All Articles Location Independence

Your Spending In Retirement Will Be Lower

I was reflecting on how much I’m spending here in Barcelona and so far have realized that despite being in a very expensive city in Europe, I’m spending diddly. Since I am slow-traveling, there is no rush, no quick trips where I have to pay for expensive taxis and buy tickets to events during prime-time.

I admit, I haven’t even ventured into the touristy areas yet. I’ve been here almost a week and haven’t seen the beach, haven’t gone to a museum, and haven’t viewed the famous architecture. It’s not that I don’t want to but I am less pressed to do it right away – I have 3 months, plenty of time.


Spending In Retirement Is Lower

My hypothesis is that spending in retirement is lower. I base it on observing those around me who have retired and by talking to those who are actively planning for their retirement.

There are a ton of retirement myths out there and it’s my goal to tease them out and bust them wide open. As high-earning professionals, we are fed a lot of fear-inducing information which keeps us tied to a lifestyle which many of us don’t enjoy.

Top 4 Retirement Spending Categories

The top 4 spending categories in retirement are:

  1. housing
  2. food
  3. transportation
  4. health care

This will constitute 90%+ of your annual household spending. Naturally, you can make it as fancy as you like or as cheap as you like. No matter what you decide, you will likely still live in America and therefore enjoy the same benefits as every citizen.

I had a Family Medicine doctor colleague who was living in a $2.4 million house in San Diego and I had a colleague who was living in a $400,000 home. One Urologist was driving a Bentley and the other a 1992 green Camry.


1. HousE Spending In Retirement

Regardless of whether you opt to retire early (I don’t mean age 55) or you decide to never retire, a time will likely come when you won’t be able to earn the same income as you do currently.

By then, I would hope that you have paid off your home or will have enough of it paid down that you’d be in a position to downsize. It’s best to exercise the latter options at least 5-10 years before retirement if retirement for you means living on a fixed income.

There is something about changing homes once a person/couple retires. It’s like a right of passage to enter retirement. So by all means, if you feel inclined to do so then sell the house and park the money in an investment account. You can then either rent perpetually or purchase a cheaper home, such as a condo.

Property Taxes

Unless you did absolutely no planning whatsoever, you should have almost zero or a very tiny monthly housing expense. Sure, there will be property tax and home repairs, possibly HOA dues. These will be insignificant for most of us.

Another way to put it is that no matter how much your mortgage payments are right now, your property taxes are only a fraction of that. So once you step into retirement, your property taxes should still feel quite light.

I think it’s another discussion altogether whether it’s wise to have a $2.5 million dollar home in retirement where your property tax payments alone will be $25,000/year. Shit, even $10,000 a year seems excessive to me but it all depends on what you planned for.

Repair & Maintenance Spending In Retirement

There is nothing wrong with renting a home during retirement. You would not be throwing money away. In fact, if you rent a place you can offload all property expenses onto the landlord – repair, tax, HOA dues, insurance, and depreciation.

If you decide to own your own home, the good news is that you won’t have to worry if your water heater breaks down at 10pm on a Sunday – you ain’t got work the next morning and can either attempt the repair yourself or calmly and patiently look for the most cost-effective way to have it repaired.

Potential For Income From Your Home

I know this won’t apply to everyone but imagine how evolved the sharing economy will be a couple of years from now. P2P services will be more ubiquitous, easier to transact, and more efficient.

If you have a garage then you can rent it out. If you have an ADU, you can rent that out. Spare bedroom? Rent it out. Don’t need that massive backyard and willing to let someone run a small urban farm off of it? Money.


2. Food Spending In Retirement

With food, I am referring to groceries and dining out. I suspect that dining out will be a little higher but groceries should be lower accordingly. I always think of dining out as 2 different types:

  1. dining out during work hours
  2. dining out for entertainment

The former is likely far more expensive even though we think the latter would be. But when we eat out we do so every once in a while and we are often more careful about what we eat – healthier stuff, etc.

During work hours, we get coffee, snacks, shitty overpriced foods. We spike up our insulin and get massive crashes afterwards creating an even stronger hunger response. We might buy something for colleagues or get more food than we need. We might have to spend far more to get something healthy or drive during our lunch break just to get something palatable.

Dining Out Exclusively

One of my good friends, T. and his wife, eat out nearly every day and try different restaurants every couple of days. She went to culinary school and he has that touch when it comes to cooking – amazing! These 2 together still only spend around $1,500/month dining out. To me, that doesn’t seem like a whole lot.

So, if you wanna go all out and dine out every day and really explore the culinary scene, it really won’t affect your budget all that much. And one more point, I think there is a point when we really might want to go crazy and dine at $400/plate restaurants. Now, I can’t imagine doing that multiple times a week but if your waist can handle that, remember you always have the option to generate some income to make up for the truly lavish and excessive expenses.

Most likely, you’ll be eating less because you are more health-conscious. You’ll be preparing more meals at home and you’ll be able to shop wiser and save more money. That has been my experience and echoed by the geezers who I’ve spoken to.


3. Transportation Spending In Retirement

I put this one 3rd, before health care, because most of us will spend far, far, far more on transportation over our lifetime than we’ll ever spend on health care. It’s not necessary for some of us but it requires a lot of planning.

Transportation mostly refers to an automobile used to commute back and forth to work. There are various expenses which we’re all familiar with:

  • purchase of the car
  • depreciation of the car
  • maintenance
  • mechanical repair
  • gasoline
  • tax on gasoline
  • tax on parts
  • sales tax
  • cosmetic repair after accidents
  • insurance
  • registration
  • driver license renewal
  • car wash
  • towing a car
  • upgrades such as tint, car alarm, stereo
  • traffic tickets
  • ¬†DUI’s

There is a slight expense for those who take public transportation or ride their bike but it’s negligible. When it comes to human-powered transportation, the cost in health savings (minus the risk of getting squished by a Hummer) far exceeds any cost you might have with buying even a $20,000 electric bicycle.

See, even if your bicycle cost as much as your car, you wouldn’t have all the ongoing expenses. In fact, there is no fucking way to build a car for as little as they are being sold to us. The extra cost burden is taken on by all the different groups which get to profit from us owning cars.

Transportation In Retirement

You might develop an expensive car habit in retirement and want an exotic car, or two. But that’s not a transportation expense, that’s an elective luxury expense and if you can afford it and find it to be a sustainable hobby then you should enjoy the shit out of it.

You might have a car and have a few places to go but it likely won’t be as much of an expense to maintain an automobile since the main expense of a car is maintaining it and feeding it gas/electricity.

As a retiree perhaps you’ll use a car-sharing service such as Car2go or rely on a combination of Uber and public transportation. There are numerous ways to cut on transportation expenses when you aren’t pressed to report to the clinic or hospital all the time.

And since automobile commute is so incredibly hazardous to our overall health, this brings us to the next topic, health care in retirement.


4. Healthcare Expenses

So here are the facts, please feel free to disagree, leave all hate-comments at the end.

  • most of what we do for patients is unnecessary
  • most medications do more harm than good
  • very few of us need antibiotics
  • the majority of our illnesses are lifestyle related
  • at least 25% of surgery are unnecessary (not counting cosmesis)
  • what is normal part of aging is considered a disease state by medical professionals
  • cancer management has advanced a lot but is still a crapshoot
  • lab tests are 80% unnecessary and 90% ineffective when it comes to disease management
  • doctors will only get paid more in the future (=higher healthcare costs)
  • 99% of the OTC stuff is junk and harmful
  • vitamins are stupendously overused

As far as healthcare spending goes, it’s true that Americans spend far in excess of what’s necessary in order to enjoy the same/worse health as citizens of other countries.

As Americans we have so many interactions with healthcare professionals that we have started treating them like the guys at Jiffy Lube or the baristas at Starbucks. Our expectations are so high because we have been let down numerous times by long waits, unexpected results, rude nurses, and incompetent healthcare professionals.

The fear of lawsuit has turned many healthcare professionals into overanalyzers. The majority of us practice out of fear or we are at the very least guarded. Few of us practice within the flow state that many artists, athletes, and other professionals get to be in.

I’m not here to solve healthcare. It has, in fact, been quite lucrative for me precisely because it’s so dysfunctional. My initially persistent attempts at changing my patients’ lifestyles was met with “If I just wanted diet advice I wouldn’t be coming to you!” or “I paid $50 for you to tell me to wait it out?” I needed to bring these issues up because we, as healthcare professionals, don’t have to swallow the shit we serve.

We don’t have to be dependent on doctors to maintain and improve our health. Doctors, PA’s, and NP’s should be there to give us expert advice, to guide us. And on the rare occasion when all else fails, they are there to offer an intervention which will most likely cause some harm along with the good that it causes.

Maintaining Health

There are certain diseases which we know so little about and likely have very little to do with our lifestyles such as MS, ALS, malignancies, thyroid disorders, etc. I’m certain that it won’t hurt any of these conditions to still live the healthiest lives possible.

Exercising, eating healthy, controlling stress, getting enough sleep, and avoiding known carcinogens are all basic and important steps to take to prevent major illnesses.

Controlling Healthcare Expenses

If you got to see a healthcare professional when you really don’t need to then poor outcomes are the norm, not the rarity. Unnecessary medications and unnecessary interventions are leading factors in raising healthcare spending.

Going to the ER or getting admitted to the hospital when not absolutely necessary can lead to further poor outcomes later.

Taking OTC meds, vitamins, herbals, supplements which we don’t absolutely need could turn out to be detrimental. It’s okay to admit that all these synthetic compounds that have been developed by individuals far nerdier than us have side effects and broader interactions which we know very little about.

Health Insurance

It’s said that health insurance can be prohibitively expensive for the elderly. We have a nation of citizens who have grown up dependent on the medical system for their basic health. So they will further rely on these healthcare professionals as they age and as they experience normal symptoms of aging which are taboo in our society to discuss.

Furthermore, after a lifelong of unhealthy habits it’s really hard to adopt a healthy one at age 70. Medicine can artificially extend our lives by quite a lot of years. Which brings up the American fetish with longevity, as if it’s a race.

I realize I am about to hit some sensitive nerves here so I’ll leave it at that. But if you live the life you want now then you might perhaps be more willing to let life take the direction it’s going to take. Doesn’t mean that you won’t address illness when it springs up but you may not drain your bank account trying to get 2 more months.


Oh, and there is Medicare! Don’t trust Medicare? Think it’s a shitty system? Think you’ll get worse healthcare because of Medicare? Nonsense! Not only does Medicare pretty much set the standard of health care delivery in this country but Medicare itself doesn’t dispense medical care – healthcare professionals do.

And if you don’t think you can get good care because you have Medicare then let’s jump to the next topic.

Foreign Healthcare

Fortunately for Americans, Mexico and Canada are a buggy ride away. Healthcare will be cheaper there. Will it be better? Depends on the human being who is dispensing the health care.

At least you have the option to have your health managed outside of the US if you think it’s too costly and too annihilistic¬†here.


What About Entertainment Expenses?

Everyone thinks that this is gonna be some gnarly amount of money that’s going to take up their entire budget. I actually think this one won’t be as bad as many fear. If you dine out super fancy, you’re either gonna get too fat or simply exhaust your options.

If you travel a ton then you’re gonna get exhausted and likely spend 6 months recuperating. For those 6 months that you traveled a ton, you probably spent what the average person would spend on slow-travel.

How about a new hobby such as racing cars? I have raced in a few classes of auto racing and most of the older individuals are wiser so they spend less but know how to drive better or make most cost-effective upgrades to their vehicles.

What about antique collecting and raising horses? Uhm, yea, you’re fucked there. I guess there is a limit after all.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.