If You Were Me, Would You Spend More?

[Meadbh]

My accountant tells me she can see a clear pattern of withdrawals among her (mostly self employed) clients. For the first 10 years of retirement, they travel and spend more. After that, health problems mount, and they stay closer to home. Their withdrawals decrease, at least until they need long term care.

Better travel now, while you can enjoy it.

 

[audreyh1]

What if you had a health catastrophe? All the more reason to do some traveling NOW while you both have your health.

 

[Fishingmn]

Since you said said it looks like you could do $30k with 100% success I would start by doing an extra $20k in the coming year and see if you really enjoy it and where your portfolio stands. In reality you can probably spend even more than $30k without too much worry.

 

[dtbach]

Yes, do it.
The phrase "spend it while you can" has deep meaning. The older you get, the less you'll want to travel and the more you'll regret not doing it while you could have.

My parents always wanted to travel more but just couldn't bring themselves to spend the money. Now they are in their 90's and can't travel and regret it. Their problem now is what to do with the $1.9M they have, as it creates tax issues since it keeps dumping more money on them.

My father regularly calls me and asks "What should I do with the $30K in my money account?"

Please travel when you are able to. Don't end up with a big stash and think about all the places you could have gone when younger.

 

[Live And Learn]

Here is one way to approach this: Pull (on paper) $200K into your 'vacation account'. That leaves $1.7M in your investment account. That will fund $30K for almost 7 years, assuming no growth. Maintain your $1.7 year after year. Anything over it goes into the paper vacation account. If the market has a bad year, you don't put anything into the vacation account.<snip>.
Rerun your Firecalc with $1.7 instead of $1.9. I would guess that it is still 100%.

+1.

I am very much like you. I could probably spend more but I don't because I NEED to feel safe. I would love to take 4 specific very expensive vacations and I have done exactly what was suggested. I've pulled nearly $100k from my retirement portfolio when doing any calculations (including calculating my retirement assets). Its as if the money simply doesn't exist. When I do take those trips the dollars will come from that "phantom pot of gold" and it will not impact any of my calculations.

Given that your pensions and SS will more than cover your expenses I would think you could easily put 200k - 300k aside for travel or whatever other non-essentials you might want to spend on. I'd bet you are still at 100% in FIRECalc and other planners with the lower portfolio amount.

ETA: I guess I should have finished the thread before replying. I'm glad this method worked to calm your fears. I look forward to hearing about your travels !

 

[NW-Bound]

In case anyone misses it, the OP already said they were thinking about getting business-class seats to New Zealand. That works!

Many posters talk about parents or relatives regretting not traveling when they still had health. Well, if people wait even longer past that phase, that regret will go away. The following story I have told, but is worth repeating.

When I told an older engineer 20 years my senior that I wanted to travel because I did not want to regret not doing so on my deathbed, he shook his head and said that people on their deathbed only wished for the pain to go away, and were not in the mind to regret anything!

My accountant tells me she can see a clear pattern of withdrawals among her (mostly self employed) clients. For the first 10 years of retirement, they travel and spend more. After that, health problems mount, and they stay closer to home. Their withdrawals decrease, at least until they need long term care.

Better travel now, while you can enjoy it.

Bernicke told us so, and I believe him. Many posters here were gung-ho and believed that they would maintain health and constant expenses until their 90s. I did not feel I would be so lucky, and the recent bout with totally unexpected illness reinforced it (I have recovered and am doing OK now, but not back to where I was).

 

[H2ODude]

Truly a great thread. DW and I are in similar situation numbers wise to OP except already spend a bit more on travel as two kids overseas. Leaving Saturday for Amsterdam, Africa, then London. We do a trip like that twice a year; as we generally are staying with kids that only eats up about $6k a trip for tickets and misc.

As I read through the responses it motivates me to kick up the monthly draw from the investments to our spending accounts. Funny thing is that while we did move the live in MIL to assisted living, we still have two dogs and the MIL's cat here at the house! This trip we're trying a house sitter for them, as much for their comfort as savings. We're going to give her a big tip if it works out so we can do some longer trips guilt free; somewhere besides our usual London/Africa visits. I will say that as much as we like the travel, those long plane rides are no fun. How you folks who did that for a living put up with it is a mystery to me.

 

[NW-Bound]

Long plane rides are not bad at all if you spring for business seats. I dread those coach seats, so usually make my trips 2 to 3 weeks to make it worth the flying pain. Longer than 3 weeks, then we both start to miss home. My sister and her husband routinely take trips of up to 2 months, and they would do it 2x a year in addition to shorter domestic trips of 2-3 weeks. I can't do that.

However, in our motorhome we have gone for close to 2 months and not miss home at all. Here looking forward to our next trip, which cannot start till mid August due to various constraints.

 

[Spanky]

I think I need a new suitcase. Thanks again, one and all.

Enjoy -- you and your DH deserve it.

As others have pointed out, you can definitely spend more as pension alone covers majority of expenses + financial assets + SS (if necessary in the future)

 

[Car-Guy]

Life is short, enjoy it while you can.

 

[zjoe]

While I definitely think you should spend more, I don't think you need to spend 30k more to have amazing travel experiences. Spend some time on flyertalk or some of the frequent flier mile blogs and figure out the many ways people can travel with little out of pocket. It is not difficult to amass several hundred of thousands of miles/points if you are willing to open a few credit cards.

 

[Lakedog]

Interesting thread as I have similar issues/struggles with spending. Although my pension exceeds annual expenses, it is difficult to crank up the spending after living somewhat frugally over the years. I retired in March 2008, and investments have almost doubled since then.

 

[unclemick]

Interesting thread - depending on the individual. I experienced a variety of 'feelings' toward spending over 20 yrs of ER. Hindsight says I was overly cheap/frugal early in ER being worried whether it would last and whether I could endure the ups and downs of my portfolio. As time in the market greatly improved my circumstances I was uncomfortably spending more as FireCalc , ORP, and the 4% rule indicated I was safe. But breaking my old perceived 'frugal' was at first painful.

Unplanned events - some well paid temp work early, Katrina, getting married and finally getting to the point mentally (you can't take it with you) has allowed my spending to loosen up as it were. The onset of RMD with the IRS taking their cut has affected my mental williness to spend more.

heh heh heh - so far health issues of significance have not surfaced - knock on wood.

 

[GTFan]

While I definitely think you should spend more, I don't think you need to spend 30k more to have amazing travel experiences. Spend some time on flyertalk or some of the frequent flier mile blogs and figure out the many ways people can travel with little out of pocket. It is not difficult to amass several hundred of thousands of miles/points if you are willing to open a few credit cards.

+1000, and not just for the OPs sake (they have plenty of money to burn). I haven't paid for a hotel room in two years now, all financed by points earned from credit card bonus offers.

 

[Meadbh]

+1000, and not just for the OPs sake (they have plenty of money to burn). I haven't paid for a hotel room in two years now, all financed by points earned from credit card bonus offers.

In 2012 I had a two week holiday that involved a luxury 10 day Caribbean cruise (with my own balcony stateroom) plus three days in Florida. I live in British Columbia. The total cost was under $1000, including flights. Points covered the rest. I had a blast. I also own a fractional vacation property and this buys me some very economical vacations.

If the OP expects to spend $30,000 per year on travel, even for a couple, she must be planning some very high end or exotic trips.

 

[NW-Bound]

In 2012 I had a two week holiday that involved a luxury 10 day Caribbean cruise (with my own balcony stateroom) plus three days in Florida. I live in British Columbia. The total cost was under $1000, including flights. Points covered the rest...

Darn, I thought my wife knew how and where to look for deals, but her skills have been slipping.

 

[tuffshed]

My advice... read my signature.