Are you guilty of spending too little ?

[aaronc879]

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.

 

[haha]

A typically stupid retirement finance article. People will spend "too little" when pigs fly. Means are limited, but wants infinite.

For many of us, there is nothing much to spend money on that would clearly increase our happiness- at least as much as having comfortable balances available.

I spend whatever I want on food or on going out, but can it really increase your spending much if you buy a bit more halibut @ $18/#? Who would want to eat it more than once a week or so?
As far as going out to eat, I like happy hours a lot, and for really nice food and a prudent amount of wine it rarely costs more than $50-$60 for two. A movie can set me back $50, add an oyster feast and still it will always be less than $125 total.

I don't want a car. My only use would be going to dances, which might expose me to difficulty with GF. I sometimes think I might like better clothes, but then I would have to be sure the moths didn't eat them so that is out.

There are few things I could spend money on that don't carry ongoing responsibilities, or expose me to some foreseeable and other unforeseeable risks. Don't want!

Ha

 

[Bestwifeever]

Now that I am getting SS direct deposits, my WR has gone from 2.x% to 1.x% and is getting awfully close to 0.x%. ....

I think about spending and enjoying more as a result (not spending more just to spend it) next year--DH is going to start SS early 2015 just after reaching 66, and then in summer 2015 I start medicare for about one-third the cost of my $930/month individual COBRA plan. Not in a million years did I ever expect to have this "problem".

 

[aja8888]

I don't want a car. My only use would be going to dances, which might expose me to difficulty with GF.

Ha

As long as you didn't take the GF with you to a dance, you should be OK with that!

 

[sengsational]

I'm going "low spend" (half of what I could spend) these first few years for two reasons... One is that this is my first year not getting a W2 (at 55), so I figure this is the danger zone if the market does not cooperate. And finally, I'm trying to stretch my limited after-tax funds into more years for the purpose of qualifying for the ACA subsidies. In a couple of years, I'll need to show income from the 401k, and then I plan to be spending closer to what I'm "allowed" to spend.

 

[NW-Bound]

Moi, spending too little? Hmm... I beg your pardon, but not this guy. Not anymore!

After spending mucho for the recent upgrades and repairs to the homes, and now pumping expensive Canadian gasoline at $5/gal into the guzzling motorhome, my last 12-month expenses are running 3.9% of current portfolio value, which has been shrinking with the current market ebb too.

So, me underspending? Party on!

 

[audreyh1]

I find that a trip to Europe easily corrects any under spending for the year.

 

[Masquernom]

If you aren't spending enough, buy a used Volvo. That will help you increase your spending....

 

[2B]

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.

I decided I was FI just as a joined the forum in 2006.. I was considering pulling the plug then when MIL broke her hip and FIL was quickly identified as having Alzheimers'. To avoid becoming a FT caregiver I stayed employed. FIL finally passed away 3 years ago. I've been officially a OMYer since then. My excuse was moving into what is to be our final retirement home which has involved various imporovements and expenses covered from earnings. Realistically, I could have covered all of these costs out of the portfolio. Now, I'm pretty sure I won't be spending what I have. The grandkids should be happy when they find out.

I agree with you that there are a lot of people here that have worked far longer than necessary. They justify it with very low withdrawl rates and many contingencies that they just have to cover. Of course, there is the other group (much smaller) that retire on a wing and a prayer with tight budgets and no room to maneuver. You never know the future. People approach that problem in different ways.

 

[2B]

I find that a trip to Europe easily corrects any under spending for the year.

I can't get DW to go enough to spend my travel budget. Without going to Europe (or somewhere overseas), the money just sits there until next year.

 

[FIREd]

I find that a trip to Europe easily corrects any under spending for the year.

+1. Living in the Bay Area helps with any fear of underspending too.

 

[Options]

+1. Living in the Bay Area helps with any fear of underspending too.

+2
As does living in SoCal...but that will be remedied in the not too distant future when I leave never to return.

 

[ocdokie]

+1. Living in the Bay Area helps with any fear of underspending too.

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.

 

[robnplunder]

Good article but not likely to garner much support from this forum. This forum is full of people with 2% - 3% WR, and their yearly asset continues to increase at rate that would leave them with a lot more than what they have now. Some want to leave the money to their children, to charities, and to other worthwhile cause and that's all good. For others, no amount of money is enough to ensure their financial security.

As for me, I have reduced my LBYM level in recent years, i.e, loosened up my purse string a little to bring more comfort and enjoyment to our lives, and to give more to others. I don't see the point of accumulating wealth beyond what's needed for my retirement.

 

[WannabeRetired]

+2
As does living in SoCal...but that will be remedied in the not too distant future when I leave never to return.

Options, where are you going next if you don't mind saying? We've been trying to justify the move to S. California for years, but it just doesn't make sense. We visit a lot and sure enjoy the weather, palm trees and beaches.

 

[wingfooted]

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.




Sent from my iPad using Early Retirement Forum

 

[robnplunder]

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.

 

[MuirWannabe]

Am I guilty of spending too little?

NO. I'm married.

 

[braumeister]

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.

 

[nuke_diver]

+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

 

[gardenfun]

+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.

 

[shotgunner]

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.

 

[robnplunder]

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.

 

[Rustic23]

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.

 

[FIREd]

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.