never had a DB pension, I'm not sure how it is possible to use that rule of thumb for early retirees. After all, I'd rather have the money now so I can do something with it, rather than wait until I'm 55 or 60, for example.


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## AltaRed (Jun 8, 2009)

The multiplier is 18, not 180. So a $1000/yr pension is worth $18,000 in PV. That probably assumes age 65 for example and some COLA adjustment. $1000/yr pension at age 60 would PV even higher since you would have more years to present worth, e.g. instead of 18 years (83-65), you have 23 (83-60)years of payments to present value. Those without a COLA'd pension like me would have to use a lower factor like 15 instead of 18. Now that I am 67 yrs old, I have to use even a smaller number. It is simply some approximation since there are a ton of unkowns, e.g. COLA adjustments, provisions for surviving spouse, etc.

It is just a way of trying to factor in one's overall asset allocation. Could do the same for CPP (but less so OAS since it can be clawed back or taken away).


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## janus10 (Nov 7, 2013)

Altared, you're probably right. I was thinking I read $100/mth but maybe it was $1,000/yr for every $18,000.
I certainly failed to make that clear in my post.


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