At, Below, or Above your means

[Sam]

After being on this board a while, it seems to me that most retirees are still living BELOW their means. Let's find out

For those who answer "BELOW our means", please explain yourself Why are you STILL saving?

No explanation needed for "Above our means". Just say when you plan to go back to work

 

[Nords]

AOM.

Got a rental rehab and a few home-improvement projects to catch up on, but after last year's portfolio returns there's certainly a little slack in the capital expenses department...

 

[linkerbink]

I'm not really saving....just not spending as much as I get. If I have a need to spend more, I will. but so far, I'm living just fine.

 

[crazy connie]

Below as I am living off of after tax investments yet and growing the pot a bit. Anticipate starting 72T dist in 08 or 09. The bigger that pot gets the less stress I will have over finances. The old widows philosphy about having a stuffed mattress.

 

[Sam]

Thank you all for voting.

Old habits are hard to die, I guess.

 

[Moemg]

I'm living below but this is my first year in retirement .If I'm left with a lot of money at the end of the year I'll just add it to my travel budget.

 

[JustCurious]

So, not only do many people on this board plan for their money to last well into their 80's and 90's and beyond (despite the fact that the average life expectancy is 78)....

http://early-retirement.org/forums/index.php?topic=12916.45

.... but most people on this board also live below their means during retirement!

This is really a conservative bunch! : I wish my parents were like you guys because I would be in line for a very nice inheritence.

 

[Nords]

So, not only do many people on this board plan for their money to last well into their 80's and 90's and beyond (despite the fact that the average life expectancy is 78)....
This is really a conservative bunch! :

Maybe, but we're definitely all above average!

 

[macdaddy]

This is really a conservative bunch! : I wish my parents were like you guys because I would be in line for a very nice inheritence.

My parents' first year of retirement from the military (when they started new jobs) they spent 2% of their income on personal expenses, not including the mortgage payment which was another couple %... that's probably some kind of record... an inheritance is nice but their frugality definitely rubbed off on me in a serious way and consequently I feel uncomfortable unless I am living far below my means. For example, I get really uncomfortable sitting in a brand new car that is for sale on a lot... or buying clothes at an upper end department store... etc... sometimes I wish I could feel a little more free with my spending, but then maybe I'd be broke.

 

[Khan]

My parents' first year of retirement from the military (when they started new jobs) they spent 2% of their income on personal expenses, not including the mortgage payment which was another couple %... that's probably some kind of record... an inheritance is nice but their frugality definitely rubbed off on me in a serious way and consequently I feel uncomfortable unless I am living far below my means. For example, I get really uncomfortable sitting in a brand new car that is for sale on a lot... or buying clothes at an upper end department store... etc... sometimes I wish I could feel a little more free with my spending, but then maybe I'd be broke.

It's difficult to turn off the very behavior the made ER a reality.

 

[lazygood4nothinbum]

all of the above, the below & the at. firecalc says i'm living at my means. my feeling is that i'm living above my means. my friends think i am living below my means.

example: just today i'm telling a friend how i'm downsizing my next car because the inherited house hasn't sold yet. i'm not crazy about any of the car choices so i'm compromising. so my friend says to me "why don't you just buy an interim car until you find what you want." now there's an idea i wouldn't have thought of (or considered).

 

[maddythebeagle]

It's difficult to turn off the very behavior the made ER a reality.

I am not at FIRE yet, but that is what I was expecting....nice poll idea by the way, OP...

 

[d]

my feeling is that i'm living above my means. my friends think i am living below my means.

... my friends have been telling me that for years ... but i think it's because my "underspending" makes them feel uncomfortable with their overspending.

 

[Bikerdude]

I would say AMM. I do an analysis each year and project what's prudent to spend depending on how long I expect to be around. I'm not consciously trying to leave an inheritance to my family but if you're living off of assets, and you die before you plan to, you will live something behind.

I live well, not rich, more like independently middle class.

 

[Enuff2Eat]

living below your means is so boring. oh, we can't buy this, no we can't have that, nops those fancy tv and cars were built for someone else, let's wait another two years for the stuffs to get real cheap.... it's almost like the only that lbym people can do nowadays are going to the park, get on this forum and watch TV??

personally i am not a fan of lbym and several time attempted to cross the line but somehow never could, i guess i will have to continue this style after i retire too.

enuff

 

[gandalf42]

It's difficult to turn off the very behavior the made ER a reality.

It might be hardwired in. I used to save my allowances as a young kid and then loan them back to my dad at interest when he was short on pocket cash.

Hope to have some to pass on to the next generation. Just have to figure how to keep uncle sammy's fingers out of the pie.

 

[lazygood4nothinbum]

... my friends have been telling me that for years ... but i think it's because my "underspending" makes them feel uncomfortable with their overspending.

sounds about right. it just happens the friend suggesting i buy two cars because i can't decide on one car resides in her atm machine.

independently middle class.

great phrase. i'm very comfortable with that.

 

[kcowan]

I define this as spending less than the growth in our portfolio in the year. So any year that the portfolio grows is an LBYM year. Lately that gap has been wide.

 

[SecondCor521]

It might be hardwired in. I used to save my allowances as a young kid and then loan them back to my dad at interest when he was short on pocket cash.

I am interested to see how my kids turn out. I have three kids, one is currently living below his means, the middle one is living above his means (and paying interest), the youngest lives at her means. Their means = their allowances, which is their age in dollars twice a month.

2Cor521

 

[kumquat]

While accumulating, I guess, if total spending + savings < income, you are LYBM.

What is an ER's means? 4% of portfoio? 5? Higher? Lower? What if you plan to spend 7% of portfoolio for x years and then cut back?

While I'm below today, when I ER shortly what will I be?

 

[gandalf42]

I am interested to see how my kids turn out.

Well, my son is cheaper more frugal than I am. He patches his clothes with duct tape. Whenever he comes home from college DW gets rid of a few.

 

[kcowan]

While accumulating, I guess, if total spending + savings < income, you are LYBM.

What is an ER's means? 4% of portfoio? 5? Higher? Lower? What if you plan to spend 7% of portfoolio for x years and then cut back?

While I'm below today, when I ER shortly what will I be?

We take actual expenses and extrapolate at inflation (10 year average) then we plan on portfolio growth at 5% above inflation. We consider actual portfolio growth above the target to be savings (or buffer for a bad year). We do not plan to cut back later on, although we anticipate that is likely. One thing that will keep the rate up is our intention to take more cruises when we become less mobile.

Currently our withdrawal rate is 3.8% and we are targeting to get to 3.5% because we plan to be retired for 35 years.

 

[Finance Dave]

While accumulating, I guess, if total spending + savings < income, you are LYBM.

What is an ER's means? 4% of portfoio? 5? Higher? Lower? What if you plan to spend 7% of portfoolio for x years and then cut back?

While I'm below today, when I ER shortly what will I be?

I have a slightly different view of this. You don't specify how MUCH savings. I don't know that I have an exact answer...but to me anyone who is saving 1% and fits your equation above is not living within their means. You must save more than 1% to live AFTER you retire. But once you determine the number that's right for your situation...then I agree with you.

On your second point, all the research I've read says an INITIAL w/d rate of 4% or so will virtually guarantee you'll never run out of money. However, I agree that I will tend to spend less in the later stages of life (after adjusting for inflation), so I'm thinking about a 7% rate the first 5 years or so, then ratchet that back as needed.

The other strategy is one I'll call "adaptive" living. You start with a base amount you will w/d, then adjust it the next year depending on how your portfolio does. This will only work if you have some non-essentials in your budget...but we definitely have that. So if the market is down one year, we take a cheaper vacation.

Dave

 

[Sam]

Do we actually have 54 retirees (or couples) on this board? Or are non-retirees also voting?

 

[REWahoo]

Do we actually have 54 retirees (or couples) on this board? Or are non-retirees also voting?

Hmmmm. Over 3,400 registered forum members. 900 have posted 10 or more times. I think it's a safe bet to say we have 54 retirees on the board.