How much will you spend when you retire? My post retirement spending increased and yours should too

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When you think about FIRE and early retirement you often think about learning to live on the bare minimum and learning to be happy about it. Well let me tell you, if that’s what FIRE is then I am bad at it! My retirement spending increased compared to while I was working and I recommend you plan to do the same.

Blasphemy! Early retirement is about being frugal and only buying grapes when they go on sale! Well not for me. Maybe I’m getting crotchety in my old age (33) but I have discovered that I have a large imagination and my desire to be spendy has grown in retirement.

I’m freee to spend how I want! (source)

Working isn’t about you

When you work most of your life is sucked up trying to make other people happy. You spend hours toiling away to make it so. Your customer, your coworkers, your boss, your boss’s boss. Whoever. It’s all about them and to make it happen you have to make some spreadsheets!

That’s what you are up to for say, 45 hours a week, then you spend another 5 hours travelling to and from your work. Its a lot of time! Factoring out time spent eating, pooping, and brushing your teeth that 50 hours you have lost for someone else is most of your usable conscious life.

Imagine what would happen if you had all that time back

Now it IS really about you

All of a sudden you get to do whatever you want with the majority of your life. Guess what. You worked hard before so now you are going to play hard and spend some money. That is exactly why my retirement spending increased and why you should plan to provision for some extra spending.

Now every day is the weekend! It’s a never-ending party as far as you are concerned. That certainly sounds amazing as long as your wallet won’t hold back your imagination.

For a while after you retire you will feel like this every time you wake up 😛 (source)

General consensus = less spending in retirement

Most people do not think that your retirement spending will increase. In fact the consensus is the opposite. Your spending should decrease since you have time to be more wasteful and you will entertain yourself well. You can take the bus or whittle your own chairs in the future as a weird hobby. The rule of thumb is that you will in fact spend less money after you retire to the tune of 80% of your pre-retirement life.

This decline in post retirement spending is mostly determined from what is called the ‘retirement spending smile’.

The smile basically says when you begin your retirement you will be full of energy and travel around spending lots of money. Then you’ll slow down in your 70’s, since you’re just sitting around playing with your grandkids and enjoying tea. And then as you get very old your retirement spending increases because you are fragile and expensive. Overall a normal person would average out to 80% of pre-retirement expenses.

Thus making a spending smile. Not necessarily a happy smile, but it’s the shape of a smile.

Retirement Spending Smile: you’re flamboyant, then inexpensive, then very expensive (source)

OUR retirement spending

However if you look at the curve of the retirement spending smile you will notice that the whole premise is that you will splurge when you are younger. If you follow that logic through, when we are very young we will (want to) spend more than when we are old folks and more money than when we were working.

It makes sense, when we are young we want to adventure and take on silly hobbies. I know I started doing all sorts of weird stuff when I retired. My wife and I are newly inspired to try new things on a whim… and to kick back and enjoy life when the time calls for it.

I am aiming to only spend an extra 10% more than my pre-retirement life. Although I will admit in the first little while I have definitely gotten drunk with power and overshot my spending. In the end this will make a distinct phase of early retirement where we want to spend a little extra.

Find your vice to avoid going overboard

You don’t want to go overboard and become Mr Spendy when you retire. That would ruin all of your retirement planning but you do want to make your retired life as good as you can. You are saving money to be able to live your chosen life style. That means maybe your retirement spending should increase to increase your happiness.

Not everything will make you happier so this optimal way of spending can be figured out by finding your vice.

What is your vice? Your vice is the thing that can give you the biggest happiness bang for your buck. By the time you near retirement you have trained yourself to live a simple life and learned to be happy with what you have.


There is always that one thing in the back of your mind that you always wish you had more of. It’s not a big deal for you but over the years you have developed a little jealousy towards other people who have this spendy thing you have been avoiding.

Everyone has a vice. Usually something weird. Too many new shoes, turning the AC way up in the summer, never ending burrito lunches…

Whatever it is. This is the thing you want to ‘over-save’ for. Nothing else. Then you can enjoy it throughout your eternal retirement. Maybe it will lose its luster for you but you won’t always wonder if you are missing out, however silly it is.

My vice…ok fine I have two vices 😐

My vice is time… and education. I spend more money in retirement mostly because I want to save time somehow or learn something I’ve always wanted to know about.

For saving time, I’ll Uber when I used to bus, I pay someone to do meal planning (but not prep…OMG that’s expensive!), and bring in a cleaner to clean my house here and there to avoid spending a day cleaning if things get gross.

For education, there are just so many things I want to learn to do. Sing. Ride a motorcycle. Be fluent in every language? I don’t know if it’s all possible but I’m trying and I don’t want to hold myself back.

I have dreams of becoming a cool dirt biker but my self-preservation kicks in too quickly to do anything cool (source)

So far I’ve hired a Russian tutor, a fitness coach, took some sailing courses, and I can’t even remember what else. Paying for a trainer helps me pick up my topic faster and it thrills me. Totally worth it!

My time is worth more now

It may sound stupid to be so driven to save time or learn faster when I don’t have a job, but seriously, my days are full. Being a good dad is a lot of work just by itself. Actually, since my time is defined by doing what I want to do, my mental hourly rate has gone way up, leading to a further retirement spending increase. Let me explain.

Not so long ago, I used to work for about $35/hour doing something I wasn’t totally into. So internally, I was willing to do things I didn’t like for $35/hour. That was my ground floor.

Now that bottom level isn’t stuck at whatever work was paying me. I don’t have to do things I don’t like for that $35/hour so what about other things I don’t want to do? In my eyes I should also not do other stuff I dislike that I can make disappear for $35/hr.

That means that just because I quit working my time isn’t worth less, it’s worth MORE. I have stopped doing crappy things for $35/hr and put my foot down.

Another reason to increase retirement spending

To take this to the extreme I could just work/save a little more to give myself the money to offload things that cost $40/hr or $45/hr. Meaning the day I quit working and the amount I saved really get to determine how much I can value my time in the future.

Overall, these days I have found my new sustainable “I don’t want to deal with this” rate is more like $50/hour. This likely sounds like poor frugality but financial independence is about living how you want to live without being tied down by money.

I want to live a life where I only have to do things I like. I don’t like the bus. If I read on the bus I eventually want to puke and audiobooks get screwed up by all the announcements. Was I motivated to budget an extra $10,000 a year to handle a bunch of great stuff like not taking the bus? Hell yeah!

I want to live how I want and it’s just fine.

Frugality is still important

You should still be generally frugal even though I’m saying you should increase your retirement spending a little. I’m definitely more spendy than I once was but still way less spendy than many people I know.

You need to be frugal as a whole or you will never be able to save your way to an early retirement in the first place. My family of four lives on $60,000 a year with our post retirement spending increase. We were spending about $50,000 a year pre-retirement and still having a good time from our life. We got to be retired early largely by being frugal and it helped accelerate us to retirement earlier. Would we be living happy lives still if we kept spending $40,000 in retirement? Totally, I live my life but I would argue we are happier with the extra little bit.

If we swole our spending up to $100,000 a year I don’t think my happiness would improve one bit. I already have a tutor. I already don’t take the bus. Then most of the rest of my time is spent with my kids and they just want to play with sticks in the woods.

A near perfect rendition of how my kids look when they play (source)

Learning to cut “life costs” is still step #1

Even if you toss in an some frivioulus expenses, shaving expenses out of your life will get you to retirement faster. Most things you cut wont be missed but you don’t know what you will miss ‘til it’s gone.

According to the department of labour the average US family income is $74,000 and their average spending rate is $57,000.

If you look at how savings rates affect time to retirement, saving $17,000 a year when you earn $74,000 (saving 23% of your income) will cause you to take you a long time to retire. Then using the 4% rule you would need about $1.5M to support that life style.

If your pre-retirement spending increased by adding an extra $10,000 a year to those expenses it would be catastrophic. You would be saving less than 10% of your income which is no good. Furthermore you will need to save more than $1.5M causing you to basically never retire. Sounds like a horrible idea? It is if it’s done like this.

The way to save AND spend more

The way you want to roll this in is after you have cut all the expensive fat out of your lifestyle. You will learn what it is you miss after doing all this cutting. Then when you near retirement look for your vice, and mentally allocate an extra 10% of your retirement spending to it.

Oh no! Now you need to work 10% longer than you already have? Not even! You can just fall prey to one more year syndrome or find something you would like to do in retirement to make up the extra money.

One more year syndrome is pretty beneficial to the goal of a retirement spending increase. You grow your savings by working for one more year but also your investments are feeding you about half of your income again every year. Giving you one year’s salary in 8 months. Factor that in with the fact that you are probably getting paid more than you used to then you can buffer up for a decent retirement spending increase pretty quickly.

There are times I would recommend one more year but in a nutshell I would recommend just working a bit more if:

  1. What you do is fun but you don’t want it as a full time job.
  2. Your salary has gone up significantly higher over the years.
  3. You have a pretty good life currently.

If on the other hand you don’t like what you do, make little money or hate your life then we can figure something else out. There are lots of ways to do it but the important thing is that you like it. That’s a different topic for a different day.


Don’t fall prey to the consensus that you have to spend less when you retire

BUT FIRST – cut the fat off your spending while you’re still working. Start enjoying living on less.

THEN – given that new spending habit, allocate an extra 10% or so for your vice. That one thing you want to be spendy on.

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2 thoughts on “How much will you spend when you retire? My post retirement spending increased and yours should too”

  1. I went from $30 to $50k of spend in the first year of FIRE. Fun is expensive. I’m not worried about it, in fact I anticipated it would happen. We are still well within withdrawal rate limits and we know if there is a 50% market crash that we can simply cut cut back by not taking one of our 8 week foreign vacations that year.

    • Nice man! Going from a 30K to 50K spend must have left you feeling like royalty! You almost doubled your spending!

      I totally agree though. Save up for it and have fun with your retirement. I’m fascinated to know what your extra spending came from.


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