[Veneta]

How does everyone plan for big lumpy expenses after retirement? For example, we’ll need to buy a car down the road, kid expenses, replacing the furnace, etc?

Do you save an additional amount on top of your 25x?

If so, how much and where do you keep it?

[Scott]

Yes, your budget should include ‘sinking funds’ for new roof/new car/new knees/new degree.

Obviously these will vary in any given year but you should be able to get an average.

[Tom]

I keep 10k in a money market. Use that for unforseen expenses. I use a car loan from Honda for a new car, never paid more than 1.9% on that, finance half of it usually.

[David]

Personally, this is where I think having a buffer FIRE number is important it also allows you to live more lavish some years if you desire to.

A great example is when I retired in 2023 I had zero debt.

I just bought a new to me $39K truck. The payment is $647 a month. I could pay it off in cash but the payment is no issue because I have more passive income than I currently spend.

Everyone’s buffer would be different depending on family, location, and wants.

For me, my FIRE number was around $40K but I wanted to have around $60K or so in passive income just in case I wanted to splurge on something or if I desired to increase my lifestyle as I age.

[Erica]

Hopefully these are already part of your budget….so they would already be part of your FI number.

[Ann]

Personally, my FIRE number is what I consider a very comfortable budget that includes sinking funds for home/car maintenance and car replacement plus 20% on top of that.

[Ron]

Average big lumpy expenses into your yearly spend in retirement estimate, then it’s a part of your 25X target.

[Matt]

A) “lumpy” is hillarious lol

B) yup, sinking funds for as many items as are practice that will degrade and need fixes or replacement over time

[Lee]

I am retired, 10 years ago today. I retired with a big cash reserve and no debt. We don’t call it an emergency fund, but it handles non emergency and real emergencies (not common) equally.

Right at the moment, I am having a new furnace installed.

Semi-emergency. Just a $7000 install. Not a problem. New kitchen appliance? No problem.

[Tony]

HSA for med stuff
Sell options in traditional weekly then buy index funds with some premium

Let them age out to long-term capital gains. Then with penalty fed and state taxes we can remove for 29 % if needed

For massive issues.
For smaller issues margin available at 5.75%

We also only use half to live off of what we make in dividends and options. So, cash bucket is available

[Jin]

I build in sinking funds into my planned monthly budget. 1% annually for the house, 10% annually for the car (so if it’s a $30k car, I plan to save $3k per year for maintenance, repairs, and to buy a replacement car)

[Author]

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