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When I was planning out my retirement, one of the things I was most curious about was what actual spending looked like post-career. I saw a lot of budgets that I knew wouldn’t fit our lifestyle, because we lived in a highly urban, very expensive city whereas many early retirees were living in the suburbs. Now that I’m over a year into my own retirement, I thought I’d share how things have been working out for us.
Some things of note:
- The Hubs is still working (it’s why we are living directly here in NYC). While we can support the cost of our annual spending completely from the passive income of our nest egg, I suppose it does make a difference to some of our spending decisions around the edges when it comes to buying conveniences. You should keep that in mind.
- If you read other FIRE blogs that show expenses, note that many of the major bloggers in the space have paid off their houses. I take a different view on this, but the net effect is that if you are trying to get a collage view of retirees’ budgets, know that some people’s housing costs aren’t apples to apples (the paid off house still ‘costs’ you because of the opportunity cost of putting that money to work for you but doesn’t show up in annual expense charts). In our case, we were still renting for the first full year, so all our housing costs show up in our annual expenses.
- I’ve included a cost of living adjustment table with a few other geographies so you can better compare to your own living situation to the costs you’re seeing for us in NYC. Figures come from NerdWallet’s cost of living index.
The one thing I hope people take away from looking at our budget is that different things work for different people. I dislike some of the attitude in the space about spending shaming. I’ve been on forums where people are seriously lynched for daring to say they don’t want to sell both their cars and ride bikes everywhere. If they like to eat, they might be told by some zealots that it’s holding them back from retiring early and that they’re not serious about the whole effort.
Our Annual Expenses
The chart below includes the last 12 months of our expenses while I’ve been retired. My data comes from Personal Capital. (If you’re looking for a free and easy way to get an instant view of your finances at all times, check it out. I love the product and write about it more over here.)
In total, we spent about $67k, or $33.5k per person. When I first started out in the city, I was spending $25k a year. That has climbed to $33.5k over 8-9 years, or a little over one thousand dollars a year. Our expenses now include some eye-popping luxuries like weekly maid service, delivered laundry, and almost a thousand dollars a month eating out! And yet it only cost $33.5k per person, the equivalent of $14k per person in Austin, TX or $13k per person in Columbus, OH!
Not cheap, but hardly the amount you would expect to need to afford these kinds of luxuries. We’ve cut in other areas to make room for these amenities.
Let’s take a deeper dive into these costs.
Rent – I’ve talked a lot about this on the blog before. $2,400 is still an eye-popping figure to me, and it makes up 43% of our total expenses. We live without amenities like an elevator, dishwasher, laundry, or even level floors. To get all those things in our current neighborhood for a 1-bedroom apartment, the cost would easily be $5,000+ a month. I’ll take our slanted floors, thank you.
Utilities – Pretty straightforward here. The building has old radiators for heating so we pay nothing for that in the winter. We pay gas for the stove and electric for window a/c. Our footprint is low and often we are basically just paying the connection charge. The exception to this in the summertime, when our electric bills can reach over $100 a month.
Household Purchases – This category intrigues me. I can never easily recall what I needed, but it nonetheless gets ordered. Things like new headphones for the Hubs, a new suitcase, etc. Somehow it adds up to $150 a month. It’s a pretty cushy amount.
Home Maintenance/Cleaning Supplies/Gadgets – Why are gadgets including in this line? Eh, I just think of it all as home stuff. The bulk of this line is electronic gadgets. The Husband wanted a $50 Amazon Echo Dot. We wanted to replace one of our kindles. A tablet hit the fritz so we ordered a cheapo Kindle Fire.
Groceries – I went through a cooking phase early on in my retirement, but then gradually tapered off. We eat out a lot, so our monthly grocery charge is only about $300 a month. I try to get to TJ’s at least once a month because they have the best prices. It involves me taking a suitcase of 30-50 pounds of groceries up and down the subway steps, so it’s a bit of an ordeal (yes, 50 lbs – I’ve weighed them several times). When I go to stores in my neighborhood, I pay easily 20-30% more per item. We are moving soon and I’m excited to get back in the cooking game and hit up an Aldi’s and a TJ’s that are within reach of the new place.
Internet – Our only choice in our building is Time Warner and they are pretty spotty. Still, when I think about all the utility I get out of the internet, this has to be the best $70 I spend each month. I’m excited that our new place is going to offer Verizon Fios, and we’ll get a connection that’s easily twice as fast for less than what we’re paying now. So excited.
Transportation – The Hubs get a monthly subway pass through his work which means we use tax deductible dollars (I’ve included the after-tax amount in this tally). I use a metro pass with stored value and pay per trip. We occasionally take an Uber if we are running late somewhere, but that adds up to less than $20 a month. We try to walk as much as we can mostly for the health benefits, and we picked a neighborhood that is within a 20 minute walk of basically everything we like to do on the weekends, so our transportation costs are pretty low.
Clothing – The Hubs and I both hate to shop for clothes. Like really hate it. I might go once a year, twice if there’s a special occasion where I have to buy a specific dress or outfit. I order things online that are on sale and have free returns. All this to say that the clothing budget is low by dint of us disliking the entire process of shopping.
Health Insurance – We have a high deductible health plan through my husband’s work. It doesn’t really cover much, but for two healthy adults it is reasonably affordable. I priced out a comparable plan on the health care exchange for us and this saved us about $50 a month over what we’d pay if he weren’t working. A small savings.
Additional Health Costs (Deductibles) – We were fortunately pretty healthy this year. No major emergencies. We had a specialist visit that took a cool $342 out of our pockets. Aside from that, it was a few co-pays for regular doctor visits and monthly regular prescriptions.
Other Entertainment – The internet is so entertaining that we have very little use for other paid activities. Occasionally the Hubs will buy a game on Steam. He has a funny psychological barrier from back when he was a 15-year-old kid with no money of his own, so he views $45 as a lot to spend on a game. Mental accounts are fascinating. We’ll drop $45 easily on a meal, but because he has an anchor from old memories, this feels a lot when it comes to video games. We’ll do the occasional movie or interesting Groupon or Living Social activity. We did a Paint Nite event and went to a Bon Jovi concert this year. I’d recommend both.
Miscellaneous – Just a catch-all.
Phone Plan – We use MetroPCS. We get unlimited talk/text/data, with 3GB each month for each phone of high speed data, at which point data is still free but throttled. I’m very pleased with the service. I did research on the coverage of T-Mobile (underlying carrier) in our area and it’s fantastic. Their data is faster than some of the other major carriers.
Eating Out – Over $10,000 on eating out?!?! Ah, my greatest weakness. I love eating out. I love interesting flavors, unique snacks, and adorable ambience. I started tracking food expenses more closely through the year and was able to shave hundreds of dollars from my monthly food expenses, but I admit it’s been creeping back up.
Vacation/Travel – I know there are a lot of retirees who talk about their global vacations after retirement, but I actually don’t like to travel. I have a few things still on my bucket list (a second trip to Japan, Eastern Europe, Southeast Asia, maybe New Zealand, and Marrakech). But I’ve been to a fair number of places already – Sydney, Tokyo, Kyoto, Osaka, London, Dublin, various areas in Tanzania for a Safari, Vancouver, Toronto, Amsterdam, Barcelona, Florence, Venice, New Delhi, New Mexico, etc.
I traveled a lot for work for eight years. Planes suck. Laying around in fancy hotel rooms is kind of nice the first dozen times, but then you’d rather be wearing ratty pajamas in your own bed, cuddling your dog. I knew I was done with travel when I found myself in a $500 a night suite for work, went to the bathroom to take a quick shower, and burned myself on a fancy towel rack warmer that I didn’t know was actually heated. When you stop thinking of that stuff as cool and just annoying, perhaps it’s time to take a break from travel. Our expenses were basically flights to visit our parents, plus a weekend trip or two to places like Philly.
Dog Boarding – Man, having a dog is expensive in the City. I’m really not big on imposing on friends, so we have never really asked friends to watch our dog. It’s also much harder in the City to ask somebody to take your pet when they have a 700 sq ft space and don’t have pets of their own, which most of our friends do not (“Hey Friend, do you mind picking up dog poop for me? Thanks”).
Books/Entertainment – I dumped the rest of our entertainment expenses in the discretionary section. I’m a sucker for a good book. I try and find what I can at the library, but I love rereading really good books. Half of this amount is books.
Dog – I just took my dog for his annual check-up. With annual vaccinations, the bill ran me close to $300. Add dog food ($62 per 24 lb bag), a few dog toys, a memory foam mattress my husband was convinced our dog needed for personal fulfillment, and you get the number in the chart.
Maid Service – Ah, maid service. Okay, let’s spend some real time here. Neither my husband nor I grew up in houses which had maids. I found the very idea to be decadent and not worth contemplating. Over the course of years I was slowly brought around to the idea by colleagues at work, who had said it had changed their lives. Of all the things that pushed us over the edge, it was actually dishes. We lived (and still live) in an apartment that doesn’t have a dishwasher. My husband uses a TON of dishes but hates to wash them. His tolerance for dirty things was a lot closer to that of a college boy than mine was, which mean we’d have piles of bowls stacked in the sink that would enrage me but which wouldn’t bother him. I finally bit the bullet and hired a cleaner once, and we were hooked. No fights about cleaning the toilet. We went from once a month to twice a week, to eventually once a week. It was all about the dishes. We moved to weekly basically so someone else would wash our dishes and clean our humidifier. Again, look, everyone has different things that squick them out or that they hate. My husband hates dishes. I hate touching the humidifier. Thank you, decadent maid service. I’m totally willing to live in a crappy apartment if it means I can then afford to hire you. When we move to the new place, we will have dishwasher. I can’t continue to have weekly maid service in good conscience, but we may still have someone come once a month.
Laundry Service – When my husband and I first moved in together, we both still did our laundry at a do-it-yourself place. But what I found was that it was taking a huge portion of our weekend and mental energy. You don’t want to leave your stuff unattended in NYC because people just take your stuff out and put it anywhere, sometimes on a dirty surface or super close to a stranger’s pile of clothes where the items get mixed up. So you sit in the laundromat. The noisy, unpleasant laundromat. For 4+ hours. We figured out that the cost of doing our laundry was maybe $10-$15 if we did it ourselves and maybe $25-$30 if we sent it out every couple of weeks. Getting back our time together on the weekends was totally worth it. After I retired, we kept the same setup. In the new place we will have in-unit machines, so this will go away. I can stand to get up off the couch in my own home to wash my clothes.
I feel like we live a truly blessed and luxurious lifestyle on our budget. We get maid service. We get laundry service. We have a multi-thousand dollar furball companion. And we’re able to keep our expenses below $67k in New York City. That’s $33.5k per person.
For comparison, that’s $14k per person in Austin, TX or $13k per person in Columbus, OH. So if those are luxuries that you also would like, perhaps it’s not out of your reach to enjoy them while still maintaining a high savings rate – it simply requires you to give up other things you don’t value as much to make room in the budget for these items.
For some, this may be too much to spend and still maintain a 30-60%+ savings rate. That’s why I broke out the discretionary expenses into their own separate category. The discretionary portion of our budget is almost $19k, and these are expenses you can easily eliminate or decrease as you try and maximize your savings in the accumulation phase.
Finally, I realize there may be some friction in the cost of living translation; in highly urban areas, services like cleaning may actually come out cheaper than they would in the suburbs. The point I’m trying to get across more generally, though, is that keeping expenses low for your area doesn’t necessarily mean no luxuries at all. Things that are important to you can make it into the budget if you are willing to cut elsewhere (in our case, place like rent and non-food entertainment).
While we all need to rein in our expenses, it’s not true that the places where we cut have to be exactly the same in order to succeed. I’m certain that some of our choices will look extremely spartan and some of them will look overbearingly decadent to others. The important thing is that it’s working for us and still keeps us under the budget we set. We need more folks to share their expenses so it becomes clear there isn’t just one mold to achieve FI.
How do you spend your money? Are there areas you like to splurge and areas where you’ve been successful cutting well below the average?
Track your own expenses and net worth easily with Personal Capital. It’s free!