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27 months. No, I’m not talking about the gestation period of a Black Alpine Salamander.
It’s been just 27 months since I responded to Jonathan’s request for new writers to come forward with their stories. In my first attempt, I talked about the unlikely path that my work life followed. From driving a beer truck for 30 years, to being the owner of a tax preparation practice, to my present situation as a full time retiree, who never ever gets a day off.
One of the things I wrote about was that our social security, along with a few tiny pensions were covering our total spending, and that I was struggling with how much money I could give to my favorite causes. One commenter/seeer who replied on the condition of anonymity, (just kidding, it was Quinn), predicted that inflation would eventually render our guaranteed income insufficient to cover all of our spending, and that we should be cautious about being overly generous.
Fast forward 27 months to today, and we are indeed out-spending SS and pension income. It’s not a worrisome amount, only requiring about a 1% distribution. One culprit is surely inflation; a simple lunch with a friend typically costs $40 to $50 bucks with a tip these days. Just a couple years ago the same lunch was about $30. Premiums for both property and casualty, and health insurance have painfully exceeded average inflation rates. There were also a few unexpected and uninsured medical expenses.
But inflation isn’t the only villain at work here, lifestyle creep has had an impact. We replaced Chrissy’s 14 year old Prius with a new Crosstrek, and have not scrutinized smaller purchases like we used too. We had a few decent vacations this year as well, and are planning a cross country road trip in May of 2026.
I knew that the grumpy old sage was a wise …… man, and that I should heed his warning. Still, I did not imagine that this would happen so soon. We can’t control every aspect of our spending, and 1% is surely a safe withdrawal rate. Still, we have to be mindful about our spending, and control what we can.
What has driven changes to your spending in the past few years?
What has driven changes in my spending in the past few years?
I’m sitting on several lots / parcels of land, both developed with utilities, which I’ve delayed building on because of the phenomenally, rapid rise in construction, labor and materials in just a few short years. I’m not sure if anyone here has development experience, but it’s high risk because the developer tends to front so much cost not knowing if there will be customers to use the land. Fortunately, for me, that’s not an issue for me now. I understand there are some areas where development costs are passed on to people like homeowners in the form of special property taxes but in my area, the developer carries those costs.
The construction price rise is incredibly sad for me because I know people would like to buy a house that’s affordable, but it’s not possible for me to build one at 2020 prices. I would build residential at zero margin for my own grown children who are all employed in medical or STEM but in my area appraisal values haven’t kept up with existing neighborhoods yet, meaning homebuyers need a very large down payment to make up the difference between an appraisal and a cost of a new build. That should balance out in time if the cost of existing homes remains high though.
Yes, my paper assets like mutual funds have also gone up in “value” measured solely against dollars though, as some commenters have noted already.
I rarely eat out these days. The cost has skyrocketed and I eat healthier at home. I only eat out when I travel or for social occasions. I think of it as a cost of maintaining friendships which is super important. I feel for the restaurant owners because I know their costs have gone up and they need to charge more to survive and I want them to survive. Inflation is out of control and I don’t see a path to controlling it. I hope the experts can find a way. Unfortunately cutting government spending, reigning in the national debt doesn’t align with the short term goals of politicians who want to get reelected.
In economics that is known as the Potent Director Fallacy, if I remember correctly. If such experts existed, surely we wouldn’t have the high inflation of the past few years in the first place, or even the gradual inflation over a longer period of time. Remember that 2% inflation per year, cuts the value of your savings in half and about 35 years.
Cutting govt spending is not the answer because the bulk of major spending is on things directly benefiting and needed by all Americans.
The real need – which nobody wants the hear or deal with – is to increase revenue. Americans are among the lowest taxed in the world- generally in the lower third of developed countries.
As in the family, our society needs to learn to pay for what we want and need. Social media is rampant with posts complaining about taxes, cutting govt and fraud and it’s all missing the point and mostly misleading or just wrong. If we had paid our bills as incurred we wouldn’t still have massive deficits.
Did you know Congress stole the SS Trust funds? NOT TRUE OF COURSE, but many people believe it and view their future on that basis.
Don’t forget Milton Freeman‘s famous quote about inflation being a monetary phenomenon. And don’t forget there are some countries where there is zero private property. So even 100% taxation is not enough to outpace government money creation.
inflation is an increase in the supply of money or the supply of credit (since credit spends like money). We had way too much of that in just a few short years during the response to Covid.
(from Gemini) “No country has zero private property (everyone owns nothing), but some, like Vietnam, China, Cuba, and North Korea, severely restrict private land ownership, treating land as state/collective-owned with long-term leases, while countries with strong socialist ideologies, like Sri Lanka Medium article, aim to eliminate it for productive resources.”
Inflation wasn’t the issue here. It’s simply funding the cost of programs we need. SS and Medicare are most visible examples, but highway maintenance is similar. Of course this cost escalate.
Because of the political fear of higher taxes, we have allowed those programs to reach a critical point. Whereas minor tax increases as needed over the last twenty years could have avoided a crisis and would hardly be noticed.
Ask someone if teachers are underpaid, the majority of people always say they are, but then tell them their property taxes need to go up to fix it.
Generally, Americans don’t make the connection between taxes and what they receive for those taxes. IMO the current environment is making it a lot worse.
I agree.
There is a difference between disliking and disagreeing with evidence and recommendations. For example, I have read and understand the basics of nutrition, but have only partially implemented recommended changes in my diet. Not because I partially agree, but because I am only partially willing to do what I know I should.
I think many people, when confronted by facts and ideas they find unpalatable, are slow to accept those facts and are quick to agree with someone with a contrary view. Even when the evidence favors the former. Confirmation bias. Think vaccines and our current CDC leadership.
I don’t want to see my taxes go up either. And I dislike waste, fraud and abuse as well as poorly designed programs as much as the next guy. But I also know that, just like my household, there is only so much money coming in to pay for what is going out. Same thing for the nation.
I do not know how to overcome confirmation bias among those whom you try to teach. A start is for all of us to recognize that all of us possess this trait, and must strive to recognize and overcome it in order to learn.
I am coming up on the end of my first year in retirement and life seems to be costing us about the same amount as when I was working. Apparently extra activities and travel, and perhaps some inflation, have offset work related costs, payroll taxes and savings.
👍 Which is what I have been saying all along and non necessary spending required to enjoy retirement will keep spending going.
Thank you for the heads up. My husband still brings in some income, so it’s hard for me to appreciate the effect inflation has on a retiree’s budget.
Just passing this along in case it’s helpful. For the past several years I’ve been using retirement planning software to estimate my financial situation going forward. You need Excel to use it, but it is set up like a form where you enter your income and expense data and certain assumptions, such as interest rates, inflation, expected growth in investments, etc. Once everything is entered, it generates year-by-year projections. Then you can see areas where you are doing well, or conversely, might want to make some adjustments. One thing I like is that the spreadsheet and the data reside with me (and not with a company that grants themselves a perpetual license to use your data, uses your data to try to sell you other services, or licenses your data to third parties). It can be used by singles or couples.
Other things to know: 1) you do need to be keeping track of your expenses and income throughout the year to get a more accurate picture. I created my own spreadsheet to do that (I also use my income/expense spreadsheet to calculate pro forma end-of-year tax calculations in November, so my spreadsheet does double duty in that sense), 2) the author provides a lot of helpful guidance within the spreadsheet, but you need to give yourself time to make sure you understand it the first time using the spreadsheet, 3) there is an up-front cost for first-timers, but after that you can get annual updates for a nominal amount, and 4) when I’ve had questions, customer service has been very helpful and responds quickly.
I have no connection to this company or anyone associated with it, I’m just a user. Link if anyone wants it:
https://www.completeretirementplanner.com/
Thank you for the link! The planner looks very comprehensive and reasonably priced.
I hesitate to comment here because I know I will get criticized or beaten up, but is all that tracking and assuming really worth it?
What have you learned about your spending you didn’t intuitively know? You surely know of any major declines or additions to your spending in retirement without detailed tracking.
Are you confident with decades long assumptions for the future?
I am not criticizing you, but rather such processes and the down to earth need for them. Maybe my real issue is just not being cut out dealing with such detail.
Rather than answer for myself, I’m going to provide an answer based on general observations of various people I’ve come across. This doesn’t mean someone “into the details” would have all these preferences or influences, but perhaps at least a few. And some of these may apply to people who don’t track their finances to this level. Everyone’s situation and needs are different.
Here are my observations. Some people who track their financial details (historical and projected):
Of course, this is just my opinion, others may have differing POVs.
I suspect all true as to why, but does it add value to the retirement process?
I’d still like to know if you learned something new about your spending after going through the process. No details needed.
Of course, yes.
Yes.
Surely the value is in peace of mind and if that is how an individual goes about it then it can’t be wrong for them? From past posts it seems like you spend a lot of time monitoring status of your various accounts which is a similar process from a different perspective.
Whether you’ve planned/forecast or not you can still be hit by unexpected events. Difference is the planner will know how much resilience they have and have thought through the action steps in response.
Peace of mind is indeed valuable and necessary and no matter how you get there works, but Im just curious as if all that effort adds extra value or perhaps a false sense of security or even the opposite.
A true sense of security?
I’m not a budget type of person. To me, knowing your yearly expenditure and balance with your yearly income works fine. But planning software and spreadsheets have their place. Originally, when I retired, I was going to fulfill a cherished fantasy: use after-tax capital strategically to pay no tax for ten years. But after modeling the scenario, it turned out that in the long term it would cause me a higher lifetime tax burden. That was certainly something I couldn’t have worked out without the help of planning software.
During my brief stint in the financial services business, I had access to software called Financial Profiles. I had fun using it, you would totally hate it, Dick. That program could poop out over a hundred pages; you have your column charts, bar charts, line charts, pie charts, area charts, and a dozen or more pretty colors. It could analyze your current plan (if you had one), pointing out any weaknesses your plan may have. Mostly it just scared the heck out of people, which was probably the idea in the first place; create fear so that I could sell them something.
That’s a great response. Very thoughtful.
Hey Dan I feel your pain. I live in Hawaii (coming close to 50 years now) and eating out for us even a simply lunch such as you mentioned is something we don’t do much, but when we don’t can add an additional $20!to the final tab. Sad, but it’s true the cost of living in America has skyrocketed since the Joe Blow Biden administration and it’s never going back. So, on those rare occasions my wife and I do eat out i thoroughly enjoy the ambiance, because let’s face it; it’s hard to beat a home cooked meal. 😎
Too much politics, please stop. This is not Threads or TruthSocial.
I’m ok but the general inflation on just about everything is really impacting my young adult kids. Wages are just not keeping up. I was not rich at their age either, but I remember my slightly above minimum wage going much further. Worked my way thru college w/o debt, had a car, rented a room and a few buck to spare…
Recently, I paid my homeowner’s insurance for next year. It went up 27%. It’s gone up almost 100% over the last 3 years. I’m required to have a separate wind and hail policy as well and can’t wait to see what that will cost. I’ve never made a claim and lived in the house since 2008. So, in certain areas in the economy, inflation is just ripping.
I had the same homeowner’s insurance for a decade, but when rates started rocketing here in Washington (for no particular reason), I went shopping. Find a good independent broker and see what’s out there. You might be pleasantly surprised. I certainly was.
I’m in WA as well and experiencing the same thing. The question I have been asking myself if whether I need this at all. My home is paid off and the land is worth a good chunk of change. If it burns down, it burns down. If a tree goes through the roof, I can just repair it. I’ve been here 20 years and nothing has happened. At some point insurance is just punitive. It’s got me wondering for sure.
Thanks Mike. Great advice.
Not making a claim has little or nothing to do with premiums, it’s the overall loss ratio for the book of business that matters. Wildfires, hurricanes, tornadoes anywhere will drive up our rates. To keep my rates a bit lower I have a $35,000 deductible applicable to hurricane damage on Cape Cod.
It’s not the wildfires, hurricanes or tornadoes. It’s the cost to rebuild after those events as well as other events.
I’m confident there are people who are happy when a storm damages their roof because they get an insurance replacement at little cost to themselves – in the short run.The insurance company pays the cost though and then that adds up over the overall loss ratio in the long run,which it would not if costs to repair or replace were less like they used to be.
I love my agent, and I wouldn’t leave her for just a couple hundred dollars, still, I’m going to get some quotes.
I’ve thought of doing the same thing, but insurance is kind of sticky like banking. My insurance company coordinates my wind and hail as well so I’d have to start all over with that. Inertia will probably get the best of me.
Dan nice work on your article. Yes, for sure noticed I need $100 bills when I take my daughter, her husband and our granddaughter for breakfast and dinner add a few more $100 bills. So been retired 20 years, prices just keep going up. For us we spend all our income and more, and rely on our RMD to fill in the gaps. This works for us, the best to all others.
I wrote a HD article about how my first 22 years of retirement worked out financially. When I started drawing my own Social Security I lived well below my pension plus SS income, until I moved to the CCRC. This year I’m spending perhaps an additional 1% of my portfolio, maybe less. That will go up next year because I am planning a trip. It will also go up because the CCRC’s fees will go up, although since the portfolio has been increasing as well I won’t know the actual percentage draw until the end of the year.
I went back and read that article again. Your final thought—carpe diem—was really poignant given that it was before Jonathan even knew he was sick yet. I saw him in the comments cheering you on to write more articles, which I’m glad you did.
Jonathan leaving us way too soon plus watching my in-laws has driven all of this home even more. My FIL didn’t retire until 70, and my MIL was taking care of her dying mother and twin sister, who died seven weeks apart. Then she had responsibility for her widowed father, who lived to be 102. After he passed, we hoped they finally could have some fun—travel and spend more time with their grandkids—but by then the Alzheimer’s had already started to emerge. She passed last year at 84, and they never really got to enjoy retirement together or the comfortable wealth they had amassed. Carpe diem, indeed.
Thank you! I really miss Jonathan.
Sorry to hear about your in-laws. I feel very fortunate that I was able to go ahead and take early retirement without financial disaster. And very fortunate that I am living in my specific CCRC now.
I’d call it smart planning plus willingness to take risks. Your CCRC journey has really informed my thinking, and I’ve pretty much talked my husband around, too.
Glad to hear that! People here are really happy with their choice, but you do need to be selective.
The only real wisdom is experience.
We went to lunch yesterday. We split a salad, each had a pasta dish, I had one glass of wine and we shared a tartufo for dessert. The bill was $123 before tip. It was not an especially upscale place and it was filled with children waiting for be Grinch to arrive – unknown to us in advance. I thought that was a bit much myself.
I find that what we have left from my pension each month is shrinking. Last week we finally exhausted a health reimbursement account that had $18,000 in it when I retired.
I have no intention of changing our spending, but I do look at it by buckets. Pension income, SS income, investment income and last investment balances. Right now SS is not used for basic expenses, but occasionally spending beyond that. If we had gone to Florida this year, that’s where it comes from.
I will be concerned when ongoing expenses start being drawn from beyond pension bucket – which will be the case with the whole college thing.
About that cross country trip, we have done it three times and now have been in every state at least once. HOWEVER, we went in early Fall.
Spring in the Midwest is tornado season which can make travel a bit unpleasant. We had the experience of hearing an alert on my phone to find shelter as a tornado was traveling down the road behind us. Luckily we got to a large underpass. I could see the tornado in my rear view mirror quite a distance away and luckily for us it changed course before getting near, but it was scary to say the least. On our last trip we stopped at a rest area in Texas and it had a tornado safe room like a large vault-no thank you.
Have fun on your trip Dan😎
FYI I once read that during tornados you should not stop under an overpass as it concentrates the wind.
Then I checked Gemini which writes:
…it’s extremely dangerous because the structure acts like a wind tunnel, intensifying winds and creating a deadly trap for flying debris, making a ditch or low-lying area much safer if you’re caught outside.
Interesting, I always heard the opposite, but in this case, there was no place to go, just miles of totally flat empty land. Good thing we didn’t have to test the method.
I thought you disapproved of people splitting dishes. You wrote a whole rant about it.
I do, we didn’t split entrées. Actually trying to talk us into having dessert the server said he would give us two spoons. 🍨🍧
We pushed the trip into May in order to, hopefully, avoid a late winter storm in the mountains. Now you have me worried about a tornado. Thanks a lot Quinn😅
Enjoy your time in the Mid-west. I’ve lived in WI for over 50 years— never experienced a tornado firsthand. We go through watches and warnings every year, but some kind of natural disaster is possible anywhere you go. I wouldn’t schedule a trip to avoid tornados, though I would avoid snow in high mountain elevations.
Thank you, Marilyn, that is my thinking as well.
I like to eat lunch out once a week with the wife. Instead of going to restaurants for lunch. I grab a couple soft drinks from home and find a food truck. We then go to a scenic place and sit on the tailgate. If the weather is nasty we sit inside the truck. Cost is usually $20
We often do similar things, probably cuts the cost in half. It’s amazing how good the food is from some of the food trucks.
I’d have to drive to NYC to find a food truck. The last time I was that close I was hovering over the Statue of Liberty in a blimp. Well maybe once after that ten years ago.
If you can’t find a trendy food truxk near you, then you’re not following your local influencers on social media!
I’ve lived in this area my whole life and except at a carnival, have never seen a food truck. I doubt there would ever be sufficient foot traffic to support one.
What I have been doing is taking both hard and soft drinks from home, putting them in a cooler or Yeti tumbler, grabbing a bagged salad kit from the grocery store and some pepperoni from the cold aisle. I bring a bowl and a fork, and find myself a nice place with a view here in Western WA and just relax. It’s less than 10 bucks and is amazing.
We are finding that going back and forth so much to visit our extended families has meant that we are spending more money than normal. Like for instance, this week with MIL moving into assisted living, both Spouse and I have spent a few hundred dollars on things that are needs and wants to help her be more comfortable. And we had just been to visit all of our parents a few weeks before this. It has been this way for us for the last 18 mos. Almost since Spouse retired for good. I am glad we can be there for them and could be there for Spouse’s brother. But I sure wish we could use some of it for fun and the back and forth is getting so tiring. I know we will be glad we did this when we don’t have them anymore Chris
Your families are lucky to have you guys. You should have no regrets about the sacrifices you are making for them. Best of luck, Chris.
Hey Chris,
When we drive from NH to NC to visit we stop for an overnight at different places (usually civil war battle fields and their local towns in VA/PA) and check out the area for a short time before heading on. Are there areas you can explore on your way or crack from visiting your parents. It could be a one day mini vacation to relieve some of the monotony of a longer trip.
David, Dick, thanks for those suggestions. Good thoughts. C
That’s exactly what we do. Last trip we visited Fredericksburg and I found my great, grandfathers name on the union army roster at the battlefield site office.
Retired 8 years ago at 58, with no pension, and delaying SS til 70. We’ve been living from distributions from the taxable account, IRA, and my wife’s SS. Our withdrawal rate is less than 3% yearly, and we’ve gotten used to taking withdrawals for day to day living, as well as 2-3 luxury trips a year along with destination type travel with friends or family during the year. We notice the inflated rates of goods and services, but our portfolio has more than doubled in 8 years, so our annual spending has gone up comfortably during that 8 years as well, and is still within the 5% guardrail we’ve set for withdrawals. We’ve also tweaked our AA from 60/40 to 50/50 a few months ago. We feel this isn’t market timing, but more a reflection of having won the game and taking some risk off the table until taking SS in 3 years (we plan to glide the AA back to 60/40). Reducing some of our equity risk will help us to maintain a certain level of portfolio withdrawals should a market correction occur before my SS kicks in.
Your plan makes sense to me, including your AA plans. As Warren Buffett said, be fearful when others are being greedy.
For me, it’s restaurants. Prices have skyrocketed over the last few years, and while I still mostly enjoy the food, the enjoyment-versus-cost calculation just doesn’t add up as easily anymore. I’ve become much more strategic about eating out—I do it far less than I used to, and honestly, when friends suggest getting together for dinner, I often can’t be bothered unless it’s a special occasion. I’d rather have them over for a nice homemade meal and a good chat with a few drinks. It’s certainly a shift I’ve also noticed within my social circle. Dinner parties are becoming the new black.
Com’on Mark, how much can one slice of ham with butter on two slices of bread cost? 😎
Strangely enough, last night we grabbed a train into Belfast to visit a continental Christmas market. Two toasted cheese and ham sandwiches with hot drinks cost just short of $50
Ouch!
The U.S. dollar has been losing value against other foreign currencies for some time.
I just got back from a month in Thailand and Taiwan. The food in Thailand is crazy fresh, cooked right in front of you, and a full plate of food for two people is $1.25. Iced coffee/tea is another $1.00. A fully furnished condo is $600/month and you don’t need a car. It’s crazy how many expats are going there from all over the world. It’s incredible.
Was in Portugal recently – can’t get over how inexpensive food was – and just about everything else
Ditto on any meals in the US. Restaurants are fleecing customers with lowly salads costing $20+ in some locales. A 3 person meal can be $180 before you blink twice. I’ve been awed by the prices in other countries, especially when you exit the touristy places.
Is it fleecing customers or the rising prices they deal with? I don’t know, but restaurant profit margins are not high.
I play golf with a dude who owns a restaurant. Margins on soft drinks are in the hundreds of percent, and his margin on a pizza is almost 100%. Yeah, he’s got costs, but he’s doing just fine. He even told me he “feels bad” about charging so much, but is in line with other restaurants in the area.
Lots of overhead in the restaurant business, still, I hate paying 20 bucks for a head of lettuce.