Flirting with my number

[2B]

Oh, I know even I may not spend as much in my 80's as my 70's. But I can't budget that with any great certainty. I could need more, I might be fine with less. I just don't know. And I have an extremely detailed current budget. At what age will I stop driving? When will I not want to travel much? Will I need a walker when I'm (only!) 80? When will that new tech that I just have to have start coming into its own?

If you deliberately plan on an extra $20k in travel or other one-time stuff in your 60's and 70's and not your 80's and 90's, I don't see that quite the same as cutting spending in your 80's. Even if it looks the same to an economist. I'm talking about my pre-retirement budget carried into retirement, with the near-term changes that requires.

Just like SWR success has its good and bad scenarios, I'm sure there is quite a distribution of spending scenarios. I don't have a lot of say in which SWR scenario I get. I probably have more control over spending, but I may still feel like moderate traveling or a new car or some new tech thing in my 80's. Or DW or I may need a hire a lot of extra help for stuff we can't do our selves. I don't have that much insight into my future.

I figure by planning for constant real spending I can better handle any problems in my 80's by making some of those normal aging budget cuts in order to help pay for the bad spending scenarios without cutting into the budget items that might hurt a bit more. Maybe it's just safety margin, maybe not.

It all comes down to your comfort zone. My original comment for using Bernicke was based on a willingness on my part to not live as large at 80 as at 60. If investment returns are good, that won't be necessary if I want to spend at that level. The concern of medical care in old age pretty much precludes significant spending anywhere else. Once my in-laws were "interned," they spent nothing for anything but their care.

Being willing to reduce spending as they age, allows someone to retire with less of a portfolio than someone determined to maintain a constant real dollar spending.

My plan is based on a pretty good base budget that still has a decent amount of discretionary spending. The extra spending in early retirement is intended to let me do additional traveling over and above what I'm doing now. Finally, I am still keeping a significant reserve to self-insure for a reasonable LTC stay.

Of course, I've repeatedly said I'm a congenital OMY-er and have built up a very safe nest egg for a pretty good retirement lifestyle. The people that are pinching every penny in their retirement won't be very sympathetic to my woes.

 

[daylatedollarshort]

Most US citizens don't have EU passports but all it takes for the plan to work is money. That was really my point since the article I referenced was from a big financial firm. They were targeting the affluent retiree renting a villa (in season, of course) and living large. They weren't suggesting people rent a small studio apartment on the 3rd floor with no elevator.

One of my light bulb moments of the past few years has been that our combined household SS checks compare favorably with the median income in many countries, even first world ones. So really if we are prepared to live like a native we have quite a choice of places to live in retirement, as long as we can get residency permits. I am not sure we will do that. It is just nice to be able to consider that as an option.

Across the OECD better life index, the average household net-adjusted disposable income is 23K USD a year -
http://www.oecdbetterlifeindex.org/topics/income/

Except for Paris and the southern resort areas, housing costs in most parts of France would actually be cheaper for us. I guess it depends on where you live in the U.S. And medical costs are so much lower we could self insure if we needed to.

When we went to the retirement planners at Fidelity, we were given the lines about needing stocks for growth and needing 80% of our full working years gross income by people who weren't retired or probably FI, and apparently not familiar with the concept of living below their means.

My point is that most of the financial advisers at the big investment companies are going to steer people more towards having a higher number, possibly riskier investments and later retirement because they want to make money off the client money. They aren't going to show people how to retire early and have a nice retirement with slow, international travel funded by Social Security and low risk investments with no fees like TIPS and I bonds. For one, they probably don't know themselves how to do that, and two, even if they did, it is not in their best financial interest to do so.

 

[explanade]

Some European countries will issue visas to people who can show significant retirement income/assets.

That would let you stay longer than 90 days at a time but it might make you liable for taxes in those countries, even if you don't buy property there.

And of course, that doesn't even mean they would take you into their health care system.

 

[daylatedollarshort]

Some European countries will issue visas to people who can show significant retirement income/assets.

That would let you stay longer than 90 days at a time but it might make you liable for taxes in those countries, even if you don't buy property there.

And of course, that doesn't even mean they would take you into their health care system.

Health insurance or private pay is something obviously to check into, as are taxes. But another aspect to consider is that health care costs in other countries, including those with better rated health care systems, are often a fraction of the U.S. costs -

21 graphs that show America’s health-care prices are ludicrous

It has just been a learning experience for us that retirement, even with foreign travel, might not need as a high a number as our retirement advisers, even at the low cost investment companies, have suggested.

 

[brett]

We always focus on after tax dollars.

 

[growing_older]

A good day in the markets, perhaps a reaction to possible diplomacy in Syria or side effect of changing out 3 DOW component stocks, but in any case things are pretty generally up. So my portfolio has reached (for the day at least) the target again.

Maybe the essential take away message is to stop watching daily, as this dipping a toe over the line only to pull back is drawing much too much attention, Maybe also a lesson is to appreciate at this stage of accumulation that a 5% swing means more than a year of expenses swing and just get acclimated to the magnitude of these numbers.

 

[RobLJ]

A good day in the markets, perhaps a reaction to possible diplomacy in Syria or side effect of changing out 3 DOW component stocks, but in any case things are pretty generally up. So my portfolio has reached (for the day at least) the target again.

Maybe the essential take away message is to stop watching daily, as this dipping a toe over the line only to pull back is drawing much too much attention, Maybe also a lesson is to appreciate at this stage of accumulation that a 5% swing means more than a year of expenses swing and just get acclimated to the magnitude of these numbers.

My experience is that the market almost inevitably takes the number down for at least a few months soon after a benchmark.
Like you, I hit a big benchmark (not the number) a month back. Ironically yesterday we hit 3 round number benchmarks simultanously--my investment portfolio, total investment portfolio, and net worth. Then dw paid off the house today.
20% more and we hit the number.

 

[RobLJ]

"If a $5,000 cut in year 7 is very do-able for you, I could see spending that extra $5K the first 6 years, and then re-evaluate. If the portfolio is still in good shape, keep spending the original amount."

"I guess this is a hot button for me personally, because I would find it difficult to cut spending. We spend on what seems to be the high side for most here, but that seems to be mostly due to our COL area, and a largish house (so high taxes). We don't take expensive vacations, don't eat out all that much, modest vehicles, no cable, cheap pre-pay cell-phones, etc. So I'm looking for a number that will likely work through the worst of times, w/o cutting."


Travel was a chunk of the spending in the first 10 years and provides significant "slack" although it's more complicated since dw plans to work for at least half of that period. I will have likely have the option of semi-retirement, which would allow semi-retirement earlier. To cut travel by 70% or almost completely, it would not kill us to drive, camp, hike and fish rather than go to Europe or other destinations as we have done the last two years.
SS will be large, combined, almost half the budget once we both qualify and draw, so the main question is making it there without too much portfolio drainage until I qualify. We were about 94% last time I ran it, with a healthy chunk of vacation spending included.
If one is close to the edge or tightly budgeted with little play, then one would be more conservative. It's a tradeoff between time retired and safety margin, which is another "risk" one runs, say if one insists on twice Firecalc 100%, as I have heard and all kind of variations. To each their own. Even 100% is not assured, as we all know.