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Author: arrete Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 745879  
Subject: Reflections-3 Years & 8 Months into RE-long Date: 7/14/2002 1:11 PM
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Now that I am really into retirement, I can look back and see what worked and what didn't when I was preparing to retire. Sometimes the same thing both worked and didn't work. For example:

Budgeting
I kept track of every penny I spent for about 4 years before I retired. It really helped, allowing me to see where I could cut costs with little pain, but also letting me see where the money was going. As a result, I knew what I needed to retire on - I thought. I still keep that budget, and it's a good thing. Here are some of the things I didn't include in the budget. Some I should have though of, others were unpredictable.

Costs of including spouses of my children. Everything from birthday presents to an extra mouth to feed on Sundays. I should have expected that. And I think I have to get a new dining room table - there just isn't enough room for everyone. Definitely hadn't thought of that.

Costs of grandchildren. I must have been in heavy denial (thought I was too young to be a grandparent, even though my kids are in their late 20s-early 30s). It's wonderful having them, but there are costs as mentioned above. I try not to go overboard, but that's hard for a proud grandma (new baby showing up in October - just added him to the budget).

Rapidly increasing health costs - for pets. I knew that costs would go up as they got older, I just wasn't ready for how fast.

Costs for leisure activities, including volunteer. This was very hard to get a handle on, though I tried. I wasn't sure what volunteer activities I would engage in - and now that I'm involved, there are definite expenses - but I'm keeping track.

However, some categories went down more than I expected - mainly clothes. Jeans and T-shirts don't require a lot of money. In fact I have a gift certificate for LL Beans that I'm not sure what to do with.

Time
When you first retire, you have all this time staring you in the face. But that goes away real fast. If you let them, volunteer activities can take up as much or more time than a job - but that it under your control. Still, it is easy to get over-involved. Grandchildren take time! If you want to get to know them and be part of their life. Duh (denial again). And hobbies may generate the use of more time than when you were working. My garden is requiring more time - but that's because I enjoy it. I just have to be careful not to reach the point where it is a chore instead of a joy. And I do everything at a slower pace - much more enjoyable that way.

Money
I really worked hard on having enough money to retire without having to worry. And I must say that I'm glad that I read everything that intercst and TheBadger wrote because they showed me the right direction and gave me the confidence to go ahead and retire. So far, even in this dismal market, I am managing to stay under my 4%. One reason is because I started closer to 3%. One thing I am sorry about is not having a CD ladder in place. That would have made me feel better in this market, but I still have enough padding to make it for another year without having to cash in anything.

I was a bit scared when I retired, but now I wouldn't have it any other way, because what I have now it time. I can use it any way I want to - I may get over-committed, but I can always back off or quit, because I am FI. It's a wonderful feeling.

arrete
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Author: peteyperson Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70278 of 745879
Subject: Re: Reflections-3 Years & 8 Months into RE-long Date: 7/14/2002 8:33 PM
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arrete,

Thank you for your inciteful post.

I would imagine that most people would never have thought so far ahead to have added the missed budget items. I like to think that I'm very thorough but I don't know that I would have picked that up. What I do know that in some ways is alarming is that the smallest change to monthly or yearly expenses is multipled by between 25 to 30 (depending on your withdrawal rate). This makes even the smallest budget corrections/overspending costly. It begins to make me think that it might be sensible to add in an extra % to cover such amounts you had not thought of despite budgetting several years prior. I have heard somoene add 10% as a buffer but I'm not sure that is quite enough.

Could you give us some idea in % terms what the increasing costs have come out at, which would give one example of a real world post-FI correction?

Thanks,
Petey



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Author: arrete Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70283 of 745879
Subject: Re: Reflections-3 Years & 8 Months into RE-long Date: 7/14/2002 9:57 PM
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Peteyperson's question actually made me sit down and do a few calculations.

Could you give us some idea in % terms what the increasing costs have come out at, which would give one example of a real world post-FI correction?

I have data from 1999 through 2001 - so only 3 years of real data. My data before that was on a classified computer. I have a printout somewhere, but the 3 years will have to do. I retired Oct 31, 1998.

Pets - up 40% from 1999 to 2001. I would have thought about 10% per year max. And none of this was catastrophe. Just regular checkups, shots and teeth-cleaning. I even had their teeth cleaned in October when the vet gave a discount. Someday, one of them will have a real problem. With my last cat (I can already hear SP's solution to this problem), I was paying over 3-4K for a couple of years, but she had cancer. Could happen to one of my 2 remaining cats.

Clothing is erratic - so far this year, I haven't spent anything. However, I will probably buy some sports socks at COSTCO and, uh, personal items when they go on sale. We're probably talking max $40. When I was working, especially when I had to wear suits, a couple thou wasn't unusual.

Volunteer - I had no idea that my volunteer work would include chauffeuring raccoons and owls. Very dependent on gas prices. And I do keep my mileage figures to take off on my income tax. I drove over 4000 miles for charitable reasons last year. It was worth keeping tabs on the mileage. But that was a 100% increase in volunteering cost because I didn't know about it ahead of time. Of course, I can choose not to do it, and the raccoons can hitchhike.

Hobbies - gardening costs have gone up about 50%, and I have a new hobby of feeding birds - that's an increase of 100%. And, of course, TMF cost me $29.95 - hadn't planned on that.

And now, the biggie - new additions to the family.
New daughter-in-laws. When I was first married, my MIL gave me a check in an amount that was my age times 10. I came from a family of 10 kids. I was completely grateful for money that was my own to spend anyway I wanted. So I have continued this with my DILs. I have always done it with my children. You will notice that, not only does adding people increase the cost, but they all get older every year! Anyway, I knew my kids were getting older, but I forgot they might get married. That turns out to be $600 for the DILs (this year)- a hefty amount to have missed. And that's just birthdays - there's Christmas, too. And babies - there is the traditional "largish" gift for the newborn from the doting grandparents, and then birthdays, Christmas… None of this had I added in. From 1999 through 2001, it increased 40% (seems to be a magic number), though I have kept Christmas expenditures constant! I'm very proud of that. And just when I thought the food budget would go down, we are having Sunday dinners for more and more people. I love it - but it is a hit to the budget, though how much is hard to say. And tonight's conversation was about 529s (educational tax-free plans). I hope no one was looking at me.

Healthcare costs doubled - but I had a large bogey in for that since I had no idea what would happen (and still don't).

So - I agree with peteyperson - I think 10% is too little for a slush fund if you want to explore new activities in retirement. And don't forget that your family may grow, not shrink during retirement. Someone, back awhile ago - may have been dory36 or inparadise, had a bare bones budget, a pretty-good life budget, and a spend whatever you want budget. I think that's a good way to go - putting upper and lower bounds on your expenditures. As you can see, I have lots of fat in my budget - and while I might not want to cut back, I certainly could. The healthcare (human and pet) would be the last to go, but everything else certainly could be tightened up.

I still think the biggest unknown is healthcare costs - something I guess peteyperson doesn't have to worry about.

arrete


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Author: arrete Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70284 of 745879
Subject: Re: Reflections-3 Years & 8 Months into RE-long Date: 7/14/2002 10:17 PM
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What a dope. I should have also compared total changes across years. From 1999 through 2001, my before taxes budget increased 13%. When you take into account inflation (which I don't really know),the real increase is more like 5-6%. Not too bad considering the unknowns. The comparison is before taxes because my taxes are based on capital gains which can vary wildly.

arrete

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Author: peteyperson Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70410 of 745879
Subject: Re: Reflections-3 Years & 8 Months into RE-long Date: 7/15/2002 9:50 PM
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Hi arrete,

Thanks for your detailed reply.

You say 10% spare on top of regular budget is possibly too small to allow for new activites / miscalculations, but from your itemized increased costs I couldn't get a take on what sort of % spare you think is prudent given your experience. i.e. what do several budget line items jumping by 40% do to your overall budget that you based " Do I have enough money to retire? " question on?

Petey


Peteyperson's question actually made me sit down and do a few calculations.

Could you give us some idea in % terms what the increasing costs have come out at, which would give one example of a real world post-FI correction?

I have data from 1999 through 2001 - so only 3 years of real data. My data before that was on a classified computer. I have a printout somewhere, but the 3 years will have to do. I retired Oct 31, 1998.

Pets - up 40% from 1999 to 2001. I would have thought about 10% per year max. And none of this was catastrophe. Just regular checkups, shots and teeth-cleaning. I even had their teeth cleaned in October when the vet gave a discount. Someday, one of them will have a real problem. With my last cat (I can already hear SP's solution to this problem), I was paying over 3-4K for a couple of years, but she had cancer. Could happen to one of my 2 remaining cats.

Clothing is erratic - so far this year, I haven't spent anything. However, I will probably buy some sports socks at COSTCO and, uh, personal items when they go on sale. We're probably talking max $40. When I was working, especially when I had to wear suits, a couple thou wasn't unusual.

Volunteer - I had no idea that my volunteer work would include chauffeuring raccoons and owls. Very dependent on gas prices. And I do keep my mileage figures to take off on my income tax. I drove over 4000 miles for charitable reasons last year. It was worth keeping tabs on the mileage. But that was a 100% increase in volunteering cost because I didn't know about it ahead of time. Of course, I can choose not to do it, and the raccoons can hitchhike.

Hobbies - gardening costs have gone up about 50%, and I have a new hobby of feeding birds - that's an increase of 100%. And, of course, TMF cost me $29.95 - hadn't planned on that.

And now, the biggie - new additions to the family.
New daughter-in-laws. When I was first married, my MIL gave me a check in an amount that was my age times 10. I came from a family of 10 kids. I was completely grateful for money that was my own to spend anyway I wanted. So I have continued this with my DILs. I have always done it with my children. You will notice that, not only does adding people increase the cost, but they all get older every year! Anyway, I knew my kids were getting older, but I forgot they might get married. That turns out to be $600 for the DILs (this year)- a hefty amount to have missed. And that's just birthdays - there's Christmas, too. And babies - there is the traditional "largish" gift for the newborn from the doting grandparents, and then birthdays, Christmas… None of this had I added in. From 1999 through 2001, it increased 40% (seems to be a magic number), though I have kept Christmas expenditures constant! I'm very proud of that. And just when I thought the food budget would go down, we are having Sunday dinners for more and more people. I love it - but it is a hit to the budget, though how much is hard to say. And tonight's conversation was about 529s (educational tax-free plans). I hope no one was looking at me.

Healthcare costs doubled - but I had a large bogey in for that since I had no idea what would happen (and still don't).

So - I agree with peteyperson - I think 10% is too little for a slush fund if you want to explore new activities in retirement. And don't forget that your family may grow, not shrink during retirement. Someone, back awhile ago - may have been dory36 or inparadise, had a bare bones budget, a pretty-good life budget, and a spend whatever you want budget. I think that's a good way to go - putting upper and lower bounds on your expenditures. As you can see, I have lots of fat in my budget - and while I might not want to cut back, I certainly could. The healthcare (human and pet) would be the last to go, but everything else certainly could be tightened up.

I still think the biggest unknown is healthcare costs - something I guess peteyperson doesn't have to worry about.

arrete


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Author: nmckay Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70487 of 745879
Subject: Re: Reflections-3 Years & 8 Months into RE-long Date: 7/16/2002 1:37 PM
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Arrete,

it's good to hear what life's like on the other side. I have a couple of suggestions that might help with the budget.

Since you like to garden, why not grow some food? Plant a few of what ever you like and save the supermarket cost.

Also, Honda makes a hybrid (gas/electric) Civic for about $21K new (minus a rebate in certain states). They're roomy, have lots of pep and get 93MPH! There should be some of those coming off lease in the next few years, so next time you're looking for a car it might be worth considering.

nmckay

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Author: friendlygirl Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70490 of 745879
Subject: Re: Reflections-3 Years & 8 Months into RE-long Date: 7/16/2002 1:41 PM
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Honda makes a hybrid (gas/electric) Civic for about $21K new (minus a rebate in certain states). They're roomy, have
lots of pep and get 93MPH!


MPH or MPG? (Could be either one, so I'm just checking. I'm trying to keep my ear to the grindstone ;-) about the hybrids.)

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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70491 of 745879
Subject: Re: Reflections-3 Years & 8 Months into RE-long Date: 7/16/2002 1:47 PM
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friendlygirl asks,

<<<<Honda makes a hybrid (gas/electric) Civic for about $21K new (minus a rebate in certain states). They're roomy, have
lots of pep and get 93MPH! >>>>>

MPH or MPG? (Could be either one, so I'm just checking. I'm trying to keep my ear to the grindstone ;-) about the hybrids.)


Honda advertises the gas mileage for the Insight at 61mpg city/68mpg highway, see link:

http://www.hondacars.com/models/insight/index.html?honda=intro

intercst

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Author: friendlygirl Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70492 of 745879
Subject: Re: Reflections-3 Years & 8 Months into RE-long Date: 7/16/2002 1:54 PM
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Honda advertises the gas mileage for the Insight at 61mpg city/68mpg highway

So then the Civic Hybrid probably does a little worse, eh? (I assume that the Insight was optimized for gas mileage, since it was in the first generation of hybrids.)

93mph, not bad. Actually I have noticed that the hybrids seem to keep up pretty well on the highway.

Of course, I only notice them when I pass them! ;-)


fg
Maybe my next car will be a hybrid?


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Author: LivAboard Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70494 of 745879
Subject: Re: Reflections-3 Years & 8 Months into RE-long Date: 7/16/2002 2:05 PM
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<<<<Honda makes a hybrid (gas/electric) Civic for about $21K new (minus a rebate in certain states). They're roomy, have
lots of pep and get 93MPH! >>>>>

<<MPH or MPG? (Could be either one, so I'm just checking. I'm trying to keep my ear to the grindstone ;-) about the hybrids.)>


Honda advertises the gas mileage for the Insight at 61mpg city/68mpg highway, see link:

http://www.hondacars.com/models/insight/index.html?honda=intro


I read an article in the local paper about a month ago (sorry no link) about a group of Honda Insight fanatics who would push their cars to get the best mileage they could. One guy was able to achieve over 100mpg on a long trip, but has not been able to repeat his performance. Of course he spends all his time concentrating on driving the most fuel efficient way. Slow acceleration, coasts to stops, coasts downhills etc. Apperently most people in the group regulary get better than 90mpg.

At the same time I don't think it would be a stretch to imagine one of those cars doing 90mph, I've been passed by them while doing 70 on an uphill.

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Author: arrete Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70504 of 745879
Subject: Re: Reflections-3 Years & 8 Months into RE-long Date: 7/16/2002 3:30 PM
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Since you like to garden, why not grow some food?

Good suggestion - actually we do grow veggies. We buy very little in veggies over the summer, and right now, if I see another green bean, I may freak. Green beans every night for 10 days. We also have tomatoes, peas, eggplant, beet, chard, squash, peppers, and leeks plus lots of herbs. And I freeze tomatoes to use all year. Haven't bought a can in years.

Also, Honda makes a hybrid (gas/electric) Civic
I have thought about this - I understand they are coming out with a larger version. I know 2 people with the Toyota Prius, which they love. I just have to make sure I can fit a carrier full of raccoons in it :) But now I have a 14 year old Acura Integra, which isn't all that big but still carries raccoons (and other stuff). Sure hope it holds out a couple more years.

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Author: ariechert Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 70679 of 745879
Subject: Re: Reflections-3 Years & 8 Months into RE-long Date: 7/18/2002 12:02 AM
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"Also, Honda makes a hybrid (gas/electric) Civic for about $21K new (minus a rebate in certain states). They're roomy, have lots of pep and get 93MPH! There should be some of those coming off lease in the next few years, so next time you're looking for a car it might be worth considering."- nmckay

What about the replacement costs of new batteries? What do they do with the old batteries? Seems to me if they are coming off lease they will probably need new batteries and I can just imagine that the batteries for those cars will be expensive. - Art

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