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Are you guilty of spending too little ?
Old 09-25-2014, 02:15 PM   #41
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Are you guilty of spending too little ?

Simple exercise. Run Firecalc and set your withdrawal rate to meet whatever success rate you feel comfortable with. Most on this board are unhappy with anything less than 100%.

Next look at the mean portfolio balance at your terminal date. I.e. 50% of the runs are above the mean and 50% below, but even the below average runs are above zero.

Wow.

Point is, the most likely result is that the people on this board are going to have a problem disposing of all their money, will need to develop expensive hobbies or else plan to have very happy beneficiaries upon check out.




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Old 09-25-2014, 02:17 PM   #42
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I don't think 4-6% is unreasonable for people retiring at full retirement age. I think a lot of people on this site will have more money when they die than when they retired. To some that may mean success. To me it means you worked longer than you needed to.
x 5.

I certainly plan to RE with 5% WR at 53 next year. My spending is front loaded as I have a lot of expense that will go down as I age. Historical S&P returns have been close to 10% and if history repeats itself, I'd still have money left over at the end.
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Old 09-25-2014, 02:57 PM   #43
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Am I guilty of spending too little?

NO. I'm married.
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Old 09-25-2014, 03:07 PM   #44
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No argument against those who say we're spending too little or retired too late, or whatever. There are very good points in those comments.

But in my defense, I believe that the reason for this phenomenon, for me and many others, is simply down to one factor. We were gobsmacked by the incredible inflation rates of the 1970s and 80s.

I also have vivid memories of my grandparents who were considered well off when they retired in the early 60s. They had a generous non-COLA pension and Social Security, and a little savings, and everyone thought they were sitting pretty. But that non-COLA pension got smaller every year due to inflation, and my GF was a financial basket case by the time he died.

Intellectually, I know that similar inflation rates are not likely again, but emotionally I have trouble believing that.
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Old 09-25-2014, 03:19 PM   #45
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+1. Living in the Bay Area helps with any fear of underspending too.
Sure does...OTOH I also see a very large influx of cash in my later years...assuming of course there is not a very large earthquake in my later years

Most people that are FI are savers and I think it's hard for savers to become spenders, it's just not in their(our) nature. Which is also why so many have the OMY syndrome. You want to be absolutely positively sure that you are good. I'm sure I am but DW isn't so is pushing for OMY (for me...since she doesn't work )

But I've worn her down over the last 6 months with data
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Old 09-25-2014, 03:22 PM   #46
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+1. Living in the Bay Area helps with any fear of underspending too.
ain't that the truth! I just spent a week agonizing over whether or not to move to a much nicer place that became available in my 'hood. Rents are through the roof, trickling down (up?) from SF, into Oakland/Berkeley, and now out here east of the Caldecott Tunnel.

But my new place is so much bigger, brighter and sunnier--I have no regrets about the higher rent. I would consider moving to a lower cost of living area, but my second grandchild was just born, and this new place will be great for her and her big brother to play in.

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Old 09-25-2014, 03:38 PM   #47
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Most people that are FI are savers and I think it's hard for savers to become spenders, it's just not in their(our) nature. Which is also why so many have the OMY syndrome. You want to be absolutely positively sure that you are good.
A profound statement I think that sums me up. I would not be on this board or enjoy the life style I have since age 51, semi ER, if I was not. Next year I am 58. I intend to work enough to manage my ACA income goal and advance to full ER. Life is flying by it seems.
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Old 09-25-2014, 03:39 PM   #48
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No argument against those who say we're spending too little or retired too late, or whatever. There are very good points in those comments.

But in my defense, I believe that the reason for this phenomenon, for me and many others, is simply down to one factor. We were gobsmacked by the incredible inflation rates of the 1970s and 80s.
Gobsmacked? First time I've seen the expression. I love the word and will use it sometime.
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Old 09-25-2014, 04:27 PM   #49
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This thread just cost me $150! I thought about it and upgraded to economy class tickets to economy plus. So, now I am not spending too little. I might be on the return trip home. Those upgrades were not available.
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Old 09-25-2014, 04:40 PM   #50
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So does having gum surgery that is completely non-reimbursable by either medical or dental insurance! DH did that yesterday, and there went next year's vacation.
Oh I know. I am shopping for a ACA policy right now and under all the policies available in my area, the maximum annual out of pocket cost for the 2 of us is around $30K. Add dental, vision, and uncovered procedures and it will take care of any underspending problem.
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Old 09-25-2014, 04:42 PM   #51
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Gobsmacked? First time I've seen the expression. I love the word and will use it sometime.
Yes, it's a wonderful word. Quite common across the pond, not so much here.
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Old 09-25-2014, 05:17 PM   #52
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I also have vivid memories of my grandparents who were considered well off when they retired in the early 60s. They had a generous non-COLA pension and Social Security, and a little savings, and everyone thought they were sitting pretty. But that non-COLA pension got smaller every year due to inflation, and my GF was a financial basket case by the time he died.

Intellectually, I know that similar inflation rates are not likely again, but emotionally I have trouble believing that.
It's not just inflation. It's the increased cost of technology and advances in medicine. The stripped-down VW Beetle your grandparents could buy in the 1960s doesn't exist anymore. A new car now HAS to have multiple catalytic converters, air bags, on-board computers and (probably) A/C, power windows, power steering, power brakes. The cost of hospital stays has far outpaced inflation due to all the complex equipment, the proliferation of specialists, and expensive prescriptions. State of the art dental care and hearing aids were cheap back then. Now much more is possible but it's gonna cost you.

So, I'm anticipating similar advances as I age. I don't know what they'll be, but they'll certainly happen.
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Old 09-25-2014, 05:33 PM   #53
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Personnally I think I have been worried too much about the odds of running out of money against the odds of running out of life itself.
Someon on this board gave my that epiphany moment when they pointed out they had a 100% chance of success on FIRECALC to age 95 and an 18% chance of living that long. One must find balance between the two and that is the tricky part of retirement to me.
This has stuck with me as well. We have no kids and don't care what is left. However, can't plan down to writing last check for the funeral.....too bad.
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Old 09-25-2014, 05:56 PM   #54
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Ya gotta have Pals to hep ya. ER age 50 - 71 I varied 0 to 6% withdrawal mostly too frugal.

Now my RMD Pals (shoulda Rothed more) at the IRS are gonna hep me!



heh heh heh - what!! take out early and pay taxes!!!. Just couldn't bring myself to spend no matter what the math said. I suppose it's good to have enough to be stupid at times.
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Old 09-25-2014, 06:13 PM   #55
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Guilty as charged. I'm too frugal (tightwad). Grew up poor and it's hard to get out of the expectation that something will go wrong to mess everything up. Like Unclemick, I should have put more in Roth accounts, because the government doesn't mind taking their share. Retired for 10 years now, and using RMD (first time last year) as my withdrawal rate. But I still gotta spend it. I have friends telling me not to be the richest man in the graveyard.
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Old 09-25-2014, 06:20 PM   #56
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No argument against those who say we're spending too little or retired too late, or whatever. There are very good points in those comments.

But in my defense, I believe that the reason for this phenomenon, for me and many others, is simply down to one factor. We were gobsmacked by the incredible inflation rates of the 1970s and 80s.

I also have vivid memories of my grandparents who were considered well off when they retired in the early 60s. They had a generous non-COLA pension and Social Security, and a little savings, and everyone thought they were sitting pretty. But that non-COLA pension got smaller every year due to inflation, and my GF was a financial basket case by the time he died.

Intellectually, I know that similar inflation rates are not likely again, but emotionally I have trouble believing that.
I saw this too with my grandparents. My grandmother event took a job in her 60's ("shop girl" at a nice shop in La Jolla) because the pension wasn't keeping up with the rent increases. She hadn't worked since she'd gotten married 40+ years earlier. All due to inflation of the 70's. It had an impact on me.
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Old 09-25-2014, 09:12 PM   #57
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That article is nuts.

An expensive mattress? That's one of the things you should splurge on? (Don't get me wrong - if your mattress is crappy, replace it - but you can get very nice mattresses that are as good as the name brand ones, for a lot less. My sister just replaced hers - top of the line materials, totally researched what she wanted - and got a local furniture store brand that is equivalent to the big name brands for half the cost.)

As someone still new to retirement - so nervous about the budget... reading this article does not make me want to spend more. Especially when they suggest a 4-6% WR.

You need to research a sleep number bed with full tilt control. If you have or get acid reflux it's worth every penny. And no those nice non name brand mattresses are not even close. Quality mattresses are like good books. You can't just judge them by their cover.


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Old 09-25-2014, 09:48 PM   #58
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After reading all of this, I'm going out to buy a new car this weekend. Anybody want to by a heavily used VW diesel?

We bought a new Subaru with cash in summer in anticipation of the retirement phase--I was afraid I wouldn't be willing to buy one after retirement. Planning on keeping it a long time, to be sure.
I don't think a 4% rate is imprudent, particularly if you are willing not to increase for inflation for several years when stocks go down and have some cash. Balancing the risk of pinching pennies until they scream for a 110% Firecalc success versus the risk of leaving a 3-4x larger estate to the kids seems--to me--the goal of a sensible retirement. YMMV.
(We have slack to fund travel and other non-essentials, and I'm only semi-retiring next year, so that's easy to post. After DW retires, maybe I'll start eating SPAM.)
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Old 09-25-2014, 09:53 PM   #59
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You need to research a sleep number bed with full tilt control. If you have or get acid reflux it's worth every penny. And no those nice non name brand mattresses are not even close. Quality mattresses are like good books. You can't just judge them by their cover.


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I don't think I will go as far as buying a sleep number, but I am due for a new king size and I will not go cheap on this. Since I sleep/doze 30-40% of my life now in bed, I want high quality... I had been pretty miserly my first few years in retirement trying to build up a safer reserve as I live solely on my pension. But now that my house has turned 10, I have begun to turn the spigot on to refresh it. Though my misery ways creep back in occasionally. My garage door still looks brand new but has no windows. Instead of spending over a grand to replace it, I spent $200 on 4 faux windows and installed them. All my neighbors have asked about my new garage door. They look so real one of my neighbors kept trying to look through them even though I clearly told him they were fake.


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Old 09-25-2014, 10:15 PM   #60
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We bought a new Subaru with cash in summer in anticipation of the retirement phase--I was afraid I wouldn't be willing to buy one after retirement. Planning on keeping it a long time, to be sure.
I've got an offer in on a end of year 2014 VW Passat Diesel. I'm buying for retirement years also as the older 2005 Jetta is in its later years and not suitable for the long term. Plus, I can get an aftermarket repair insurance policy on the newer car keeping me off the garage floor at my age.
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