Anyone planning to increase their WR with age?

[Gone4Good]

When you are old with creaky and arthritic bones, your eyesight and hearing shot, your palate dull, your hands trembling, your walk a shuffle on shaky legs, what do you care to spend your money on?

A nursing care facility that doesn't abuse me and hires hot nurses to bathe me and convincingly pretend I'm attractive.

 

[W2R]

I think it would be OK if I did. Who knows what the future might bring? The objective is to not end up old and broke. As long as that does not seem at all likely, the rest is just details.

As for whether or not I will even want to spend more when am older, well, who knows. For the first five years of retirement I wasn't spending my full 3.5%, because I was perfectly happy spending less. Last year at age 67, I spent a whole lot more (dream house purchase). And then this year I seem to be piling up big expenses of various kinds as well. I wonder if spending more as I age is a trend? Guess we'll see.

 

[audreyh1]

It seems like an obvious thing to do. The older we are the less likely we are to deplete our portfolio at a given withdrawal rate.

Using FireCalc to figure the highest withdrawal rate possible from a 50/50 portfolio that still results in 100% success you get these results for various withdrawal periods:

40 yrs - 3.3%
30 yrs - 3.7%
20 yrs - 4.6%
10 yrs - 7.5%

Does anyone here plan to adjust their withdrawal rate upwards as they age?

I think I probably will, although I don't have anything formulaic in mind.

Sort of. But only very gradually. RMD tables present one model that seemed reasonable.

I use % of remaining portfolio, so my withdrawal amount goes up if the portfolio does well, and shrinks if the portfolio loses.

 

[razztazz]

I am not "planning" on it as I read the question but I am expecting to. Medical spending in just a few years towards the end of things will use more money than I will save in normal "age related budget savings". Maybe I get lucky and remain healthy as a horse or just drop dead suddenly. But I am not counting on it.

Also, right now I have very little housing costs. In the next 10-15 years I can see where I might want to move into an apartment or even some kind of non-medical type senior's digs. eg Not assisted living etc. Just an apartment complex. Well, rent for any basic apartment that I would care to live in would be several hundred dollars per month more than I am spending now. So, yes, somewhere along the way I will be spending more. Now, if I make a lot more money in that time maybe my actually withdrawal rate won't go up?

But I do not plan on any "Eat, drink, and be Merry, it's the 2 minute warning!" lifestyle changes.

 

[truenorth418]

Yes. I am at a steady 2.5% now, but I intend to use the RMD tables for my withdrawal % beginning in 4 years at age 55. Thus my % withdrawal rate will very slowly increase over time as I age.


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[Danmar]

When you are old with creaky and arthritic bones, your eyesight and hearing shot, your palate dull, your hands trembling, your walk a shuffle on shaky legs, what do you care to spend your money on?
.

Boy you are depressing me. Health care, gifts to family and charity, round the world cruise with companion nurse? Bigger TV? You are going to spend it or give it away no matter what.

 

[RunningBum]

When you are old with creaky and arthritic bones, your eyesight and hearing shot, your palate dull, your hands trembling, your walk a shuffle on shaky legs, what do you care to spend your money on?

If you are not afflicted with any physical deterioration, then you are not old no matter what your age. Spend away.

Sounds a lot like my parents. They now spend nil on travel and not much on entertainment, but would like to live someplace where all meals are served so they don't have to cook, but can't afford it.

Comfort in those years is probably even more important to me than stuff and experiences now. I'm at least going for a nice balance. If you don't think you'll mind eating ramen and keeping the heat low or sweltering without A/C in your old age, spend away!

 

[papadad111]

How we spend changes. While in early years certain spending may be "up to" a certain WR to fund travel or vehicle choice or home upgrades. That lifestyle spending can be modulated downward fairly easily

In later years that same WR may only provide for essential necessities such as nursing care , food prep, or other life extending medical help. Survival spending is not easily modulated.

Then comes the quality of life question. Does a Medicaid bed feel any differently from a self paid bed in the nursing home ? Would that money have been better spent to party like a rock start while you had your youth instead of saving it for a rainy day ?

That is ... If you're lucky enough to make it to that point and have the opportunity of living in a nursing home.

Balance is key. Balance. No one knows for sure.

Remember all plans are inaccurate the moment the ink dries.

 

[kcowan]

Our WR will increase when the last cat dies. He is 18 now...

We might get another pet in 15 years.

 

[ShokWaveRider]

I am still trying to figure out ours SWR. Our complete Portfolio (Hardly a portfolio) is invested at 3%. We currently use a little over half what it returns PA. Nothing in stocks. The investment matures in 2019. Approximately 50% of the capital is in qualified tax deferred accounts. The other part has no tax obligations other than the returns. (Which we live off) We do not take money from our Qualified accounts, although I could.

I am 62, DW is 57. I do not take SS yet ,but at 66 it will give me about $30k pa. Our family Life Expectancy is average so I will not wait till 70. 66 is the limit. The reason I do not take it now is it will put us over the ACA rebate levels we currently enjoy, otherwise I would have taken it this year.

I am still trying to figure out what to take. We have no debt. Every 3 years we lease a car and pay it all up front. On those years, the lease payment is the excess and comes from the unencumbered capital.


As far as inflation is concerned we do not notice that it makes a great impact on our Standard of Living, at least not yet.

Confused.... I am.

 

[nun]

No plan to increase withdrawal rate, but I might buy a few big ticket items or give money way. My goal is not to spend it all, but to leave lots to my nieces and a couple of charities.

 

[marko]

No, RMDs will take care of that whether I like it or not.

IIRC, my eventual RMD is about the same as my current SWR, so IMHO, IDC!

 

[NW-Bound]

A nursing care facility that doesn't abuse me and hires hot nurses to bathe me and convincingly pretend I'm attractive.

If in your old age you still have as much as J. Howard Marshall did, you are set.

 

[Independent]

I am not "planning" on it as I read the question but I am expecting to. Medical spending in just a few years towards the end of things will use more money than I will save in normal "age related budget savings". Maybe I get lucky and remain healthy as a horse or just drop dead suddenly. But I am not counting on it.
.

+1

I am not planning to increase spending on "normal" stuff. But, I'm thinking we may be forced to increase spending on elder care.

As I get closer to the end, it may turn out that I get more enjoyment out of leaving money to children or charity than I get from spending it on myself. Or not. I won't know until I get there.

 

[Gone4Good]

If in your old age you still have as much as J. Howard Marshall did, you are set.

Truly, his cup floweth over.

 

[Mulligan]

When you are old with creaky and arthritic bones, your eyesight and hearing shot, your palate dull, your hands trembling, your walk a shuffle on shaky legs, what do you care to spend your money on?

If you are not afflicted with any physical deterioration, then you are not old no matter what your age. Spend away.

My dad is close to that point and I convinced him to shake a $150 out of his massive nest egg to buy himself a Chromebook since he didn't like his Ipad. Yes, it cost me 3 digits out of my inheritance, but it was money well spent. And I got a $150 of entertainment out of it, getting him to quit poking the screen with his fingers thinking that would open up a website!


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[Major Tom]

Does anyone here plan to adjust their withdrawal rate upwards as they age?

That's my hope/plan. I retired earlier than I had originally expected to, and with a smaller stash than I was planning for, so have been living on an ~2 - 2.2% WR in the hope I can increase that a little as I get older. I do expect my housing costs to increase at some point, and will have no problem with having extra fun money

Like you, I don't have a strict plan or formula, but am certainly hoping to be able to splash a bit more cash around in the future. As frugal as I am, it sure is fun spending money

 

[Major Tom]

A nursing care facility that doesn't abuse me and hires hot nurses to bathe me and convincingly pretend I'm attractive.

Reminds me of the care home my Dad was in. He loved it when the nurses told him they were going to give him his bath. I do hope they were paid well for putting up with all his flirtatiousness. They seemed to bear it all with great humor, bless 'em!

 

[kaudrey]

Yeah, that's the conventional wisdom. I always wonder how much of that data is influenced by people who find themselves income constrained. If people had the resources to spend what they wanted, would their spending go down?

My parents are 78.

My mother has cancer in her spine and can't do much outside the house due to limited mobility. Their expenses are way down because they no longer travel and she doesn't do anything that costs money. YMMV, but after seeing how our families are both dealing with life in the 70s/80s (aunts/uncles on both sides etc), I am inclined to think the answer is often yes.

 

[REWahoo]

YMMV, but after seeing how our families are both dealing with life in the 70s/80s (aunts/uncles on both sides etc), I am inclined to think the answer is often yes.

I agree.

My parents, older siblings and my close relatives (those who did not die early), all had reduced spending as they aged. It wasn't based on income constraints but on the lack of ability and/or desire to go and do the things they did in the early years of their retirement.

My motto: Use it before you lose it.

Edit: Actually there was a spike in my parent's spending near the end. My mom spent the last three years of her life in a nursing home. My dad was her roommate for several months before he died, then she died a year or so later.

 

[Gone4Good]

My parents are 78.

My mother has cancer in her spine and can't do much outside the house due to limited mobility. Their expenses are way down because they no longer travel and she doesn't do anything that costs money. YMMV, but after seeing how our families are both dealing with life in the 70s/80s (aunts/uncles on both sides etc), I am inclined to think the answer is often yes.

Sorry to hear about your mom.

And now that I think about it, our health care expenses later in life may not be that much larger than what we're paying now. We're currently 44 and pay a ton for individual health insurance that is nothing more than catastrophic coverage. So we pay huge premiums every month and still have to pay out of pocket for pretty much whatever care we get.

At 70 my mother pays about a third of what we each do for far better coverage under Medicare.

Of course that could all change in 20+ years, and not likely in my favor.

 

[NW-Bound]

It seems like an obvious thing to do. The older we are the less likely we are to deplete our portfolio at a given withdrawal rate.

Using FireCalc to figure the highest withdrawal rate possible from a 50/50 portfolio that still results in 100% success you get these results for various withdrawal periods:

40 yrs - 3.3%
30 yrs - 3.7%
20 yrs - 4.6%
10 yrs - 7.5%

Does anyone here plan to adjust their withdrawal rate upwards as they age?

I think I probably will, although I don't have anything formulaic in mind.

It is true that the older you are, the less time you have and the higher WR you can spend. But the Bernicke effect is also very real. People claim that they plan to stay globe trotters into their 80s because they see such traveling geezers at the airport, but I see plenty of 60 and certainly 70 year olds in nursing homes or rehab centers when I visited my father and father-in-law there, and many did not last long either.

Youngsters in the early 40s have too much time ahead and risk to indulge and should stay with a lower WR. But for older retirees, perhaps a compromise is go use a higher WR when you enter your 60s, and to not panic to see your stash shrinking somewhat.

I myself try to maintain a constant spending pattern. When SS is accounted for, that means an initial WR higher than 3.5%, which then drops down when SS starts. I doubt that I can go broke this way, but seeing your stash drop in bad market years takes some getting used to.

FIRECalc can model the effect of SS addition to spending easily enough. It tells me I can spend 20% more than what I did last year. And I doubt that I will last another 30 years, the retirement period I used in FIRECalc.

 

[Fedup]

My plan is to do the opposite. Get more out in the first two years. Then decrease by half. Then RMD withdrawing rate. This is for my husband's account. In 10 years my SS will kick in. I plan to leave my untouched until I must take it. But these are only 401k type of accounts. I have other buckets I can tap, some are taxable accounts.


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[Gone4Good]

Youngsters in the early 40s have too much time ahead and risk to indulge and should stay with a lower WR. But for older retirees, perhaps a compromise is go use a higher WR when you enter your 60s, and to not panic to see your stash shrinking somewhat.

That's pretty much where I'm heading with the question. If you retire early with a low WR (like us), it seems obvious that you wouldn't need to stay as conservative in your 60's as you were in your 40's.

As for not being able to spend the money when I'm older . . . I've always fancied a peid-a-terre in Paris or maybe just a flat in Manhattan. Having "too much money" won't be a problem.

 

[FUEGO]

My dad is close to that point and I convinced him to shake a $150 out of his massive nest egg to buy himself a Chromebook since he didn't like his Ipad. Yes, it cost me 3 digits out of my inheritance, but it was money well spent. And I got a $150 of entertainment out of it, getting him to quit poking the screen with his fingers thinking that would open up a website!

That's my mom right there.

She recently retired at 62 with a full (but modest) pension and my dad is still working. They are set to get $35-40k in social security in another few years. And they have probably $2 million or more in the bank.

Yet she's worried about tiny expenses and trying to cut corners all over. She's driving a 20 year old Honda with 200k+ miles on it. I've suggested she could probably afford to buy a new(er) used car but she says "I'm on a budget".

She's hesitant to spend on fun travel while she still can. "I'm on a budget".

She doesn't have an actual budget and hasn't determined exactly how much she could spend every year without depleting her portfolio later in life. I've suggested they crunch the numbers or meet with their financial advisor (you pay him, why not use him?).

I imagine they will learn from us that it's okay to spend more in retirement as long as you have a plan with some degree of safety. I just hope it's before they are 70+ and/or suffer from some disability.

The good news is my inheritance will probably be rather rotund. The bad news is I don't think they'll ever be able to spend all their funds.