When did (do) you increase your spending?

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flyingaway
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When did (do) you increase your spending?

Post by flyingaway »

When doing retirement preparations, many here tend to have a few safety nets, such as having a portfolio 50% above the 4% rule, not counting the social security, using 3% or 2% safe withdrawal rate, discounting pensions, ignoring potential inheritance, etc.

So when did (do) you feel that you can spend more money because the worst things did not happen and you have much more money than you (conservatively) planned? Did you regret not spending more money at the beginning of your retirement?
59Gibson
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Re: When did (do) you increase your spending?

Post by 59Gibson »

Great question. This is the crux of the swr/multiple of expenses debate. Many on here will probably never increase spending even with 40-75x expenses. Always preparing for the next shoe to drop or something lurking around the corner. Just the other day on another post someone proposed what amounted to a 1% withdrawal for potential what ifs. I'd probably look at increasing spending in 5 yr increments.
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RickBoglehead
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Re: When did (do) you increase your spending?

Post by RickBoglehead »

No, we did not regret spending money at the beginning of retirement.

Our retirement began last month. We bought a new car last Friday, that costs a lot of money. It looks good, has 0 to 60 in 4.8 seconds (impressed even my 30+ year old son who is very jealous, and is fun to drive).

You can analyze this stuff to death. If I take our spending that we proposed doing and multiply it by 30 years, we have more than that. Given that we didn't spend to retirement levels in the first half of the year, and given that we're up 10.2%, after spending, in the first half of the year, enough is enough.

We fully intend to do everything possible to spend to our planned budget. Life is way too short, the pandemic has taught us that.
59Gibson wrote: Fri Jul 09, 2021 8:49 am Many on here will probably never increase spending even with 40-75x expenses. Always preparing for the next shoe to drop or something lurking around the corner. Just the other day on another post someone proposed what amounted to a 1% withdrawal for potential what ifs.
This is no way to live, IMO. You can't live in fear all your life.
Last edited by RickBoglehead on Fri Jul 09, 2021 8:59 am, edited 1 time in total.
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Cyclesafe
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Re: When did (do) you increase your spending?

Post by Cyclesafe »

Think more about what makes you feel fulfilled and do those things more - even if they cost money.
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Re: When did (do) you increase your spending?

Post by goodenyou »

People who laser focus on retirement savings and are obsessed with retirement income planning have a hard time enjoying (more) spending. De-accumulation is frightening after 30-40 years of savings. Having funded contentment is the goal. Know what that is is the challenge.

We are spending more prior to full retirement. We have met our goals and are enjoying more at a younger age. We are saving less, but are still saving.
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gogreen
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Re: When did (do) you increase your spending?

Post by gogreen »

flyingaway wrote: Fri Jul 09, 2021 8:38 am When doing retirement preparations, many here tend to have a few safety nets, such as having a portfolio 50% above the 4% rule, not counting the social security, using 3% or 2% safe withdrawal rate, discounting pensions, ignoring potential inheritance, etc.

So when did (do) you feel that you can spend more money because the worst things did not happen and you have much more money than you (conservatively) planned? Did you regret not spending more money at the beginning of your retirement?
Was doing rebalancing last Dec and realized that we saved like 2.6 annual exp in 2020. Asked my wife to start spending more to keep it at least at 2x :mrgreen:
Seriously, what's the point of oversaving if tomorrow isn't guaranteed? :sharebeer
SQRT
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Re: When did (do) you increase your spending?

Post by SQRT »

Yes, a good question. I retired at 56 (2006) and for about 10 years only spent divs and pensions. Divs increased by about 8% per year so this funded a reasonable increase in spending. After 10 years, and a portfolio that was much higher than when I retired, I started liquidating some stock, around 1-2% per year. Now after 15 years of retirement I’m liquidating even more (15%) for a major rebuild for one of our properties.

In general, it’s probably something you would do gradually when your ability to productively spend more intersects with your ability to fund these increases. I think, for many people who retire later, this may not happen in a meaningful way. As we age, opportunities and desire to spend more may not present themselves? But everybody is different.
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Re: When did (do) you increase your spending?

Post by namajones »

flyingaway wrote: Fri Jul 09, 2021 8:38 am So when did (do) you feel that you can spend more money because the worst things did not happen and you have much more money than you (conservatively) planned? Did you regret not spending more money at the beginning of your retirement?
With each passing day, I am increasingly aware of how precious the passing days are, and I know that my health won't last forever. That's why I'm leaning toward taking SS earlier than I have to--so that I won't be tempted to not spend money early on, when I can most enjoy it by doing things I will not be able to do in old age.
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Re: When did (do) you increase your spending?

Post by sureshoe »

Funny, I was thinking about posting a vaguely related post. I'm struggling with this right now. I have a certain cost-of-living right now. I could adjust it up 30% or down 30%. This affects the day I retire. I want to buy a nice car, do some other things around the house, etc.

I've started spending a little bit more. I'm to the point now that I'm worried about dying with a lot of money... hopefully have a long time. The flipside is that if I have to work a few extra years, I don't necessarily mind.

Not sure if any of this helps you. I think the question is, are you willing to go without. I don't want to die broke and desolate, but I think you have to realistically asset what your assets look like when you're 80 or 85. If you have $1M projected along with (likely) SS income... that's starting to feel excessive.
MichDad
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Re: When did (do) you increase your spending?

Post by MichDad »

I retired in 2018 at age 62 with a federal government pension, rental income, and a lot of retirement savings. I'm waiting until age 70 to collect my maximum Social Security benefits. We lived fairly frugally for the thirty years before retirement. I thought it would be difficult to open the spigot and move into a serious spending mode. It hasn't been very difficult. We've been frontloading a lot of taxes on substantial Roth conversions. [We've increased the percentage of our Roth assets from about 30 percent of our portfolio to around 55 percent and increasing.] We're working towards fully funding a grandchild's Section 529 account for four years at a public university. I think we'll accomplish that by the time our grandchild reaches age fifteen. We've done a lot of foreign travel to expensive destinations and we live in Europe several months each year. Despite this, our retirement portfolio has increased by over 15 percent over the past 40 months.

I'm thinking that we'll purchase a luxury SUV in the next year or two.

At some point, we'll sell our large house and downsize to a luxury condo. I suspect that will cause another increase in our retirement portfolio.

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GerryL
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Re: When did (do) you increase your spending?

Post by GerryL »

flyingaway wrote: Fri Jul 09, 2021 8:38 am When doing retirement preparations, many here tend to have a few safety nets, such as having a portfolio 50% above the 4% rule, not counting the social security, using 3% or 2% safe withdrawal rate, discounting pensions, ignoring potential inheritance, etc.

So when did (do) you feel that you can spend more money because the worst things did not happen and you have much more money than you (conservatively) planned? Did you regret not spending more money at the beginning of your retirement?
Shortly before retirement (at 66), I had a CFP evaluate my plan using a somewhat conservative annual spend. (The plan included large irregular spends, like painting home and new car). The results indicated that in the worst case scenario, I would probably die with more $$ than I started with at retirement. So a few years later, I had the plan run again with a ~60% increase in the inflation-adjusted annual allowance. The new worst case scenario did see my net worth shrinking but not evaporating over a 30+ year period.

Just hit my 7-year anniversary and I am still not spending all of my annual allowance (especially not last year!) but I have realized that as my RMDs grow, I may want to increase my QCDs to stay below the IRMAA threshold. So, the next time I have my plan evaluated, I will increase my annual spend target by another 10%. (I've actually set the new target in the Quicken planning tool, and the future is still looking very good.)

I don't track my earnings closely. I watch my overall portfolio and keep track of spending through the year. I have an idea of how much I can comfortably spend, and -- if I want to -- how much I can exceed my allowance in a given year.
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flyingaway
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Re: When did (do) you increase your spending?

Post by flyingaway »

sureshoe wrote: Fri Jul 09, 2021 9:43 am Funny, I was thinking about posting a vaguely related post. I'm struggling with this right now. I have a certain cost-of-living right now. I could adjust it up 30% or down 30%. This affects the day I retire. I want to buy a nice car, do some other things around the house, etc.

I've started spending a little bit more. I'm to the point now that I'm worried about dying with a lot of money... hopefully have a long time. The flipside is that if I have to work a few extra years, I don't necessarily mind.

Not sure if any of this helps you. I think the question is, are you willing to go without. I don't want to die broke and desolate, but I think you have to realistically asset what your assets look like when you're 80 or 85. If you have $1M projected along with (likely) SS income... that's starting to feel excessive.
If at the beginning of the retirement, you have enough according to your spending. Now you have more than enough after the past 10 plus years of bull market. If you spend more, you would not go without money, I think.
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Re: When did (do) you increase your spending?

Post by H-Town »

goodenyou wrote: Fri Jul 09, 2021 9:17 am People who laser focus on retirement savings and are obsessed with retirement income planning have a hard time enjoying (more) spending. De-accumulation is frightening after 30-40 years of savings. Having funded contentment is the goal. Know what that is is the challenge.

We are spending more prior to full retirement. We have met our goals and are enjoying more at a younger age. We are saving less, but are still saving.
This generalization is inaccurate. It took us 10 years to save 50x. During this time, we spent more if we wanted to. After achieving FI, we didn't change our lifestyle over nights. We just keep doing what we were doing. The point of being FI is the freedom to do what you want without the constraint of money.
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Re: When did (do) you increase your spending?

Post by wander »

We are still working. When our portfolio reached 25x of our expenses, we felt confident to increase our expenses to gradually keep up with portfolio growth. Of course, the rule between needs and wants is still there so although our expenses have increased, our portfolio still grows to 26x and more.
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Re: When did (do) you increase your spending?

Post by smitcat »

H-Town wrote: Fri Jul 09, 2021 3:39 pm
goodenyou wrote: Fri Jul 09, 2021 9:17 am People who laser focus on retirement savings and are obsessed with retirement income planning have a hard time enjoying (more) spending. De-accumulation is frightening after 30-40 years of savings. Having funded contentment is the goal. Know what that is is the challenge.

We are spending more prior to full retirement. We have met our goals and are enjoying more at a younger age. We are saving less, but are still saving.
This generalization is inaccurate. It took us 10 years to save 50x. During this time, we spent more if we wanted to. After achieving FI, we didn't change our lifestyle over nights. We just keep doing what we were doing. The point of being FI is the freedom to do what you want without the constraint of money.

"We are spending more prior to full retirement. We have met our goals and are enjoying more at a younger age."
"During this time, we spent more if we wanted to."
Similar to both of you we did not wait untill retirement to increase our spending.
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Re: When did (do) you increase your spending?

Post by jebmke »

Retired in December, 2007. We actually spent more in 08-10 because the recession drove down prices on home improvement contractors as well as travel. Since then we have been relatively steady (excluding income tax expense).
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delamer
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Re: When did (do) you increase your spending?

Post by delamer »

We are fully retired as of 1.5 years ago.

Our fixed income (pensions & Social Security) is significantly larger than our basic expenses in retirement. This also will be true for the survivor when the first of us dies.

Plus we each have long-term care insurance.

If the above isn’t enough to allow us to spend more freely, I don’t know what would be.

Our accumulated savings are either going to be spent by us or our heirs. We decided its going to be us, while doing some gifting to our adult kids.
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Re: When did (do) you increase your spending?

Post by Robdac »

Just finished reading Die with Zero. While not a plug, he did have a couple interesting observations.

1. If you worked to earn it then every $ you don't spend is time you worked for nothing. It was essentially wasted because you certainly can't take it with you. He argues to not leave it to your kids. Instead, give them their "inheritance" while you are alive and enjoy the rest. All of it.

2. As you age, there will be things you can not longer do. For example, even if you love skiing, at some point you will downhill ski for the very last time. Better off to enjoy those kinds of things while you can and leave reading books and watching Jeopardy for later.
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Re: When did (do) you increase your spending?

Post by Wanderingwheelz »

goodenyou wrote: Fri Jul 09, 2021 9:17 am People who laser focus on retirement savings and are obsessed with retirement income planning have a hard time enjoying (more) spending. De-accumulation is frightening after 30-40 years of savings. Having funded contentment is the goal. Know what that is is the challenge.

We are spending more prior to full retirement. We have met our goals and are enjoying more at a younger age. We are saving less, but are still saving.
I’d far rather have to cut back a little at 75-80 than regret not enjoying life more when I was younger and able to immerse myself more deeply in life.
Last edited by Wanderingwheelz on Fri Jul 09, 2021 4:46 pm, edited 1 time in total.
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theplayer11
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Re: When did (do) you increase your spending?

Post by theplayer11 »

Robdac wrote: Fri Jul 09, 2021 4:26 pm Just finished reading Die with Zero. While not a plug, he did have a couple interesting observations.

1. If you worked to earn it then every $ you don't spend is time you worked for nothing. It was essentially wasted because you certainly can't take it with you. He argues to not leave it to your kids. Instead, give them their "inheritance" while you are alive and enjoy the rest. All of it.

2. As you age, there will be things you can not longer do. For example, even if you love skiing, at some point you will downhill ski for the very last time. Better off to enjoy those kinds of things while you can and leave reading books and watching Jeopardy for later.
makes perfect sense, too many fixated on saving every penny for a 30 year retirement when they won't be able to do physically what they should be doing more of now...and most won't even be alive at the end of the 30 years.
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Re: When did (do) you increase your spending?

Post by Wanderingwheelz »

H-Town wrote: Fri Jul 09, 2021 3:39 pm
goodenyou wrote: Fri Jul 09, 2021 9:17 am People who laser focus on retirement savings and are obsessed with retirement income planning have a hard time enjoying (more) spending. De-accumulation is frightening after 30-40 years of savings. Having funded contentment is the goal. Know what that is is the challenge.

We are spending more prior to full retirement. We have met our goals and are enjoying more at a younger age. We are saving less, but are still saving.
This generalization is inaccurate. It took us 10 years to save 50x. During this time, we spent more if we wanted to. After achieving FI, we didn't change our lifestyle over nights. We just keep doing what we were doing. The point of being FI is the freedom to do what you want without the constraint of money.
I can actually relate to what both of you said.

Being FI does give one the freedom to spend without worry. True. That’s what being financially independent actually is.

But it’s also true that at some point, perhaps it’s after your last kid moves out of the house, a new way of viewing things can set in. It may not be exactly “over night”, but it’s definitely a “new chapter“ so to speak that sets something off that maybe relieves some additional pressure that allows one to feel a new freedom to spend more. I think I hit this exact point fairly recently. Without putting too much emphasis on such a number, we are somewhere @ 50x too, but still accumulating without as much concern.
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Re: When did (do) you increase your spending?

Post by Marseille07 »

Robdac wrote: Fri Jul 09, 2021 4:26 pm Just finished reading Die with Zero. While not a plug, he did have a couple interesting observations.

1. If you worked to earn it then every $ you don't spend is time you worked for nothing. It was essentially wasted because you certainly can't take it with you. He argues to not leave it to your kids. Instead, give them their "inheritance" while you are alive and enjoy the rest. All of it.

2. As you age, there will be things you can not longer do. For example, even if you love skiing, at some point you will downhill ski for the very last time. Better off to enjoy those kinds of things while you can and leave reading books and watching Jeopardy for later.
I agree with 2, but I don't agree with 1 at all. 1 is only true for W-2 income. Retirement is based off of 1099-B income. Working toward building a money machine that keeps giving, isn't wasted.
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Re: When did (do) you increase your spending?

Post by RoadagentMN »

It really helped both of us having pension with colas, its a weight lifted off. The retirement accounts are for fun today and legacy tomorrow. The pension resolve any “what if?” concerns.
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Re: When did (do) you increase your spending?

Post by bhwabeck3533 »

GerryL wrote: Fri Jul 09, 2021 2:36 pm Shortly before retirement (at 66), I had a CFP evaluate my plan using a somewhat conservative annual spend. (The plan included large irregular spends, like painting home and new car). The results indicated that in the worst case scenario, I would probably die with more $$ than I started with at retirement. So a few years later, I had the plan run again with a ~60% increase in the inflation-adjusted annual allowance. The new worst case scenario did see my net worth shrinking but not evaporating over a 30+ year period.
I just read this entire thread, and must say one of the most pertinent topics on the forums and hit close-to-home. I'm a Vanguard DIY investor and track expenses quite closely, and monitor my investment balances monthly (since retirement in 2014). I also have a DIY spreadsheet that projects end of year assets to my dying day. And, given my assumptions the number at the "end of my days" is quite significant. I think we could spend more but may need a second opinion.

Where do I find this "CFP" who could provide an informed opinion? Someone who has no interest in managing my "pot of gold" for me.
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Re: When did (do) you increase your spending?

Post by goodenyou »

bhwabeck3533 wrote: Sat Jul 10, 2021 7:24 am
GerryL wrote: Fri Jul 09, 2021 2:36 pm Shortly before retirement (at 66), I had a CFP evaluate my plan using a somewhat conservative annual spend. (The plan included large irregular spends, like painting home and new car). The results indicated that in the worst case scenario, I would probably die with more $$ than I started with at retirement. So a few years later, I had the plan run again with a ~60% increase in the inflation-adjusted annual allowance. The new worst case scenario did see my net worth shrinking but not evaporating over a 30+ year period.
I just read this entire thread, and must say one of the most pertinent topics on the forums and hit close-to-home. I'm a Vanguard DIY investor and track expenses quite closely, and monitor my investment balances monthly (since retirement in 2014). I also have a DIY spreadsheet that projects end of year assets to my dying day. And, given my assumptions the number at the "end of my days" is quite significant. I think we could spend more but may need a second opinion.

Where do I find this "CFP" who could provide an informed opinion? Someone who has no interest in managing my "pot of gold" for me.
This may help

viewtopic.php?f=2&t=296300&p=4864520&hi ... s#p4864520

viewtopic.php?f=2&t=352576&hilit=Fee+only
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Re: When did (do) you increase your spending?

Post by MikeG62 »

flyingaway wrote: Fri Jul 09, 2021 8:38 am When doing retirement preparations, many here tend to have a few safety nets, such as having a portfolio 50% above the 4% rule, not counting the social security, using 3% or 2% safe withdrawal rate, discounting pensions, ignoring potential inheritance, etc.

So when did (do) you feel that you can spend more money because the worst things did not happen and you have much more money than you (conservatively) planned? Did you regret not spending more money at the beginning of your retirement?
This is a good question and IMHO one that is hard to answer until "after the fact". Having said that, we are following a modified version of Guyton and Klingers withdrawal decision rules, which rules include guardrails whereby spending is ratcheted up (or down) should one's annual WD rate fall below (or rise above) certain predefined thresholds. Not quite the same thing as you are talking about, but it does allow for episodic increases in spend (outside of normal inflation adjustments) if things turn out better than planned (or the worse case scenario's you have built into you planning assumptions did not happen). Does not require waiting indefinitely to increase spend and provides a nice structure about how to determine when to loosen the reins so to speak.
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flyingaway
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Re: When did (do) you increase your spending?

Post by flyingaway »

MikeG62 wrote: Sat Jul 10, 2021 9:11 am
flyingaway wrote: Fri Jul 09, 2021 8:38 am When doing retirement preparations, many here tend to have a few safety nets, such as having a portfolio 50% above the 4% rule, not counting the social security, using 3% or 2% safe withdrawal rate, discounting pensions, ignoring potential inheritance, etc.

So when did (do) you feel that you can spend more money because the worst things did not happen and you have much more money than you (conservatively) planned? Did you regret not spending more money at the beginning of your retirement?
This is a good question and IMHO one that is hard to answer until "after the fact". Having said that, we are following a modified version of Guyton and Klingers withdrawal decision rules, which rules include guardrails whereby spending is ratcheted up (or down) should one's annual WD rate fall below (or rise above) certain predefined thresholds. Not quite the same thing as you are talking about, but it does allow for episodic increases in spend (outside of normal inflation adjustments) if things turn out better than planned (or the worse case scenario's you have built into you planning assumptions did not happen). Does not require waiting indefinitely to increase spend and provides a nice structure about how to determine when to loosen the reins so to speak.
I read in another thread, or somewhere else, that many recent retirees enjoy seeing their portfolios increase nicely, AFTER their spending. Maybe people should reconsider how to spend more money.
I am not retired yet, but I have increased my expected retirement spending from $80k to $100k, and make new planning from there.
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Re: When did (do) you increase your spending?

Post by SQRT »

flyingaway wrote: Sat Jul 10, 2021 9:20 am
MikeG62 wrote: Sat Jul 10, 2021 9:11 am
flyingaway wrote: Fri Jul 09, 2021 8:38 am When doing retirement preparations, many here tend to have a few safety nets, such as having a portfolio 50% above the 4% rule, not counting the social security, using 3% or 2% safe withdrawal rate, discounting pensions, ignoring potential inheritance, etc.

So when did (do) you feel that you can spend more money because the worst things did not happen and you have much more money than you (conservatively) planned? Did you regret not spending more money at the beginning of your retirement?
This is a good question and IMHO one that is hard to answer until "after the fact". Having said that, we are following a modified version of Guyton and Klingers withdrawal decision rules, which rules include guardrails whereby spending is ratcheted up (or down) should one's annual WD rate fall below (or rise above) certain predefined thresholds. Not quite the same thing as you are talking about, but it does allow for episodic increases in spend (outside of normal inflation adjustments) if things turn out better than planned (or the worse case scenario's you have built into you planning assumptions did not happen). Does not require waiting indefinitely to increase spend and provides a nice structure about how to determine when to loosen the reins so to speak.
I read in another thread, or somewhere else, that many recent retirees enjoy seeing their portfolios increase nicely, AFTER their spending. Maybe people should reconsider how to spend more money.
I am not retired yet, but I have increased my expected retirement spending from $80k to $100k, and make new planning from there.
Right. In nominal terms we are spending almost double what we did just prior to retirement 15 years ago. It’s been quite a run. I expect to flatten our spending curve at some point but not likely in the next 5 years.
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Re: When did (do) you increase your spending?

Post by JackoC »

Marseille07 wrote: Fri Jul 09, 2021 5:34 pm
Robdac wrote: Fri Jul 09, 2021 4:26 pm Just finished reading Die with Zero. While not a plug, he did have a couple interesting observations.

1. If you worked to earn it then every $ you don't spend is time you worked for nothing. It was essentially wasted because you certainly can't take it with you. He argues to not leave it to your kids. Instead, give them their "inheritance" while you are alive and enjoy the rest. All of it.

2. As you age, there will be things you can not longer do. For example, even if you love skiing, at some point you will downhill ski for the very last time. Better off to enjoy those kinds of things while you can and leave reading books and watching Jeopardy for later.
I agree with 2, but I don't agree with 1 at all. 1 is only true for W-2 income. Retirement is based off of 1099-B income. Working toward building a money machine that keeps giving, isn't wasted.
I agree, 2 is hard to argue with, it's kind of obvious. 1 is entirely a matter of opinion, and scale of wealth. If people are fortunate enough (or however else you believe it comes about, I'm not seeking to debate that) to reach a certain level, raining money on kids while still around, aiming for there to be nothing more left when you go: not IMO. Helping them out and getting them used to the idea there will be more money when you go (your parents have money: it's not the worst thing to have to adapt to in life, but still a thing to adapt to): yes. But like most such topics, many people will in have in mind their own situation, or some 'normal' situation, so when it's said 'give them their inheritance while you are alive' they may be thinking of a few grand a year or something. By same token, in lots of statements here like 'a couple transferring $30k/yr to grown kids is ruining those kids' lives' are assuming $30k/yr for some years and that's all there is, rather than it being a relatively small advance on what's to come. And they aren't necessarily arguing to give the rest to strangers and stiff your own kids (though some are, and anyone who wishes to do that can); more often I think they are just thinking of their own situations and projecting. All depends on opinion, and the actual numbers, which people are often reluctant to get into even under screen names, naturally.
Last edited by JackoC on Sat Jul 10, 2021 2:43 pm, edited 1 time in total.
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Re: When did (do) you increase your spending?

Post by whodidntante »

I'm not retired, but I don't think I am the sort to build in redundant protections. The 4% rule is already conservative if you're old when you retire.
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Re: When did (do) you increase your spending?

Post by quantAndHold »

goodenyou wrote: Fri Jul 09, 2021 9:17 am People who laser focus on retirement savings and are obsessed with retirement income planning have a hard time enjoying (more) spending. De-accumulation is frightening after 30-40 years of savings. Having funded contentment is the goal. Know what that is is the challenge.

We are spending more prior to full retirement. We have met our goals and are enjoying more at a younger age. We are saving less, but are still saving.
This is so very, very true. The first year of retirement was fine, but the second year it sunk in that we really, truly were living on savings. At the same time, we had a couple of extraordinary expenses that we hadn’t planned for, and spent a couple of years living like poor people to compensate. It was earlier this year that I realized that even with the extra spending, our spending rate had dropped to <3% of the portfolio, and we really could loosen up and still be fine.

But the struggle to spend money is a real thing.
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Re: When did (do) you increase your spending?

Post by Wannaretireearly »

Anyone use a bucket strategy? I haven't got to the second half of 'die with zero', which supposedly explains 'how' to do this. But, I've been thinking of this kinda strategy to ensure we have a 'spending plan'.

Assume $4M portfolio & 100k expenses, starting at age 50.

1. Go-go retirement phase: age 50 to 60. Allocate $1M to spend. Some years higher, some years lower.

2. Slow-go retirement phase: age 60 to 70. Allocate $800k to spend. Knowing Social security will kick in for one/both and you'll spend less.

3. No go phase. 70 to 100. Truly use a SWR with a portfolio worth at least $2M

I think you'd still have a largeish portfolio leftover, but would a strategy like this ease the burden of 'high spending early' when health and time allow?


Thoughts? I wonder if any early retirees have followed anything similar.... :sharebeer
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
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Re: When did (do) you increase your spending?

Post by goodenyou »

quantAndHold wrote: Sat Jul 10, 2021 2:50 pm
goodenyou wrote: Fri Jul 09, 2021 9:17 am People who laser focus on retirement savings and are obsessed with retirement income planning have a hard time enjoying (more) spending. De-accumulation is frightening after 30-40 years of savings. Having funded contentment is the goal. Know what that is is the challenge.

We are spending more prior to full retirement. We have met our goals and are enjoying more at a younger age. We are saving less, but are still saving.
This is so very, very true. The first year of retirement was fine, but the second year it sunk in that we really, truly were living on savings. At the same time, we had a couple of extraordinary expenses that we hadn’t planned for, and spent a couple of years living like poor people to compensate. It was earlier this year that I realized that even with the extra spending, our spending rate had dropped to <3% of the portfolio, and we really could loosen up and still be fine.

But the struggle to spend money is a real thing.
In the over 10 years that I have participated in this forum, I have read many posts from people faced with the anxiety of deculmulation. It has been well-researched and written about as well.

“The Deculmulation Paradox
Why Are Retirees Not Spending More?”

https://investmentsandwealth.org/getatt ... aradox.pdf
Last edited by goodenyou on Sat Jul 10, 2021 3:19 pm, edited 1 time in total.
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Re: When did (do) you increase your spending?

Post by delamer »

Wannaretireearly wrote: Sat Jul 10, 2021 2:51 pm Anyone use a bucket strategy? I haven't got to the second half of 'die with zero', which supposedly explains 'how' to do this. But, I've been thinking of this kinda strategy to ensure we have a 'spending plan'.

Assume $4M portfolio & 100k expenses, starting at age 50.

1. Go-go retirement phase: age 50 to 60. Allocate $1M to spend. Some years higher, some years lower.

2. Slow-go retirement phase: age 60 to 70. Allocate $800k to spend. Knowing Social security will kick in for one/both and you'll spend less.

3. No go phase. 70 to 100. Truly use a SWR with a portfolio worth at least $2M

I think you'd still have a largeish portfolio leftover, but would a strategy like this ease the burden of 'high spending early' when health and time allow?


Thoughts? I wonder if any early retirees have followed anything similar.... :sharebeer
I’m not arguing that 70 is the new 50, but to call 60 to 70 “slow-go” years is pretty out there. While you may indeed need to take less from your portfolio, the only major changes on the expense side for most oeople are going to be health insurance premiums and maybe a paid-off house. Travel, dining out, and hobbies are likely to be going full throttle.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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Re: When did (do) you increase your spending?

Post by Marseille07 »

JackoC wrote: Sat Jul 10, 2021 2:40 pm I agree, 2 is hard to argue with, it's kind of obvious. 1 is entirely a matter of opinion, and scale of wealth. If people are fortunate enough (or however else you believe it comes about, I'm not seeking to debate that) to reach a certain level, raining money on kids while still around, aiming for there to be nothing more left when you go: not IMO. Helping them out and getting them used to the idea there will be more money when you go (your parents have money: it's not the worst thing to have to adapt to in life, but still a thing to adapt to): yes. But like most such topics, many people will in have in mind their own situation, or some 'normal' situation, so when it's said 'give them their inheritance while you are alive' they may be thinking of a few grand a year or something. By same token, in lots of statements here like 'a couple transferring $30k/yr to grown kids is ruining those kids' lives' are assuming $30k/yr for some years and that's all there is, rather than it being a relatively small advance on what's to come. And they aren't necessarily arguing to give the rest to strangers and stiff your own kids (though some are, and anyone who wishes to do that can); more often I think they are just thinking of their own situations and projecting. All depends on opinion, and the actual numbers, which people are often reluctant to get into even under screen names, naturally.
Yeah, I guess personally I don't really believe in distributing money while alive. 30K/year, done over the course of 20 years, can add up quite a bit. And I don't know if it is necessarily healthy for the kids to receive this kind of money, whether the parents can afford to or not.

And I guess I was also disagreeing with the notion that the money we have leftover is wasted because we can't take money to the afterlife. While this statement isn't false, the story isn't so simple when we're living off of money created by...money.
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Re: When did (do) you increase your spending?

Post by Tingting1013 »

Marseille07 wrote: Sat Jul 10, 2021 3:25 pm
JackoC wrote: Sat Jul 10, 2021 2:40 pm I agree, 2 is hard to argue with, it's kind of obvious. 1 is entirely a matter of opinion, and scale of wealth. If people are fortunate enough (or however else you believe it comes about, I'm not seeking to debate that) to reach a certain level, raining money on kids while still around, aiming for there to be nothing more left when you go: not IMO. Helping them out and getting them used to the idea there will be more money when you go (your parents have money: it's not the worst thing to have to adapt to in life, but still a thing to adapt to): yes. But like most such topics, many people will in have in mind their own situation, or some 'normal' situation, so when it's said 'give them their inheritance while you are alive' they may be thinking of a few grand a year or something. By same token, in lots of statements here like 'a couple transferring $30k/yr to grown kids is ruining those kids' lives' are assuming $30k/yr for some years and that's all there is, rather than it being a relatively small advance on what's to come. And they aren't necessarily arguing to give the rest to strangers and stiff your own kids (though some are, and anyone who wishes to do that can); more often I think they are just thinking of their own situations and projecting. All depends on opinion, and the actual numbers, which people are often reluctant to get into even under screen names, naturally.
Yeah, I guess personally I don't really believe in distributing money while alive. 30K/year, done over the course of 20 years, can add up quite a bit. And I don't know if it is necessarily healthy for the kids to receive this kind of money, whether the parents can afford to or not.

And I guess I was also disagreeing with the notion that the money we have leftover is wasted because we can't take money to the afterlife. While this statement isn't false, the story isn't so simple when we're living off of money created by...money.
Let’s say my daughter develops a passion for theater and is really good at it, devotes her life to studying and performing it. She has her head on straight and does everything right, but the only places she can pursue her dream are in VHCOL locales. Would I bat an eye at buying her a $1M condo so she doesn’t have to slum it with a bunch of revolving roommates? That’s money very well spent IMO.
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Re: When did (do) you increase your spending?

Post by quantAndHold »

Wannaretireearly wrote: Sat Jul 10, 2021 2:51 pm Anyone use a bucket strategy? I haven't got to the second half of 'die with zero', which supposedly explains 'how' to do this. But, I've been thinking of this kinda strategy to ensure we have a 'spending plan'.

Assume $4M portfolio & 100k expenses, starting at age 50.

1. Go-go retirement phase: age 50 to 60. Allocate $1M to spend. Some years higher, some years lower.

2. Slow-go retirement phase: age 60 to 70. Allocate $800k to spend. Knowing Social security will kick in for one/both and you'll spend less.

3. No go phase. 70 to 100. Truly use a SWR with a portfolio worth at least $2M

I think you'd still have a largeish portfolio leftover, but would a strategy like this ease the burden of 'high spending early' when health and time allow?


Thoughts? I wonder if any early retirees have followed anything similar.... :sharebeer
My 74 year old wife would find this both hilarious and offensive. The physical changes that cause people to slow down their spending happen, more often than not, during the decade from 70-80. Sometimes earlier, sometimes later, but I wouldn’t suggest to anyone that their spending is going to slow down before their mid-70’s, unless they already have health conditions affecting their quality of life. We travel several months per (non-COVID) year, and there are plenty of 70-somethings out on the road with us.
Normchad
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Re: When did (do) you increase your spending?

Post by Normchad »

Wannaretireearly wrote: Sat Jul 10, 2021 2:51 pm Anyone use a bucket strategy? I haven't got to the second half of 'die with zero', which supposedly explains 'how' to do this. But, I've been thinking of this kinda strategy to ensure we have a 'spending plan'.

Assume $4M portfolio & 100k expenses, starting at age 50.

1. Go-go retirement phase: age 50 to 60. Allocate $1M to spend. Some years higher, some years lower.

2. Slow-go retirement phase: age 60 to 70. Allocate $800k to spend. Knowing Social security will kick in for one/both and you'll spend less.

3. No go phase. 70 to 100. Truly use a SWR with a portfolio worth at least $2M

I think you'd still have a largeish portfolio leftover, but would a strategy like this ease the burden of 'high spending early' when health and time allow?


Thoughts? I wonder if any early retirees have followed anything similar.... :sharebeer
This is more conservative than I will be, by a wide margin.

3% of 4M is 120K per year. So in this scenario, I’d spend at least that much in the first 10 years, but likely more. If I was going to “go go@ with the intention of cutting back later, I’d probably start at $150K per year…..
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Re: When did (do) you increase your spending?

Post by Marseille07 »

Tingting1013 wrote: Sat Jul 10, 2021 3:35 pm Let’s say my daughter develops a passion for theater and is really good at it, devotes her life to studying and performing it. She has her head on straight and does everything right, but the only places she can pursue her dream are in VHCOL locales. Would I bat an eye at buying her a $1M condo so she doesn’t have to slum it with a bunch of revolving roommates? That’s money very well spent IMO.
It's personal. If you have extra 1M to spare without impacting your bottom line, sure why not. Personally I wouldn't do it, but each family is different.
Last edited by Marseille07 on Sat Jul 10, 2021 4:53 pm, edited 2 times in total.
JackoC
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Re: When did (do) you increase your spending?

Post by JackoC »

Marseille07 wrote: Sat Jul 10, 2021 3:25 pm
JackoC wrote: Sat Jul 10, 2021 2:40 pm I agree, 2 is hard to argue with, it's kind of obvious. 1 is entirely a matter of opinion, and scale of wealth. If people are fortunate enough (or however else you believe it comes about, I'm not seeking to debate that) to reach a certain level, raining money on kids while still around, aiming for there to be nothing more left when you go: not IMO. Helping them out and getting them used to the idea there will be more money when you go (your parents have money: it's not the worst thing to have to adapt to in life, but still a thing to adapt to): yes. But like most such topics, many people will in have in mind their own situation, or some 'normal' situation, so when it's said 'give them their inheritance while you are alive' they may be thinking of a few grand a year or something. By same token, in lots of statements here like 'a couple transferring $30k/yr to grown kids is ruining those kids' lives' are assuming $30k/yr for some years and that's all there is, rather than it being a relatively small advance on what's to come. And they aren't necessarily arguing to give the rest to strangers and stiff your own kids (though some are, and anyone who wishes to do that can); more often I think they are just thinking of their own situations and projecting. All depends on opinion, and the actual numbers, which people are often reluctant to get into even under screen names, naturally.
1. Yeah, I guess personally I don't really believe in distributing money while alive. 30K/year, done over the course of 20 years, can add up quite a bit. And I don't know if it is necessarily healthy for the kids to receive this kind of money, whether the parents can afford to or not.

2. And I guess I was also disagreeing with the notion that the money we have leftover is wasted because we can't take money to the afterlife. While this statement isn't false, the story isn't so simple when we're living off of money created by...money.
1. But again this is assuming a particular relationship between $30k/yr and the total pot. If it was really 'quite a bit' of the total pot over 20 yrs, that would be one thing, but it might not be. And if it's not, and the intention isn't to deny most of the rest to kids (in favor of eg. charity, fine if one's choice but it's not everyone's), I don't see that a bit larger a wave of money to heirs when you go is necessarily better than a bit smaller one because $30k/yr chipped away at it. Also it seems to be assumed the money would be spent as it's received, but the kids might already have habits where they tend to save it. All depends.

2. I didn't think I endorsed the idea that money left behind is 'wasted', which I also don't believe at all. I don't think it's wasted in enhancing heirs' (and perhaps their heirs) lives if that's what one wants, nor wasted if given to charities if that's the choice, nor even wasted by converting it to cash and throwing it off a building for random people to pick up (if can be done safety for all involved :happy ), 'waste' is up to the person with the money I believe.
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Re: When did (do) you increase your spending?

Post by Wannaretireearly »

delamer wrote: Sat Jul 10, 2021 3:18 pm
Wannaretireearly wrote: Sat Jul 10, 2021 2:51 pm Anyone use a bucket strategy? I haven't got to the second half of 'die with zero', which supposedly explains 'how' to do this. But, I've been thinking of this kinda strategy to ensure we have a 'spending plan'.

Assume $4M portfolio & 100k expenses, starting at age 50.

1. Go-go retirement phase: age 50 to 60. Allocate $1M to spend. Some years higher, some years lower.

2. Slow-go retirement phase: age 60 to 70. Allocate $800k to spend. Knowing Social security will kick in for one/both and you'll spend less.

3. No go phase. 70 to 100. Truly use a SWR with a portfolio worth at least $2M

I think you'd still have a largeish portfolio leftover, but would a strategy like this ease the burden of 'high spending early' when health and time allow?


Thoughts? I wonder if any early retirees have followed anything similar.... :sharebeer
I’m not arguing that 70 is the new 50, but to call 60 to 70 “slow-go” years is pretty out there. While you may indeed need to take less from your portfolio, the only major changes on the expense side for most oeople are going to be health insurance premiums and maybe a paid-off house. Travel, dining out, and hobbies are likely to be going full throttle.
Hear ya. My father died before 60 of brain cancer, so that colors my view all the time.

On the positive side, my father in law retired at age 49 (my idol) & is now in his 70s. My maternal grandmother just turned 95, grandfather will turn 96 later this year. Both live by themselves in a 2 story house where the bedroom and bathroom is upstairs! (my real idols).

So, who knows what my genetics have in store for me 😉....
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
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Re: When did (do) you increase your spending?

Post by Broken Man 1999 »

Our "base" spending hasn't gone up all that much over the years we have spent from our retirement portfolio. We started spending from our retirement portfolio in August of 2015. DW also started receiving her SS benefit in 2015.

However, our spending on "one of" things like remodeling projects has added a lot of spending for us.

Even with elevated spending on projects and spending on regular and routine living expenses, our portfolio is at an ATH with Friday's market close.

I have started buying I-bonds POD to our grandchildren. That will increase our yearly spending a total of $20,000. My hope is that we will never need these I-bonds, if so they are available for us while we are alive.

I prefer to use this method rather than giving family members large gifts that remove assets from us totally as I don't want to ever have to depend on anyone else financially as we age. My healthcare needs are the wildcard that makes me hesitant to start giving large sums to family members outright at this time. This seems an easy method for now. Best I can come up with at the present. A gift with strings, so to speak. Hopefully we will never have to pull any of these strings.

Our daughters have great careers, are high earners, and are doing just fine. So my reluctance to giving substantial amounts isn't anchored in worrying that it would somehow affect them negatively, not at all. They are in their forties now, and we were generous to them for their education, marriages, and help with their first homes.

I always wonder about the hesitation for making large gifts to children. Typically a parent has had decades to observe their childrens financial habits. Seems unlikely the vast majority of the children would suddenly go completely of the rails if they received large amounts. Truth be told, the daughters have better results than we did at their age.

Broken Man 1999
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Re: When did (do) you increase your spending?

Post by Tingting1013 »

Broken Man 1999 wrote: Sat Jul 10, 2021 4:18 pm I always wonder about the hesitation for making large gifts to children. Typically a parent has had decades to observe their childrens financial habits. Seems unlikely the vast majority of the children would suddenly go completely of the rails if they received large amounts.
Exactly right.

And if they do have terrible financial habits, you have no one to blame but….
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Re: When did (do) you increase your spending?

Post by sailaway »

Tingting1013 wrote: Sat Jul 10, 2021 4:22 pm
Broken Man 1999 wrote: Sat Jul 10, 2021 4:18 pm I always wonder about the hesitation for making large gifts to children. Typically a parent has had decades to observe their childrens financial habits. Seems unlikely the vast majority of the children would suddenly go completely of the rails if they received large amounts.
Exactly right.

And if they do have terrible financial habits, you have no one to blame but….
My in laws believe that handouts cause problems, so they only give them to their least financially responsible child and their children....
Wannaretireearly
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Re: When did (do) you increase your spending?

Post by Wannaretireearly »

Tingting1013 wrote: Sat Jul 10, 2021 4:22 pm
Broken Man 1999 wrote: Sat Jul 10, 2021 4:18 pm I always wonder about the hesitation for making large gifts to children. Typically a parent has had decades to observe their childrens financial habits. Seems unlikely the vast majority of the children would suddenly go completely of the rails if they received large amounts.
Exactly right.

And if they do have terrible financial habits, you have no one to blame but….
My kids 10 and 12 regularly tell us we spend too much money!
Must've done something right 😉
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
delamer
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Re: When did (do) you increase your spending?

Post by delamer »

Tingting1013 wrote: Sat Jul 10, 2021 4:22 pm
Broken Man 1999 wrote: Sat Jul 10, 2021 4:18 pm I always wonder about the hesitation for making large gifts to children. Typically a parent has had decades to observe their childrens financial habits. Seems unlikely the vast majority of the children would suddenly go completely of the rails if they received large amounts.
Exactly right.

And if they do have terrible financial habits, you have no one to blame but….
them.

You can model good habits/behavior in any number areas of life — health, education, finances, etc. — but ultimately each child is their own person. And some will rebel against your model and do exactly the opposite, because what better way to assert their individuality?
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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Re: When did (do) you increase your spending?

Post by stoptothink »

sailaway wrote: Sat Jul 10, 2021 4:35 pm
Tingting1013 wrote: Sat Jul 10, 2021 4:22 pm
Broken Man 1999 wrote: Sat Jul 10, 2021 4:18 pm I always wonder about the hesitation for making large gifts to children. Typically a parent has had decades to observe their childrens financial habits. Seems unlikely the vast majority of the children would suddenly go completely of the rails if they received large amounts.
Exactly right.

And if they do have terrible financial habits, you have no one to blame but….
My in laws believe that handouts cause problems, so they only give them to their least financially responsible child and their children....
We have already had "the discussion" with my in-laws, the one where we tell them that they'll always have a place to stay but we will no longer give them money. We were helping then monthly only to find out they were paying most of the bills for my brothers-in-law. This was not the only poor decision they were making with funds we were providing, but the idea that we were giving them money (for what we erroneously assumed was their necessities) that was in turn used to pay for the video games and fast food for my near 30yr old BILs who essentially refused to work was kind of the final straw.

I guess we're lucky, there is nothing to handout from either my parents or my in-laws...unless it is provided by us.
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Re: When did (do) you increase your spending?

Post by theplayer11 »

Marseille07 wrote: Sat Jul 10, 2021 3:56 pm
Tingting1013 wrote: Sat Jul 10, 2021 3:35 pm Let’s say my daughter develops a passion for theater and is really good at it, devotes her life to studying and performing it. She has her head on straight and does everything right, but the only places she can pursue her dream are in VHCOL locales. Would I bat an eye at buying her a $1M condo so she doesn’t have to slum it with a bunch of revolving roommates? That’s money very well spent IMO.
It's personal. If you have extra 1M to spare without impacting your bottom line, sure why not. Personally I wouldn't do it, but each family is different.
I wouldn't either. I wouldn't want to receive it either. No feeling like making it yourself, and I want my kids to have that feeling as well.
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Re: When did (do) you increase your spending?

Post by Wannaretireearly »

goodenyou wrote: Sat Jul 10, 2021 3:15 pm
quantAndHold wrote: Sat Jul 10, 2021 2:50 pm
goodenyou wrote: Fri Jul 09, 2021 9:17 am People who laser focus on retirement savings and are obsessed with retirement income planning have a hard time enjoying (more) spending. De-accumulation is frightening after 30-40 years of savings. Having funded contentment is the goal. Know what that is is the challenge.

We are spending more prior to full retirement. We have met our goals and are enjoying more at a younger age. We are saving less, but are still saving.
This is so very, very true. The first year of retirement was fine, but the second year it sunk in that we really, truly were living on savings. At the same time, we had a couple of extraordinary expenses that we hadn’t planned for, and spent a couple of years living like poor people to compensate. It was earlier this year that I realized that even with the extra spending, our spending rate had dropped to <3% of the portfolio, and we really could loosen up and still be fine.

But the struggle to spend money is a real thing.
In the over 10 years that I have participated in this forum, I have read many posts from people faced with the anxiety of deculmulation. It has been well-researched and written about as well.

“The Deculmulation Paradox
Why Are Retirees Not Spending More?”

https://investmentsandwealth.org/getatt ... aradox.pdf
Great article. Thx for sharing!
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
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GerryL
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Re: When did (do) you increase your spending?

Post by GerryL »

bhwabeck3533 wrote: Sat Jul 10, 2021 7:24 am
GerryL wrote: Fri Jul 09, 2021 2:36 pm Shortly before retirement (at 66), I had a CFP evaluate my plan using a somewhat conservative annual spend. (The plan included large irregular spends, like painting home and new car). The results indicated that in the worst case scenario, I would probably die with more $$ than I started with at retirement. So a few years later, I had the plan run again with a ~60% increase in the inflation-adjusted annual allowance. The new worst case scenario did see my net worth shrinking but not evaporating over a 30+ year period.
I just read this entire thread, and must say one of the most pertinent topics on the forums and hit close-to-home. I'm a Vanguard DIY investor and track expenses quite closely, and monitor my investment balances monthly (since retirement in 2014). I also have a DIY spreadsheet that projects end of year assets to my dying day. And, given my assumptions the number at the "end of my days" is quite significant. I think we could spend more but may need a second opinion.

Where do I find this "CFP" who could provide an informed opinion? Someone who has no interest in managing my "pot of gold" for me.
Sorry to say that both CFPs who evaluated my portfolio were with Vanguard. I got the evaluation done as a perk for being a Flagship client. I hear that perk is no longer offered. In fact, Flagship status is nothing but a meaningless label, apparently. You can probably find a fee only financial planner who would be willing to do a Monte Carlo style analysis for you. Probably plan on shelling out at least $1k for their time.
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