[Jule‏]

I’ve been thinking a lot about the common retirement rule of thumb: multiplying your current annual expenses by 25 to estimate how much you’ll need. Honestly, I think it’s flawed.

It doesn’t factor in the rising costs that come with aging—especially healthcare and the increasing need for daily assistance.

Watching my in-laws and next-door neighbors, both couples in their 80s, has been eye-opening.

Even though they no longer travel and live relatively simple lives, their expenses have gone up, not down.

There’s Medicare supplement insurance, prescription costs, post-surgery recovery help, and paying for everyday services they can no longer manage on their own—like cleaning, yard work, or home maintenance.

For example, my mother-in-law had knee and heart surgeries in the last two years, which meant hiring help just to get through recovery. My father-in-law helps a bit, but he has limits too.

Meanwhile, my neighbors now rely on a housekeeper who handles nearly everything in the home except cooking. And while they don’t travel anywhere anymore, they dine out frequently because cooking daily is too much.

These are real, growing expenses. I was shocked to hear they now spend around $175,000 a year—including insurance, property taxes, and the help they need to live comfortably.

Maybe if you factor in Social Security, the 25x rule becomes more workable. But it’s clear to me now: retirement planning needs to account for the physical, financial, and logistical realities of old age—things that are easy to overlook when you’re still young and able-bodied.

[Deborah]

For the in-laws, consider meals on wheels. While I haven’t used Mom’s Meals, I hear good things about them.

Also, if their local grocery store has pre-prepared packaged meals (ours has them as part of the deli), having grocery delivery could help them have healthy meals with little prep.

Agree w the financial aspect of increasing as we age.

[Melissa]

Or maybe move overseas. I live now in Thailand on 1k usd per month. This doesn’t include my med insurance or travel.

I have a cleaner who comes when I need her for 8 usd per hour.

She is considered expensive but she also helps me with my garden and brings some food when she visits me.

[Ella]

You can age well or you can age poorly, and so much of aging is reliant on what you do now.
My MIL worked well into her 70s. At 80, she still drives, is mobile, and has no chronic diseases.

She gardens, takes care of her youngest grandchild, and still entertains at home. She never smoked nor drank alcohol.

My sister is nearly 67, but you would never know it. She is a vegetarian, a lifelong teetotaler, and a nonsmoker.

She exercises nearly every day and attends regular church services.

In other words, my MIL and sister do all the things that longevity researchers say you should do (or shouldn’t do) in order to increase your “healthspan” or the time in older age in which you are healthy and independent.

In addition to cutting out alcohol, exercising, and improving your diet, one simple thing you can begin doing to ensure you stay mobile is to sit on the floor.

Sit on the floor with your legs crossed, or in the frog position. Do this every day.

People lose their ability to get up off the floor as they age because as adults we tend to sit in chairs or on couches, but rarely on the floor.

It sounds like something simple, but it honestly works to keep you mobile and able to do all the physical things one needs to do in order to run a household.

[Cody]

This is true, and I’m glad you brought it up!
Most who consider that rule of thumb exclude future Social Security retirement benefits from their analysis, which can be a significant buffer against various risks.

Another thought: Many will retire early and need/want to provide support for their own parents, financially and otherwise.

[Ryan]

I’m thinking of delaying social security to 70 and earmarking the entire amount to old age related expenses as my hedge.

[Lisah]

But are you accounting for the fact your money will still continue to grow 6-8% while you withdraw 4%.

[Kyle]

I agree, it’s one of the main things that frustrates me about people retiring so early. They have such blinders on and are oblivious to expenses like this.

They simply look at their annual spend for like one or two years at the age of 26 and think “oh look I barely spend on anything I can retire with just $800k!”

Of course, they don’t realize that they will be a completely different person in 15 years or so compared to themselves now.

Perhaps when you are 45 yo you don’t want to live in a van or a tiny apt in South Dakota. Perhaps they forgot to factor in car repairs or dental care etc.

yes, I know you don’t spend much on dental now but in 25 years you might need to spend $15k on something dental wise. Perhaps they forgot to factor in the cost of remodeling their bathroom and kitchen in 20 years.

How do you overcome this?
Have to use your brain and plan every possible expense. Most people are going to need about $750k-$900k just for healthcare expenses like this.

FI still works just need to be realistic about the numbers

[Chantel]

$175k in their 80s sounds like a lot but if a couple needs $100k per year today at the age of 65 and increases that by 3% per year to account for inflation, that puts them at $175k at age 84, and the 4% (25x) rule accounts for inflation

[张扬]

Sounds a lot like what Suze Orman said to Paula Pant in that infamous interview lol. I don’t think most people want to work until 70 as she suggests though.

And jobs can be a contributor to many health issues due to the stress, poor diets, and lack of exercise often associated with them.

Anyway, this is one reason I didn’t leanfire, but some early retirees earn extra income and actively work on their health so they might be ok in the end.

We’re all forced to find the right balance between time, health, and money, and it might be prudent to save a little extra but I wouldn’t let fear make me lose too many years that could have been spent enjoying life.

[Aaron]

Real retirement planning (with the 4% rule of thumb isn’t) has always considered these costs. Some planners also apply higher inflation factors to these far future expenses (5-6%}.

It’s also important to recognize that your in-laws are in a privileged position of having the money to have that kind of help.

Most will not and their new job will become taking care of themselves until they can’t. Then whatever Medicaid offers will be it until the hospital or a home.

If you don’t have family in the US then non-us options are much cheaper.

[Jeff]

Wake-up call to live healthier. Part of retirement is taking care of yourself through diet and exercise. Movement is life.

I’ve witnessed over the years of what I call the feebeling of America.

Seniors are barely able to move. Zero cardiovascular health and very little upper body strength.

Stopping working doesn’t mean you stop challenging your body. You need to take at least an hour a day to exercise.

Don listen to the voices that tell you to slow down as you age. They’re lying or ignorant.

You’ve got a choice. Either spend your retirement years challenging yourself and living your life or just sit there and watch it pass by miserably…

[Dave]

Your points about underestimating elder care costs are totally valid, but you appear to have a fundamental misunderstanding of the 4% / 25x rule — the calculation is based on your anticipated annual spending post-retirement, *not* your current annual expenses (as you stated).

For example, someone who plans to have their home fully paid off before retirement wouldn’t factor their mortgage payment into their annual spending, as that would result in significant oversaving.

[Stacey]

This is the same-old here, of one more year… what if I need long term care, what if I need daily help, etc…

Most people think money is their constraint on this path.

What if time is your actual constraint? What if you only have a 1 year retirement?

I am a firm believer, you plan for what you can and let the chips fall where they may.

[Kara]

You are supposed to multiply your expected retirement expenses, not your current expenses. It’s an oft-missed subtlety.

But to your point, most think about the immediate first stage of retirement, not necessarily what it’ll look like when they are in their 70s, 80s, and beyond.

For my part that’s why I’m not budgeting in Social Security even though I do expect to get something from it.

My expectation is I will use that additional income on the things I have no current ability to plan for since it is so far away.

Literally, I intend to get a savings account purely to funnel that money into, so it is available once I need it for those future unexpected expenses.

[Jade]

Ditto, after seeing others expenses as they age, I have been factoring this into my retirement plans by increasing needed bottom line by 15% more for ages 70-75, 20% more for 75-80, 25% more for 80+ to account for increased medical expenses and assistance with house maintenance, etc.

This is on top of the usual inflation one usually includes.

[Frank]

A sample size of two couples means nothing, especially when it’s obviously atypical.

I could provide many counter examples from personal experience or we could just look at the data, which makes a lot more sense than this type of catastrophizing.

And don’t you already have a ridiculous amount of money in the many millions?

These kinds of posts are usually made to justify hoarding behaviors.

Your neighbors would be a whole lot better off not trying to keep living in a house and taking care of it when they should be in a retirement facility and have sold the house.

Looks like a lot of bad planning and choices going on here that are inflating their costs.

[Author]

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