Am I being too chintzy with myself?

[dtbach]

I'm 61 and have a military pension that pays about 1/2 of our expenses. DW and I will be eligible for SS in about 4 years which should cover the other 1/2 of expenses.

So basically my portfolio is covering mostly non-essential purchases for us.

My WR is about 3.5% at the present and lets us live very comfortably. But we could perhaps go out to dinner more often or take pricier vacations if I went to 4%.

On the other hand, should I stick to 3.5% and then occasionally take out $$ for vacations, etc?

 

[kaudrey]

In your situation, I would probably live it up a little more. So, yes, go on vacation and go out to dinner.

Basically, the 4% is supposed to mean your portfolio should survive 30 years. However, from what you have said, your necessary withdrawals will go down to 0% in 4 years, correct? If you are planning to withdraw a much lower % in only a few years, sticking to the 4% rule now doesn't really make sense for you.

 

[REWahoo]

As kaudrey says, loosen up the purse strings. It appears your nest egg will become 100% "fun money" in the near future and there is no reason you shouldn't bump up your current spending a bit.

 

[aaronc879]

Hate to sound morbid but you really should consider this. What happens if you die early? Does your wife get a substantial portion of your pension? If she gets nothing then she could be left with just her SS and whatever is left of the portfolio. My grandfather didn't do a spousal benefit in his pension. He got cancer and died in his 70's. 12 years later my grandmother is still going strong and getting by on $1000/mo SS and a small annuity. Sure would be nice if she had part of his pension too. Just something to keep in mind.

 

[razztazz]

I'm the same way. As soon as I start collecting Social security at 62 (in 5 yrs) my stash becomes just "excess money". I still fret over nick and dime stuff though.

 

[dtbach]

Hate to sound morbid but you really should consider this. What happens if you die early? Does your wife get a substantial portion of your pension? If she gets nothing then she could be left with just her SS and whatever is left of the portfolio. My grandfather didn't do a spousal benefit in his pension. He got cancer and died in his 70's. 12 years later my grandmother is still going strong and getting by on $1000/mo SS and a small annuity. Sure would be nice if she had part of his pension too. Just something to keep in mind.

You make a good point. Yes I have Survivor Benefits on my pension that pays about 60%. My SS is higher so she would switch to that. All of the portfolio would go to her. I suspect she would sell the house (which would generate a fairly good amount of cash) and move into a condo. I think she would be in good shape.

 

[H2ODude]

We hover around 2.4%! Live about same way we always have, but do travel more. We're loosening up, but for the life of me cannot imagine us spending at 4% level. Whatever feels comfortable. At this point we're not holding back "in case of asteroid"...it's just how we care to live.

 

[Animorph]

We're spending more than 4%, since the portfolio is it for now. A small pension next year, and then SS in 10 and 15 years. We should be taking less than 3% after all income is online. FIRECalc says this works out fine, but I'm trying to be a little conservative in raising the cash we need for the next few years.

 

[NW-Bound]

I was spending 3% until home projects bump it to 4% this year. When SS comes online in a few years (if we claim early), it's all play money, and lots of it. It's nice to know the above, but right now I am not craving for anything. I looked at my brothers' BMW SUVs and even my son's Audi with indifference. And the 2 homes already keep me too busy with maintenance.

I like to have more money to count, I guess, as I do not have any immediate plan for it. But if the OP wants to go eat out more or some indulgence like that, he should do so.

PS. Next year, when I am surer of my physical condition we will resume foreign travel. That will take care of any surplus.

 

[dtbach]

Just made a reservation at the Grand Hotel in Mackinac Island, Mi. Added a day, bumped up to a higher category room and ordered a wine basket for the first night.

I feel better already! (And that cost an additional .015384% of my portfolio) I'll see if I regret this when I"m 90.

 

[NW-Bound]

Heck, for myself if I am still alive at 90 I will not regret anything, or more likely may not remember anything to regret about.

 

[dtbach]

Heck, for myself if I am still alive at 90 I will not regret anything, or more likely may not remember anything to regret about.

+1

 

[retire2020]

dtbach…I'm planning to follow this - flexible 5% WR. I'll then put away 1% in CD and use it during bad years.

Table 5 - Paul Merriman

 

[CaliforniaMan]

dtbach…I'm planning to follow this - flexible 5% WR. I'll then put away 1% in CD and use it during bad years.

Table 5 - Paul Merriman

How do you define a bad year, and how much of the difference do you plan to make up from drawing down the CD?

 

[Jmo1969]

You don't want to be the richest man in the cemetery. So I say take that vacation and splurge a little.

 

[retire2020]

How do you define a bad year, and how much of the difference do you plan to make up from drawing down the CD?

I'll check in Dec and if the return was negative, I'll only rely on divident/capital gain for the coming year and use the difference from CD to get by for following year. My essential expense will be 2.75% and rest will be discretionary for travel/misc. Ofcourse during bad years I'll try to live within essential expense budget range, use up that CD and not withdraw/sell anything from my portfolio if possible. And I'll rebalance to 60/40 every Dec.

 

[heeyy_joe]

Live it up!

 

[haha]

I would try to avoid using words like "chintzy". It is pejorative, and will bias your thinking, once you have this characterization in your head.

Ha

 

[dtbach]

I would try to avoid using words like "chintzy". It is pejorative, and will bias your thinking, once you have this characterization in your head.

Ha

Perhaps I should have said "Am I being too frugal"

 

[Nemo2]

Perhaps I should have said "Am I being too frugal"

Define 'too'.

 

[Nords]

You make a good point. Yes I have Survivor Benefits on my pension that pays about 60%. My SS is higher so she would switch to that. All of the portfolio would go to her. I suspect she would sell the house (which would generate a fairly good amount of cash) and move into a condo. I think she would be in good shape.

Two points:
The Survivor Benefit Plan pays out 55% and rises each year with the pension COLA.

You could maximize your Social Security benefits by delaying to age 70 and spending down more of your portfolio now. If you're taking RMDs from your tax-deferred accounts, then taking bigger distributions earlier might be able to reduce the amount of SS subject to federal taxes later.

In any case, by delaying your SS to age 70 you'll maximize your spouse's SS survivor benefits (assuming you had the higher earnings record). There are a number of "file and suspend" options that could help the two of you maximize your SS distributions without both of you waiting until age 70.

 

[Lancelot]

I'm with Nords, I'm taking voluntary distributions from my IRA in amounts that keep me in the 15% tax bracket (36,900 for 2014?)

I'm thinking about returning the US and spending a bit more, mulling with drawl rates of 4 to 4.5%. I will defer SS to age 70 unless my portfolio takes a major hit or I have a major illness that would likely send me to my great reward