Do We Have 10+ Year Retirees?

[JDARNELL]

I retired on November 9th, 2009, so I am in my 10th year but won't be 10+ years until November. So take my answer with a grain of salt.

No, I never had to curb my spending. See below for an idea of my spending patterns so far (not including the various costs of buying and moving to my Dream Home in 2015). I am spending more now than I did during the first few years of retirement, but TBH I was spending less before I retired than after. No more need to save for retirement.

During 2008-2012 I just stuck to my 45:55 AA. It stood by me really well! I was not tempted to sell low, so given my own particular level of risk tolerance, that is a good AA for me during a crash. My portfolio today is 35% greater than it was on the day I retired and would have been 43% greater had I not bought my Dream Home in 2015 and moved into it. Also, due to my "age 70" SS kicking in, last year I spent only 0.60%. I truly do need to "Blow That Dough" at this stage in life.

As of last month I have begun slowly transitioning to a more conservative AA, with "110-age" as my goal for equities. This year, 42:58, then 40:60 next year, then 38:62 the following year (at age 72) and continuing with 110-age from there on out.

That is a great chart. Puts things into perspective.

 

[imoldernu]

Retired 1989
-At any point did you have to curb your spending?
No.
-How did you adjust your portfolio during 2008-2012?
By then, all in U.S. Bonds... No adjustments.

 

[YVRRocketSurgery]

I'm somewhat surprised that there doesn't seem to be anyone commenting that they significantly reduced spending due to market downturns.
Is that due to:
Saving more initially to allow for a lower than 4% withdrawal rate?
Having good market returns early in your retirement?
A more conservative asset allocation?

I'm assuming it's a combo of things but it'd be interesting to know what you'd consider to be the primary factor.

 

[Lakewood90712]

I'm somewhat surprised that there doesn't seem to be anyone commenting that they significantly reduced spending due to market downturns.
Is that due to:
Saving more initially to allow for a lower than 4% withdrawal rate?
Having good market returns early in your retirement?
A more conservative asset allocation?

I'm assuming it's a combo of things but it'd be interesting to know what you'd consider to be the primary factor.

It's because we are already so cheap, nothing left to reduce. We already reuse dryer sheets then try to return them to the store as defective.

 

[Souschef]

I'm somewhat surprised that there doesn't seem to be anyone commenting that they significantly reduced spending due to market downturns.
Is that due to:
Saving more initially to allow for a lower than 4% withdrawal rate?
Having good market returns early in your retirement?
A more conservative asset allocation?

I'm assuming it's a combo of things but it'd be interesting to know what you'd consider to be the primary factor.

I can only speak for us. SS and pensions bringing in about 60 K, We have no mortgage or other debts, Our property taxes are about $400/year,as opposed to others who have property taxes in the thousands.
Our largest.single expense is income taxes, due to our large RMD's. We pay those out of our RMD's.

 

[ERD50]

I'm somewhat surprised that there doesn't seem to be anyone commenting that they significantly reduced spending due to market downturns.
Is that due to:
Saving more initially to allow for a lower than 4% withdrawal rate?
Having good market returns early in your retirement?
A more conservative asset allocation?

I'm assuming it's a combo of things but it'd be interesting to know what you'd consider to be the primary factor.

You also need to consider that the model assumes you do not cut spending.

I think most here (not all, and that's OK too), have been conservative in some way. Either figuring less than 4% WR by rounding expenses up and/or rounding down their portfolio, discounting (or even ignoring) future SS/pensions, have some 'back-pocket source (downsizing a home), etc.

My view was, I'd rather be conservative and feel confident drawing that each year, than to worry too much about market fluctuations and feel I need to cut back (because I don't want to cut back!).

Others factored in a lot of discretionary spending, with the plan to cut back if needed. Statistically, they will probably do better overall. It's a choice.

-ERD50

 

[street]

Very interesting thread! I would of like to hear what % your portfolios have increase now, from the day you retired. Very informative for the ones that have way less time into retirement.

 

[ls99]

It's because we are already so cheap, nothing left to reduce. We already reuse dryer sheets then try to return them to the store as defective.

Yes! And never tipping more than 15%. Let others be the high rollers.

 

[Another Reader]

The RMD's from the inherited IRA's got cut dramatically in 2009-2012. Zero in 2009 by government fiat, if you recall. However, my rents went up. I took more than the RMD's out of the inherited IRA's because I bought houses in 2009-2012, increasing the real estate income significantly. I even took some contributions out of my Roth IRA to buy one house.

Unless we hit a real depression where all income and asset values decline substantially, I do not see changing my spending choices.

 

[dtbach]

Was laid off in Nov 2008 and never "really" worked again (unless you count the 2010 Census, which was actually kind of fun). So I guess I just met your 10+ year cut off.

 

[W2R]

I'm somewhat surprised that there doesn't seem to be anyone commenting that they significantly reduced spending due to market downturns.
Is that due to:
Saving more initially to allow for a lower than 4% withdrawal rate?
Having good market returns early in your retirement?
A more conservative asset allocation?

I'm assuming it's a combo of things but it'd be interesting to know what you'd consider to be the primary factor.

I am always ready to cut back on a moment's notice if I need to! I just haven't needed to cut back yet.

If/when I do, I know exactly what will get the axe. My Amazon habit would be a good place to start.

Yes! And never tipping more than 15%. Let others be the high rollers.

We tipped considerably over 15% yesterday! So I guess that makes us the high rollers... We tipped $3 on a lunch that added up to $8 for the two of us. (We split a large $8 Caesar salad and each had water to drink).

 

[RE2Boys]

Just a hair over 19 years retired from my career, Feb 3, 2000.

My portfolio is about 2.5 times its value at the time I retired. AA has been about 50/50.

What I adjusted in 2008-2009 time frame? NOTHING continue LBYM. Emphasis has always been spending quality time with my sons.

BUt......I have a COLA'd federal pension that most would describe as generous. Add to that we've always worked about 3 months a year each to keep busy (even with two boys that were 1 and 3 year olds) until this past year. Maybe 10-15K of earned income per year. And have kept our LBYM lifestyle intact all these years, but have cranked up the travel budget in last few years (and college spending). Only times we've dipped in the portfolio was for remodeling and newer cars periodically (never buy new, never spent over 21K for a newer car), college expense, and recently (past 3 years) travel. We spent 3 weeks together last year camping and visiting National Parks in CO, and WY with the college age sons. Other years camped two weeks in Alaska, rafted the Grand Canyon. Wife and I are picking up a new to us camper Monday (used of course).

Also helps to live in a LCOL area (2000sq ft ranch for about $200K) in a state that doesn't tax retirement income.

 

[Dtail]

IMHO, it appears that many of the responders are not using a 4%WR even in a % of current portfolio and thus those that retired in 2003 and later would logically have a fairly decent increase from the original portfolio.

 

[Teacher Terry]

We have been retired for almost 7 years. We each have a 20k pension and I bring in 22/year teaching my class. So only our travel or big one time expenses come from savings. No need to cut back.

 

[audreyh1]

This August I will be at 20 years!

So - that means made it through 2000-2002, and 2007-2009 nasty bears.

Retired at 39 so we always drew well under 4% and did all sorts of unconventional financial things for the first 13 years.

Always had some years expenses in cash so never had to reduce spending during the nastiest times.

In 2008/9 didn’t change investment strategy, just rebalanced buying more stocks. It was hard to do because our net worth had been about cut in half. In fact for a few months we were just below where we started in 1999! But didn’t cut spending as we had funds set aside, and net worth recovered in about 3-4 years (not counting inflation- that took longer).

Also never used the Trinity (traditional) method because didn’t trust automatically adjusting withdrawals to inflation.

 

[Lsbcal]

Retired 32 years this October! Assets halved early on due to divorce, now probably 50% higher. Spending has doubled in the past 4 years since my son was born. SS for the whole family more than offsets the increase.

So far on this thread you are the winner.

 

[Lsbcal]

Having done a lot of VPW simulations, I'm convinced one needs to spend even through downturns. For me there is a certain tension between wanting to increase our stash and enjoying it before ... the end.

In the 2008-2009 downturn we had a 55/45 portfolio going into it and something like a 45/55 portfolio at the low point. I only rebalanced after the market started up again (July 2009).

Currently we're 7% above the inflation adjusted starting portfolio of 2003. Our portfolio is currently 60/40. A chart showing the roller coaster:

 

[Souschef]

When I retired in 2009, I had been putting every dollar allowable into my 401K for years
So in the 2007 / 2008 period i was really buying low. When I retired, I rolled the 401K into an IRA.

It is now worth 5X what it was when I retired.

 

[haha]

Having done a lot of VPW simulations, I'm convinced one needs to spend even through downturns.

Does this mean something other than that even during a downturn one will continue to eat and still need a place to sleep, which one hopes is warm in winter and tolerable in summer?

I think I agree since I have never contemplated becoming a breatharian or living full time in a tent.

I am cheap and quirky, but I also have limits.

Ha

 

[audreyh1]

Does this mean something other than that even during a downturn one will continue to eat and still need a place to sleep, which one hopes is warm in winter and tolerable in summer?

I think I agree since I have never contemplated becoming a breatharian or living full time in a tent.

I am cheap and quirky, but I also have limits.

Ha

I think he means that it doesn’t help that much to tighten the belt severely during downturns as the impact of market drops on the portfolio way overwhelm funds withdrawn. And he’s done enough simulations to know that the VPW method will survive taking the proscribed withdrawal each year - no need to reduce it.

With the VPW method and other methods using % remaining portfolio, you are going to see a reduction in income anyway after a portfolio drop, but there is no need to reduce it even further.

 

[rk911]

13-yrs as of last august. other than to buy a new motor home and to fund some home improvements we haven't touched our investments. haven't reached RMD age yet, either. we have positive cash flow each month as we continue to live beneath our means off of our pensions and SS. discipline, a wife who started investing for us (surprise! surprise! surprise!) and some luck put us here.

 

[big-papa]

I think he means that it doesn’t help that much to tighten the belt severely during downturns as the impact of market drops on the portfolio way overwhelm funds withdrawn. And he’s done enough simulations to know that the VPW method will survive taking the proscribed withdrawal each year - no need to reduce it.

With the VPW method and other methods using % remaining portfolio, you are going to see a reduction in income anyway after a portfolio drop, but there is no need to reduce it even further.

Bingo! The main thing with these methods is making sure that the dollar amount calculated for withdrawal during these downturns is still sufficient to live on, especially when considering SS and/or a pension. Then again, there's no rule that says you need to slavishly follow the calculated withdrawal amount, either, whether the amount calculated to withdraw is more than you need in a given year or a little less.

 

[Another Reader]

The only portfolio withdrawals I take are RMD's from the inherited IRAs. Since the savings and investment deposits are about equal to the RMD's there is essentially a zero withdrawal rate right now. Add in the equity pay downs on the remaining mortgages, which of course are difficult to access if needed, and the "portfolio withdrawal rate" becomes negative by a significant percentage.

It's going to be more difficult to match deposits and withdrawals when I have to take my RMD's, but by then I hope to have two more mortgages paid off.

 

[mexexpat]

15+ years. We downsized considerably, not because we had to, but because it made sense.

 

[Lsbcal]

I think he means that it doesn’t help that much to tighten the belt severely during downturns as the impact of market drops on the portfolio way overwhelm funds withdrawn. And he’s done enough simulations to know that the VPW method will survive taking the proscribed withdrawal each year - no need to reduce it.

With the VPW method and other methods using % remaining portfolio, you are going to see a reduction in income anyway after a portfolio drop, but there is no need to reduce it even further.

Thanks Audrey, that's about sums it up nicely.

Actually in a decent market year and a normal spending year we probably won't be spending up to the VPW assigned limit because it is higher then we need. So I keep a running total of the unspent monies and would dip into it if a series of years were to draw down our portfolio as could happened in very bad markets of the past. For example, a bad sequence started in 1966 and lasted into 1974.

I always want to pull back in a bad year. I totally understand the emotional tole a downturn can take on a retiree. I guess sometimes it might be better to spend somewhat less just to feel you are "doing something" about it.