By Lou Carlozo
CHICAGO (Reuters) - You can play with retirement planning calculators from now until you're 90, but it's unlikely any of them will factor in expenses like a $1,000 custom-made satin-and rhinestone stage outfit.
That's the first thing that Aurora Flores, 60, bought when she retired last year after 20 years in public relations. The New Yorker kicked her world music band up into high gear, performing internationally and spending most of her spare cash on items like traveling between shows and that sparkly stage suit.
It paid off. Flores had fun and actually made money taking her Latin music band, Zon del Barrio, on the road. But the suit is a symbol - not only that new adventures await those who leave their day jobs - but also that the expenses of that first year of retirement are often higher than expected and unpredictable.
That's good to know because virtually all of the retirement calculators require workers to guesstimate the amount they will spend in retirement. Many people lowball the figure for the first year, when new retirees outspend their expectations with celebratory trips and hobby supplies. Spending tends to slow down later, as retirees age, settle into routines and travel less.
Flores estimates she spent about $112,000 in her first year of retirement; that's 75 percent of the $150,000 that was her last annual salary, a typical first-year percentage, say experts. But, like with Flores, not all the money goes to utility bills and blood pressure medication. Much of it is an upfront investment in lifestyle change.
For all the research done in the name of retirement planning, there is scant data on actual expenses of first-year retirees. People between the ages of 65 and 74 spend 33 percent of their budgets on shelter; 12 percent on health care; 13 percent on food (with one-third of that on eating out); 5 percent on entertainment and 17 percent on transportation including leisure travel, according to the U.S. Bureau of Labor Statistics.
Reuters asked some retirees how they spent their money during that first year, and found a breadth of answers.
CRUISES AND CROWNS
"If you've worked for 40 years, as my wife and I have done, you think, well it's time to have a little fun," says Stan Hinden, a former Washington Post columnist and the author of "How to Retire Happy." He and his wife took a one-week $15,000 cruise to the Caribbean when he retired, and admits that "I had not included the cost of travel or fun in my budget. It took us about two years to figure things out, and we really had to slow down our spending."
Part of that was necessitated by first-year health expenses, common among retirees who have given up employer insurance but are too young for Medicare and Medigap coverage. Even though he had Medicare, Hinton recalls needing two crowns in his first year of retirement, an expense Medicare didn't cover. Talk about a big bite: It cost him $2000, entirely out of pocket.
Hinton tells preretirees to plan on spending more than 80 percent of their last year's income in their first year of retirement so they are ready for both the fun and the unexpected medical costs.
Half of the respondents in a recent Employee Benefit Research Institute survey said they spent more in early retirement than they did before they stopped working.
For some retirees, debt will be a factor too. The average new retiree now has outstanding mortgage and credit card debt equal to about 10 percent of net worth, according to the AARP's Public Policy Institute.
LIFE IN THE FAST LANE
Richard Alan Brown of Highlands Ranch, Colorado, refers to his March 2012 retirement from pharmaceutical sales as "changing lanes" - perhaps because he had new cars on his mind.
"New toys were necessary," he said, noting that his wife Beth's car lease expired and he had to turn in his company car. They spent $55,000 on a 2011 Jeep and a 2011 V6 Chevrolet Camaro.
The couple also threw a "Changing Lanes soiree" for about 75 guests at The Broadmoor in Colorado Springs, a luxury resort and hotel by Cheyenne Lake, that set them back between $12,000 and $15,000.
"When you retire with a great benefits package, you think you're king of the world for the first year," says Brown, 61, who was making $148,000 in the final year on the job.
But the Browns actually planned carefully for that first-year splurge - running numbers with a financial adviser and dialing back regular expenses, including downsizing from a single-family home to a townhouse.
They spent 75 percent of their combined incomes in year one and expect to spend less in year two, in part because he's spending much of his time writing a book and in part because the couple saves on travel by driving 40 minutes away for recreation in the Rocky Mountains. "It's just a tank of gas for us."
UPSIZING THE HOUSE AND THE BUDGET
Not everyone cuts spending or downsizes in retirement. Tony Lopez, 59, of Yorba Linda, California, and his wife Celia, 57, tapped their savings to put down $132,000 - more than double his last salary - on a four-bedroom home they share with their daughter, son-in-law and three grandchildren.
The couple commutes to a vacation home in Texas and waits for Celia to retire from her job as a kindergarten teacher so they can visit Rome and the Vatican. Says Tony, "That's when we're going to take the big trip" - and spend the big bucks.
(Follow us @ReutersMoney or at http://www.reuters.com/finance/personal-finance; Editing by Linda Stern)