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January 20, 2014


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I'd also suggest that many of those early retirees may be golden parachute folks, who really did not WANT to retire (nothing wrong with wanting to work) which also may affect depression and self worth.

Personally, I find as a forced early retiree that the extra time has allowed me to become more healthy. Less work time means more outside time, more wandering and exploring and the option to take daytime classes.

I agree that we all have our own spending needs. Retirement elminiated a whole category of spending for me. (as someone who likes being casual and had to dress, drive, and educate regularly for her job).


I know that working longer has shortened my life because of stress from a bad boss and bad work situation. I chose to stay to reach my 30-years of service, which increases my pension enough to give me financial security (it's COLA). The pension is just part of my total retirement income, but I regard it as my security blanket that's worth the stress of work (I think). But, I'll never know if my decision to stick it out at work for more money and security was worth the price on my health and happiness. However, being insecure about money is stressful, too! I'm happy to be retiring this year!! Syd, you were very, very smart to get out at the age you did. And I think you'll live a longer life because of your planning and wise decision to choose life over work.


That rule of thumb thing needs to be amputated, it is so worthless and irrelevant to me.

Twice in the last 10 years of my career, I voluntarily reduced my salary, from full-time to part-time, then from part-time to lesser part-time. So, 80% of WHAT would I use to estimate my expenses? You start from the ground up on estimating expenses, not from the top (i.e. salary) down.

One condition of my retiring 5 years ago at age 45 was that my day-to-day lifestyle would not change. I did not do a lot of traveling before I ERed, that did not change afterward. Remember, it was the commute I could not stand so I just got sick and tired of travel.

Two big items have had a bif effect on my expensesin the 5 years I have been retired. The first is health insurance. I had a decent HI plan until they raised the premiums by 50% over a 2-year period, so I left the plan and went into a low-cost one. I kenw it was not ACA-compliant but I never intended it to be long-term. I have just begun a new plan this year which is more expensive than what I just had but a lot less than the starting rate for the old plan (and that is without the subsidy; with the subsidy it costs even less). So just charting my HI premiums in the last 5 years and going forward is a very wavy graph, first rising, then falling, then rising again.

The next item it is income taxes, something you did not mention in your post. I had some spikes in my income a few years ago due to short-term cap gain distributions which did not repeat in subsequent years. This caused my income tax bill to rise but remember that it only rose because my income also grew, guaranteeing me the means to pay the taxes. In my budget, I split my income taxes into two parts - one for the basic level of predictable and recurring dividend income and an excess piece consisting of erratic, non-recurring income such as those income spikes. Remember that the income tax brackets are indexed so any income gains due to inflation will not be taxed more due to bracket creep.


Interesting to see you mention Pfau and Blanchett. I've read those guys for years, along with Kitces, Evensky, Guyton, and of course the godfather of withdrawal rate research, Bill Bengen. Keep up the good work, Syd. I enjoy reading your blog.

Retired Syd

Don: Well you are well-educated, aren't you! Thanks for the nice words.


Putting retirement aside, your post made me think of longevity. I recalled that there are certain hot spots on the planet, where people live the longest. Here it is:

Apparently having or not having a job or retiring young had anything to do with these folks living to 100 or beyond. It used to be good clean, stress free living, with tons of movement, activity and exercise. But nowadays, longevity boils down to just one thing: spirituality and belief in God. (Not my words or findings, but proof positive in the article.)
From my own experience, once I gave up total control of my life and decided to follow spirituality, I have found my life to be more meaningful, rewarding and most assuredly, longer lasting. I'm never ill. I don't take any meds. My docs never finds anything wrong with me. I go for all the annual medical tests I think I need each year. So, I don't know.
When I do feel ill, I pray. It seems to be working. I astound everyone with my good health and energy. Maybe their really is something to it. Up until your post, I never gave this much credence.

Just a thought. Just sayin'..........

PS: I could stand to lose a few pounds. I have been praying for that for years but nothing yet. Perhaps spirit thinks I look good in a size 14. Oh well. Marilyn Monroe was a 14.

Banjo Steve

First, know that I am wary of most statistical surveys, have done a bit of social research myself? Where was the study done? On whom? How big a sampling? etc.

Second, I think the finances of retirees is lower because they have the time (as well as the motivation) to pursue rational frugality. Bargain food shopping, coupons, lower gas prices, early bird specials at restaurants, carpooling, senior golf tee rates, etc. Fewer (or no) dependents. Of course, if one chooses to spend $$$ traveling, it can cost, but even then there are retiree ways to do it cheaper.

As for the life expectancies of early retirees, well, if indeed true, then what a way to go! :)


I am not surprised about the amount going down due to:

-payoff of mortgage

-downsizing ultimately to less space and perhaps to urban from suburban location and potentially giving up 1 car or cars altogether

-tiring to traveling so reduction in that budget. Most of my clients comment that the first thing they want to do in retirement is to do all the leisure traveling they never had the chance to do while working. In the next breath they talk about 2-3 yrs of that and then expecting they will tire of it and then settle down to a routine.

And those reductions I would expect would be larger than increase in health care expenses especially once on Medicare and in the interim, they can pocket the difference.

Retired Syd

Banjo Steve: Yes, and even if a study is statistically correct (I imagine that on AVERAGE the 70 or 80% of expenses target could be close), when the actual results can vary so much from the average, the average can be pretty meaningless.


Love this - I would rather die after 30 years of an early retirement than work another 20 years and earn a few more years of life. I feel exactly the same way.
I don't know about decreasing expense as you get older. It must be highly situational. Perhaps it applies to most retiree, but I don't know if I can count on that for us. Since we already threw out the 80% rule of thumb, I don't think this one will apply to us either. I guess we'll see in 40 years or so...


Hi Syd, from the perspective of a couple who retired ten years ago aged 40, your analysis is right on the button. a.) we are still here to tell the tale :) and b.) our disposable income has risen despite UK inflation in excess of 2.5%. In theoretical terms, this should not have been the case - inflation and ultra low interest rates are the enemy of the mortgage free retired. However, in practical terms we have time to; carefully research things that save money, plan our travel/adventures when it is most cost effective to do so, maximise the yield on investments and perhaps most importantly - we need much less 'stuff'.
Delighted to see you are blogging with greater frequency. Keep up the great work.

Marian@The Living Well in Retirement Challenge

Hi Syd! My husband and I have just completed our first year of retirement. We have been pleasantly surprised at how our costs of living are much less now than they were when we worked. The absolute bonus has been the quality of life in our retirement! We are living life well!

Retired Syd

Marian: Congratulations on your retirement. I just took a peek at your blog and am happy to see you are enjoying it so much. Your vegetable garden is beautiful!

Ian: You guys are ahead of us at 10 years, so I'm glad to hear that's how the finances are working out.

RB40: I'm thinking at least in my case it's kind of an inverted U curve. In the beginning, I was really careful with money, spending much less than I expected, mostly because I was a bit nervous. But then a few years in, I can see that it's all been ok, so I have loosened the purse strings a bit. But I can see my desire to squeeze in as much travel as possible has waned a bit. So I can see that expense slowing down over the years, along with some other expenses that I don't really expect to have, say in my 80's.

Retired Syd

Cindi: Sorry for the delay in posting your comment-I just found it in my spam filter! On the weight thing, I just heard on the business channel a few days ago that the average size in the U.S. for women is 14. It was a show about how clothing marketing is so strange because all the models are so much smaller than the average shopper. Even though the average is much higher, they sell more clothes with leaner models. I guess we call that aspirational marketing?

fred doe

If you took care of you money while you were working? Then there's a good chance you'll take care of it when you retire.


I think it's a good idea diversify your investments because if you put all your eggs into one basket and the basket is dropped and all your eggs break then how are you going pay your bills. I found some information about some of the different types of investment options at: http://www.mutualfundstore.com/investing-education.

Michael Johnson

This post is great. It is very interesting as well as informative also. It is very important to know all information about retirement before taking the retirement planning. Before the planning taken it is important to discuss the market strategy with retirement advisor. Proper information gives a proper retirement plan.

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