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Old 01-17-2015, 07:38 AM   #21
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Originally Posted by LARS View Post
Like the article says: "When my will is read, it will begin with the statement: 
"Being of sound mind and body … I spent it all.""

The challenge of spending is a tricky one for those that are not looking to leave large inheritances.

Can't say I have any bright ideas, but I do spend some time looking out some 20 years or so and thinking about the minimum $s I want to show up with at the age (approx. 80 yrs old) on the theory that I ought to amortize current excess $s and add to increased spending.

Read more: Planning To Die Rich Misses The Point - Business Insider
Planning To Die Rich Misses The Point - Business Insider
The linked article reflects our own feelings.

I am not into giving advice, but what you said is exactly what we did. Retired at 53, now nearing 80. Not into active investing, but, financially speaking DW and I are at almost the exact position as the day we retired, and feel secure with what the future may bring. Keeping in mind that the 1989 dollar is now $1.90, and the investment return basis over the early years was better than it is today, the fact is that our capital is/was far below that of most ER members. We are only now, beginning to go into the spend down period... much later than we planned.

The simple part of this was understanding that LBYM does not mean sacrificing anything at all, as long as one understands that matching the outgo with the income is what we do before the fact.

Our path to a fulfiling and happy retirement is here:
Sharing 23 years of Frugal Retirement
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Old 01-17-2015, 08:04 AM   #22
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I would rather have money left over when I kick the bucket than risk becoming destitute. I am not going to make any attempt to "spend it down" until at least 5 years after ER, that is, until the retirement risk period is over I am sticking to ~3% WR. If things look good 5 years in, I will loosen the purse strings a little.
I agree. Having a husband 15 years older has been a good education for me. I can see the difference money makes in a comfortable old age (he's 76 now). The first hearing aids he got 10 years ago cost $5,000 for the pair and insurance paid $1,500. He lost one a few years ago and the other stopped working, and the ones we just bought at Costco were "only" $2,600 and work much better. (Thanks to those of you here who recommended Costco!) Between the 2 of us we have 5 dental implants. I'm also finding that our travel is more expensive. He just can't do long-hauls (e.g. transatlantic) in Coach anymore. He never fit in Coach seats anyway and now it just kills his back. The aspects of travel that reduce wear and tear- maybe private car to/from the airport, a hotel close in, etc. also cost $$$.

I'm planning on 3% withdrawal till I start collecting SS in 8 years and even that scares me, but I look at my spreadsheets and under some pretty reasonable assumptions the $$ I'll have left at 90 are equivalent to what I have now in today's $$.

I'd rather have that cushion. When my granddaughter starts college (she's less than a year old) I may be able to help her and (please God) future siblings with expenses. At that point, I'll have a good idea of how much I can chp in for that. I've already started a 529.
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Old 01-17-2015, 08:20 AM   #23
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Love this line from that article:
A quote by Kevin Welch made famous by the Garth Books song, "Pushing Up Daisies."
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Old 01-17-2015, 08:40 AM   #24
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...
I'm planning on 3% withdrawal till I start collecting SS in 8 years and even that scares me, but I look at my spreadsheets and under some pretty reasonable assumptions the $$ I'll have left at 90 are equivalent to what I have now in today's $$.
...
Sounds like the VPW calculator would fit your case. See above for link if you haven't already checked it out.
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Old 01-17-2015, 09:08 AM   #25
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Seriously, being in the RMD phase adds another dimension to spending. Not only are you making funds available, Uncle Sam is requiring it! (talk about SWR choice!)
I take my RMD's from an inherited IRA as 'in kind' distribution, in the form of securities. Sure, I pay taxes on the distribution, but these holdings go right back into my brokerage account.
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Old 01-17-2015, 10:13 AM   #26
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Let me try this another way.

Let’s assume that today, 2 people living in an Assisted Living facility costs approximately all-in $110,000 per year (this $ amount comes from recent direct experience with parents).

Now assume, worst-case scenario that you and DW both need AL care when you turn 80 (about where my parents each did), which for DW and me is approximately 20 years out. So, figure the cost of AL care in 2035 will be (for two) $240,000 (that assumes a 4% inflation factor). Further figure SS will be $50,000 per year in 2035.

So net expense (reduced by SS, but not any other income/insurance) for AL for two of approximately $200,000 per year. Figure again worst-case you and DW live 10 years in AL. That means you need approximately $2,000,000 in 2035 to cover your expenses (worst-case) for 10 years.

Conclusion: Why not spend income AND CAPITAL with an eye to arriving at 2035 with a net worth of $2,000,000?
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Old 01-17-2015, 02:09 PM   #27
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Let me try this another way.

Letís assume that today, 2 people living in an Assisted Living facility costs approximately all-in $110,000 per year (this $ amount comes from recent direct experience with parents).

Now assume, worst-case scenario that you and DW both need AL care when you turn 80 (about where my parents each did), which for DW and me is approximately 20 years out. So, figure the cost of AL care in 2035 will be (for two) $240,000 (that assumes a 4% inflation factor). Further figure SS will be $50,000 per year in 2035.

So net expense (reduced by SS, but not any other income/insurance) for AL for two of approximately $200,000 per year. Figure again worst-case you and DW live 10 years in AL. That means you need approximately $2,000,000 in 2035 to cover your expenses (worst-case) for 10 years.

Conclusion: Why not spend income AND CAPITAL with an eye to arriving at 2035 with a net worth of $2,000,000?
I'd guess that most people would play the game of arriving at AL with a net worth of zero. Around here it's advertised on TV as "Elder Law/Financial Management"
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Old 01-17-2015, 02:17 PM   #28
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Hmmmm....maybe I should borrow to pay for my mega yacht. My estate can pay it off.
I suspect this happens more than one might think.

I know of one very successful guy in town who did this (via an early heart attack); the bank was left holding the bag because despite a big house/boat/car/vacation home had a very, very small estate.

Well, it's one way to beat the system and your ne'er-do-well heirs!!

But seriously: maybe LBYM is a bell shaped curve? Amass a goodly chunk of change, spend it down and then in later life borrow away with no plan to pay it all back?
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Old 01-17-2015, 04:41 PM   #29
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I take my RMD's from an inherited IRA as 'in kind' distribution, in the form of securities. Sure, I pay taxes on the distribution, but these holdings go right back into my brokerage account.
Nice to hear, but not all of us have the good fortune of inherited IRA's. Many here have to make their own from scratch.
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Old 01-17-2015, 04:56 PM   #30
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I'd guess that most people would play the game of arriving at AL with a net worth of zero. Around here it's advertised on TV as "Elder Law/Financial Management"

I haven't heard of any AL facility in the U.S. that will take someone in with no money, that is to say, entirely depending by Medicaid or MediCal or whatever.

Do such AL facilities exist? That would be good to know about.

Or are subsidized senior housing or the nursing home the two choices for the indigent elderly?
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Old 01-17-2015, 06:26 PM   #31
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Am I that odd? I don't particularly care if I "spend it all" and given how little control I have over some key variables such as my own future health and longevity, it seems almost impossible that I could. My focus is on having "enough" to live as I choose (modest LBYM lifestyle). I know I will use any excess for safety and I certainly hope that safety will mean there is some leftover. Let that fall where it may - some nice inheritance to children late enough in life to avoid spoiling them and some nice support for some favorite charities. Perhaps if the portfolio grows unexpectedly large I would consider some indulgences, but those are more likely to be family experiences than things.
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Old 01-17-2015, 07:19 PM   #32
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Am I that odd? I don't particularly care if I "spend it all" and given how little control I have over some key variables such as my own future health and longevity, it seems almost impossible that I could.
No you are not that odd. But, and it is a big but for me, I do not want to leave too much on the table so to speak as leaving a large inheritance is not important for us.

So while I agree that "spending it all" is not realistic; neither is an ever increasing net worth. The question becomes when, and by how much, to start dipping into principal for us?

Mind you if there were a foolproof way to show up at my funeral with only $1 in my pocket I'd be all for it, but there ain't so I won't...
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Old 01-17-2015, 07:30 PM   #33
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Love this line from that article:

Quote:
Your gravestone will have two dates separated by a hyphen. You have no control over the dates, but you do have control over the hyphen Ö thatís your life. Make the most of that hyphen.
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Originally Posted by RonBoyd View Post
A quote by Kevin Welch made famous by the Garth Books song, "Pushing Up Daisies."
That sure sounded familiar, here's another song on that theme, from a great great artist, Steve Goodman:



Quote:
Lyrics to Between the Lines:


The day you're born they sign a piece of paper
To certify the date of your birth
And the day you die they sign another
Just to prove you've gone back to the earth

And between those two pieces of paper
There's the truth that is so hard to find
And the story of your life is written ' , but
You must read in between the lines


Now when you're young you think it doesn't matter
If you leap before you look
But those old folks are wiser and sadder
From the chances that they took

Now when your chance comes along, you must take it
Just be careful and take your time
And the chances are good you will make it
If you could read in between the lines...

more at: Steve Goodman - Between the Lines Lyrics
To the OP - if by, say 75 ~ 80 YO, I find I'm still in good financial shape, and any heirs are likely to get 'enough' (I would start annual gifts, I think), I might go pretty heavy into annuities, as a form of insurance. There are drawbacks and considerations, but it does address the "die with $0" conundrum (well, not literally, I don't think you can go 100% annuities).

-ERD50
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Old 01-17-2015, 08:50 PM   #34
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We never really own anything, we are just temporary custodians entrusted with the care of assets to be passed on to someone else as the next temporary custodian.


There's a "proverb", something like "shirtsleeves to shirtsleeves in three generations", meaning that wealth gained in one generation will be lost by the thirdÖ. " I know I'll never see the results, but I hope our family can avoid that. I grew up in what was essentially a camp trailer. The wife in a remove village in a third world country. We both worked our way out of a downtrodden situation, and overall we're doing ok. Our one child seems to have a clear mind, and decent prospective career.


I expect the expenses for the wife & I will rise as we finish out time on this Earth, but rather than spending down, I concur with the approach of ensuring the wife & I have enough to live on, and then working on getting the rest to the custody of a well trained/educated next generation.


Personal opinion, the article:


Planning To Die Rich Misses The Point - Business Insider


Ö is just pushing more "consumerism", and failure of personal responsibility to care for the assets of YOUR next generationÖ
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Old 01-17-2015, 10:34 PM   #35
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… is just pushing more "consumerism"
+1. I don't feel like I will be a failure if I leave enough money to either pay for many years of LTC for both of us without being a burden to our kids or society, and what we don't need for end of life care can go to help our kids enjoy the freedom of FI, feed low income families, and provide sanctuary to formerly abused animals.

Personally, I would rather see the money go to elephants than a Maserati dealer's profits.
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Old 01-17-2015, 11:10 PM   #36
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Personally, I would rather see the money go to elephants than a Maserati dealer's profits.
Not me, I'd go for the car while I can still have fun with it! (And, they go up in value over time, these exotic machines).
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Old 01-18-2015, 03:43 AM   #37
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Let me try this another way.

Letís assume that today, 2 people living in an Assisted Living facility costs approximately all-in $110,000 per year (this $ amount comes from recent direct experience with parents).

Now assume, worst-case scenario that you and DW both need AL care when you turn 80 (about where my parents each did), which for DW and me is approximately 20 years out. So, figure the cost of AL care in 2035 will be (for two) $240,000 (that assumes a 4% inflation factor). Further figure SS will be $50,000 per year in 2035.

So net expense (reduced by SS, but not any other income/insurance) for AL for two of approximately $200,000 per year. Figure again worst-case you and DW live 10 years in AL. That means you need approximately $2,000,000 in 2035 to cover your expenses (worst-case) for 10 years.

Conclusion: Why not spend income AND CAPITAL with an eye to arriving at 2035 with a net worth of $2,000,000?
If you really think that is worst case, sounds good. Matching family history sounds like it may not be the worst case though, but maybe it is in this case.
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Old 01-18-2015, 09:25 AM   #38
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Hmm. 4.2 liter v8 in an elephant... not thinking the 0-60 speed will be that great..
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Old 01-18-2015, 10:25 AM   #39
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Hmm. 4.2 liter v8 in an elephant... not thinking the 0-60 speed will be that great..
Tough to park, too.......
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Old 01-18-2015, 10:41 AM   #40
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If you really think that is worst case, sounds good. Matching family history sounds like it may not be the worst case though, but maybe it is in this case.
Needless-to-say, this sort of "planning" is fraught with much inaccuracy. And reality is if I thought for example $2 million was the number I'd add a nice cushion just to be safe. After all, that is what we all do on this site!

To other posters on spending equating to giving into "consumerism": I don't get that point of view personally. I look at all of my current/future spending as slowly chipping away at the "delayed resources" I banked early on for the express purpose of consumption/living down the road so to speak.

Again, this discussion takes on a different trajectory if leaving an inheritance is important.
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