For those that have retired with =>$5M in investable assets

[Danmar]

No, I don't think so. She was just asking a rhetorical question. People here never miss a chance to make jokes. We enjoy a lot of levity. Life is too short, and can be brutal. Why not laugh as much as you can stand?

Sure but these "jokes" were at the expense of the OP and generally derided his assumed position of wealth. Certainly agree the original question was off the mark, but I thought we were a little more open to other points of view than this. If he had mentioned a much more modest sum, I suspect our responses would have been much more civil and helpful.

 

[Ronstar]

it's *only* $200K on 4% rule !

I think someone that amasses $5m probably has had a good paying job for some time, and probably spends more than $200k per year in their bigger earning years. It may be tough for them to live on $200k in retirement.

 

[rodi]

I just wanna hear some more of those illicit comments from our esteemed moderator.

I meant elicit some illicit comments. LOL

(Or... I mistyped. )

 

[marko]

It may be tough for them to live on $200k in retirement.

As is often pointed out on this forum, depending on geography, it can be tough to live on $200K when working.

 

[Terryjm51]

Yes, I've noticed that trend growing the past few years.

Many people seem to be taking the outlook that the goal is to have as much or more, in real dollars, at the end as in the beginning whether you're talking a single year or the balance of your life. Whereas in earlier years on the Forum most seemed to be looking at simply not running out of money while trading it for the retirement lifestyle they enjoyed the most.

I think the proportion of folks who get more satisfaction out of not spending than spending is growing. For example, there seem to be more folks who would gain more satisfaction from staying home and not spending $10k on travel than actually doing the travel. They'd really enjoy the travel. But they'd enjoy opening the spreadsheet and seeing the unspent money there even more.

After a lifetime of intense planning and saving, seeing your portfolio grow in real terms post retirement is more satisfying than spending some money to have more experiences.

Not my view but I can understand how it can be for many.

I can totally agree, seeing numbers move up is pretty exciting. Being able to send grandkids to college is high on my list hopefully in 10 years.


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[hnzw_rui]

As is often pointed out on this forum, depending on geography, it can be tough to live on $200K when working.

In CA, that's $50K in fed and state income tax for MFJ with standard deduction. It's $15K tax for $100K. Add another 7.45% for FICA.

For single, $25K fed and state income tax for $100K and $65K tax for $200K. Then additional 7.45% FICA for $100K, slightly less for $200K ($117K income cap for SS).

 

[Lucantes]

Certainly better than sarcasm.

What's wrong with sarcasm?

 

[sanfanciscotreat]

In CA, that's $50K in fed and state income tax for MFJ with standard deduction. It's $15K tax for $100K. Add another 7.45% for FICA.

For single, $25K fed and state income tax for $100K and $65K tax for $200K. Then additional 7.45% FICA for $100K, slightly less for $200K ($117K income cap for SS).

Us retirees don't pay no FiCA; we collect through SS a small portion of that which has been deposited in our accounts; never to come out even or ahead of what we have put in.

 

[hnzw_rui]

Us retirees don't pay no FiCA; we collect through SS a small portion of that which has been deposited in our accounts; never to come out even or ahead of what we have put in.

This is the comment I was replying to.

As is often pointed out on this forum, depending on geography, it can be tough to live on $200K when working.

 

[marko]

I can totally agree, seeing numbers move up is pretty exciting. Being able to send grandkids to college is high on my list hopefully in 10 years.


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It might be a few factors. One is the very erratic nature of the market in the past few years; you want to build up some ice under your feet for when the next meltdown arrives.

The other may be that the profile of those on this forum has changed.

Just an impression, but it seems that when I first started lurking here 10 years ago the typical RE person was late 40's and early 50's. About 3 years ago we've seem to be seeing people in their 20's and 30's; obviously the money has to last a lot longer.

There also seems to be a lot of folk who left work involuntarily; maybe a little less prepared financially so the need for continued growth vs spend down is there.

Just my guess.

 

[Tadpole]

I only need $54,733.79/yr to do everything I want to so that is a 1.1% withdrawal from my hypothetical $5M nestegg. Since I will have a long spend down period, can I get some longevity credits for this?

 

[papadad111]

Many people seem to be taking the outlook that the goal is to have as much or more, in real dollars, at the end as in the beginning whether you're talking a single year or the balance of your life. Whereas in earlier years on the Forum most seemed to be looking at simply not running out of money while trading it for the retirement lifestyle they enjoyed the most.

I think the proportion of folks who get more satisfaction out of not spending than spending is growing.

.

Good point. So I think I concur with this trend. Speculations on the drivers to the behavior when I think to consider why.

1. Great Recession's psychological effect. Not unlike the Great Depression the spendthrifts got thriftier. Thrifty even was a "trend" for a while. Natural to grow portfolio when spending gets cut here and there.

2. Realization that things don't always happen (never happen) as planned and having 2 deep market slides in a decade drove a higher level of conservatism in asset allocations and the need to keep portfolio balance steady (versus down)

3. Actual market returns - a lost decade 2000-2010, plus very low yield on bonds. Just keeping up with inflation is a challenge let alone growing the portfolio. The behavior change is a "survive" rather than "thrive" approach and similar to above, this drives a cutting expenses and holding portfolio steady objective for many - hard to grow when market is neutral - taking on unnecessary risk later in the game is avoided

4. Older people as a percentage. Older people tend to be more conservative and get comfortable with what they have and how to make that work for them.

5. The boomer demographic is driving more retirees who are not "early" any longer. For core participants, Yes there are some 40-somethings and early 50's but I suspect if we did another age poll, the board average age demographic is likely higher than it was 8-10 years ago. I also think there are more "not yet fired" than "fired" today so that comes into play too. I'd argue we get more "fly by" visitors here who post a bit and disappear, usually just before or just after retiring. Typically in their upper 50's to mid 60s- those one and done tend to want to know if they will be able to squeak by and be ok, not whether they will be able to grow their pot ... But they disappear as they tend not to be analytic worriers and it's too much brain exercise to have more than their vague plan ...

I'm sure there are other reasons.
What do others think?

 

[Danmar]

@papadad. I think you have listed most of the possibilities. I find myself feeling this way as well. Eg like to see the portfolio increasing rather than decreasing even though I am 65, retired 10 years and wouldn't have any difficulty spending more than I currently spend, other than the fact that the portfolio might decline. Currently just spend dividends. Just being conservative I guess, hate the thought of spending "principal" although I know this is not rational. Always think I might need it later?

 

[ChrisC]

@papadad. I think you have listed most of the possibilities. I find myself feeling this way as well. Eg like to see the portfolio increasing rather than decreasing even though I am 65, retired 10 years and wouldn't have any difficulty spending more than I currently spend, other than the fact that the portfolio might decline. Currently just spend dividends. Just being conservative I guess, hate the thought of spending "principal" although I know this is not rational. Always think I might need it later?

For the friends I know who fit this category (and they have actually told us that they are excited about seeing their portfolio grow), they are not "conservative" in their investments, at all; most of them, at 66 plus are in 100 percent equities, and their financial needs are backstopped by ample pensions, social security or other streams of income. Some have over $5 million in investable assets and yet take greater pleasure in watching their portfolio grow rather than going out on travel, creating experiences with their loved ones, or pampering themselves by buying any luxury items. It's odd to me since they are just watching the portfolio grow for their children who are clueless about personal finance. To me, this is a rather sad situation, as they invested more in watching their portfolio grow and enjoying their creature comforts at their beautiful and well-designed home, rather than traveling and creating experiences with their children over the years, who are now adults.

 

[Big_Hitter]

most of them, at 66 plus are in 100 percent equities, and their financial needs are backstopped by ample pensions, social security or other streams of income. Some have over $5 million in investable assets and yet take greater pleasure in watching their portfolio grow rather than going out on travel, creating experiences with their loved ones, or pampering themselves by buying any luxury items.

someone insert the photo of the hearse with the uhaul behind it

 

[Danmar]

For the friends I know who fit this category (and they have actually told us that they are excited about seeing their portfolio grow), they are not "conservative" in their investments, at all; most of them, at 66 plus are in 100 percent equities, and their financial needs are backstopped by ample pensions, social security or other streams of income. Some have over $5 million in investable assets and yet take greater pleasure in watching their portfolio grow rather than going out on travel, creating experiences with their loved ones, or pampering themselves by buying any luxury items. It's odd to me since they are just watching the portfolio grow for their children who are clueless about personal finance. To me, this is a rather sad situation, as they invested more in watching their portfolio grow and enjoying their creature comforts at their beautiful and well-designed home, rather than traveling and creating experiences with their children over the years, who are now adults.

Agree, but in our case no one would ever say we have foregone anything or are in a sad situation. We spend freely and enjoy ourselves to a significant degree. We do have generous pensions backstopping our lifestyle and a large portfolio (100% equities). We are generous givers both to charity and family (including paying for extravagant family travel) but the portfolio keeps increasing and is up significantly in recent years. I'll need to loosen the purse strings further at some point but am waiting for further increases in the portfolio to do so. Go figure.

 

[NW-Bound]

Let's supposed that I had $5M, my budget would be $100K (2% SWR). This amount would be twice as much as my current expense. In other words, my budget would be fine.

Uh Oh! I have been spending at the above level in the last 3 years (not counting income taxes), but I do not have $5M.

Of course, I am not spending at a puny 2% WR either. Much of it was due to non-recurrent expenses, which should not happen again. Perhaps I should cut out the filet mignon to help, Costco or not, until I claim SS.

Sure but these "jokes" were at the expense of the OP and generally derided his assumed position of wealth. Certainly agree the original question was off the mark, but I thought we were a little more open to other points of view than this. If he had mentioned a much more modest sum, I suspect our responses would have been much more civil and helpful.

Same as many others, I thought the question was funny because without context, what kind of answers did the OP expect? Of course $5M would be nowhere near enough if he had in mind the cost of maintaining a $2M yacht, a fractional jet ownership, a home in the French Riviera, etc...

Someone who was able to amass this net worth, and not by winning the lottery, should also know how to manage his expenses up till now. This left us scratching our collective head, and the common reaction to an absurd question is to burst out laughing.

 

[Danmar]

Same as many others, I thought the question was funny because without context, what kind of answers did the OP expect? Of course $5M would be nowhere near enough if he had in mind the cost of maintaining a $2M yacht, a fractional jet ownership, a home in the French Riviera, etc...

Someone who was able to amass this net worth, and not by winning the lottery, should also know how to manage his expenses up till now. This left us scratching our collective head, and the common reaction to an absurd question is to burst out laughing.

Yes, the OP question certainly was peculiar. Inexperience perhaps.

 

[kcowan]

The irony is that the premise behind FIRECALC and SWR is depleting the whole portfolio.

 

[Danmar]

The irony is that the premise behind FIRECALC and SWR is depleting the whole portfolio.

Right, but the corollary of a SWR is that in many (most?) outcomes the ending portfolio is higher than the start.

 

[travelover]

someone insert the photo of the hearse with the uhaul behind it

 

[ERD50]

The irony is that the premise behind FIRECALC and SWR is depleting the whole portfolio.

It is?

I thought it was for finding the point where your portfolio would be depleted if, and only if, the future was as bad as the worst of the past (depending what % historical success you used).

And with the default 95% success rate, that means that 95% of the historical time periods, your portfolio would not be depleted. And ~ 1/2 the time you have as much buying power as when you started, and sometimes MUCH more.

-ERD50

 

[ERD50]

Inappropriate (or poorly worded) question from inexpetienced member. I would have thought ignoring it the best response? Certainly better than sarcasm.

Ignore it? How would that be "best"?

How can anyone learn unless it is pointed out that the question itself is off the mark?

I recently started perusing a technical forum, and a common response to an odd question is "A well phrased question is half answered". I take that to mean that if you have really thought about the question, that at least some of the answer will become evident. Then people can help fill in the missing pieces. But if you just throw out a question, w/o really thinking about it, you aren't even ready to absorb the answers.

PS - And if someone has a problem dealing with a little friendly sarcasm, I suspect they will have problems dealing with a lot of stuff.

-ERD50

 

[scrinch]

Us retirees ...collect through SS a small portion of that which has been deposited in our accounts; never to come out even or ahead of what we have put in.

I've heard people claim this before, but each time I've looked into it (and calculated for my own situation) I've found that the expected social security retirement benefit payout is greater than what was contributed. Care to explain how you come to this conclusion?

 

[audreyh1]

OP seemed entertained rather than discouraged.