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Old 07-07-2016, 09:07 AM   #41
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The way I look at it, if the day comes when I need expensive end of life care, I don't want to feel like I'm impoverishing DW by buying it. She may also need expensive end of life care and she shouldn't have to rely on Medicaid. If there is money left over, someone else can have it.

So, you can have your oysters and Gucci, I have my piece of mind. YMMV
For me it's not either/or. For me the object is to feel fairly secure AND enjoy the oysters. If I stress that a lobster dinner will leave my family having to take care of me in old age I've seriously failed.
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Old 07-07-2016, 09:23 AM   #42
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I am sure travelover was talking of oysters as a metaphor. The Gucci bag, well, I am glad my wife has no desire to own one.

I spend more than my wife does. Her biggest happiness was that she could quit her very stressful work when her megacorp wanted to send her to India to manage workers there. There was nothing she could buy to compensate for the stress, and being able to putz around at home was all she cared for.
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Old 07-07-2016, 09:36 AM   #43
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The joy of spending must be balanced against the joy of "counting". We all have different weights to give to each of the two pleasures.
This sums it up well, thank you.
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Old 07-07-2016, 09:41 AM   #44
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But at a minimum, it’s crucial to recognize that accumulating “excess” retirement dollars and seeing the retirement account balance grow, particularly in the first half of retirement, doesn’t mean the retiree is underspending. In fact, spending down the retirement principal early in retirement would be a sign of trouble.
I agree completely. Even in early retirement, it helps to be cautious about spending and prepare financially for the later years of retirement.

We may be wise by not be drawing down on our nest eggs, but never fear, the next time the market crashes there will be hundreds of articles written about how terribly most retirees prepared for retirement, and how unrealistic we were in our spending projections and how many of us will be sleeping under bridges and eating out of trash cans if we live to be a day over 70.

OK, personally? In order to draw down on my portfolio I bought a house in cash. But, you can't do that every year. After buying the house, my 45:55 portfolio is still 121% of what it was when I retired in 2009, due to the bull market.

In order to draw down further on my portfolio, I could adjust my spending. Let's see. Christmas every day (ho hum), or traveling AWAY from my dream home where everything is the way I want it? Er, I think the polite response would be that, uh, "I will take these ideas under consideration".

Or instead of doing anything to increase spending, how about just sitting back with a big grin and enjoying life? We deserve it after all those years of hard work.
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Old 07-07-2016, 09:42 AM   #45
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... And to me, eating at home all the time is against my religion, lol that's why God invented restaurants. Do I do it every day? nope, do I stress because I love maryland style Crabs and for the 4th of July, I sprang for a bushel of crabs and had them cooked and cleaned? nope.

I try very hard to live below my means (some years hubby and I succeed way better than other years) but I'm not giving up vacations to pay my mortgage off early.
We still eat out, but because we cook, restaurant foods do not impress us easily. But restaurants can have an ambience that is not the same as at home. Because of that, we enjoy eating out more when traveling, because the locale is different than home town and makes it more exciting.

Talking about crab, we never fail to have blue crabs when in the Chesapeake Bay area. I still remember the time we stopped by St. Thomas, and ate crab dumped on a table over butcher paper at a restaurant on the pier. Came back to my rental car and found a parking ticket due to overtime parking. I told my wife no way I was going to pay that ticket. They never tracked me down and hassled me about it.

Do they have a better system to track parking violators now, I wonder?

PS. My wife recently dug though the boxes and found for me a T-shirt bought at St. Thomas years ago (20 or 30?). Darn, there was no digital camera then to take lots of pictures to aid my memory.

PPS. Blue crabs now are much smaller than they used to be. The last time we had them (3 years ago) when visiting my friend in Silver Springs, he agreed that they were getting smaller and bonier. People eat them all. Not good.
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Old 07-07-2016, 09:53 AM   #46
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I agree completely. Even in early retirement, it helps to be cautious about spending and prepare financially for the later years of retirement.

We may be wise by not be drawing down on our nest eggs, but never fear, the next time the market crashes there will be hundreds of articles written about how terribly most retirees prepared for retirement, and how unrealistic we were in our spending projections and how many of us will be sleeping under bridges and eating out of trash cans if we live to be a day over 70.

OK, personally? In order to draw down on my portfolio I bought a house in cash. But, you can't do that every year...
The maintenance cost of my homes constantly surprises me. OK, some are improvements and not strictly maintenance, but the point is that I do not have to figure out a way to spend more. Things happen automatically that take care of my anticipated surplus. Darn!
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Old 07-07-2016, 10:00 AM   #47
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This site is full of intelligent, insightful people who help me stay on the path to ER, but I definitely think there is a little too much fear and this article is consistent with that. People are on here all the time saying, "I've got 3 million plus a pension and my house is paid off, I'm 65, I think I need to work another 5 years, thoughts?"

Our plan is riskier than most here, I think the 4% rule blinds people to the fact that they'll reduce expenses in bad years. If leaving a large inheritance is the reason the majority of those in the article are dramatically under spending their portfolio, that's cool - totally respect that. But people seem to discount all the safety valves they have built in - equity in paid off home, taking social security early etc. Heck, if you have a $2 million dollar portfolio, you could make zero return on it and withdraw 100k for 20 years, then reverse mortgage the house and live on that and social security. If the worst Monte Carlo simulation occurs in reality, we've got bigger problems in the world and you better stock up some ammo!
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Old 07-07-2016, 10:04 AM   #48
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... If the worst Monte Carlo simulation occurs in reality, we've got bigger problems in the world and you better stock up some ammo!
How do you know some of them are not stocking up ammo already?
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Old 07-07-2016, 10:09 AM   #49
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The maintenance cost of my homes constantly surprises me. OK, some are improvements and not strictly maintenance, but the point is that I do not have to figure out a way to spend more. Things happen automatically that take care of my anticipated surplus. Darn!
My retirement has been very serene with just one modest, low maintenance home which is the way I want it. I am done with my big yard renovation project which I knew from the start would be required (so, in my spreadsheet I regard it as part of the purchase price of my home). I won't have to have anything else done, ever, unless/until something breaks.

I can't even imagine the expense, worries and logistics of taking care of a second home from hundreds of miles away. Not my cup of tea, even though I could easily afford to buy a second home.
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Old 07-07-2016, 10:11 AM   #50
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How do you know some of them are not stocking up ammo already?
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Old 07-07-2016, 10:14 AM   #51
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This site is full of intelligent, insightful people who help me stay on the path to ER, but I definitely think there is a little too much fear and this article is consistent with that. People are on here all the time saying, "I've got 3 million plus a pension and my house is paid off, I'm 65, I think I need to work another 5 years, thoughts?"

Our plan is riskier than most here, I think the 4% rule blinds people to the fact that they'll reduce expenses in bad years. ...
In our case, we plan for very flexible spending that will allow us to handle reasonable worst case scenarios. But, we've done Several More Years.... We appear to be out of the ordinary on this forum in that we want our discretionary spending in early retirement to exceed our present after-tax, total spending. Maybe a desire to cash in on all the deferred gratification from our respective work schedules.... Plus DW is not a fan of hostels, coach seating, or staying in tents.
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Old 07-07-2016, 10:29 AM   #52
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And before you say (again) that the annuity should be COLA'd and it shouldn't be that expensive to do, check around. There aren't many/any, and they're very expensive. I'd like to live in space to decrease the strain on my muscles and joints in old age, but we've got to live in reality.
Not true in FA-ville, where everything comes up roses, regardless of the counter facts staring us in the face.

I especially enjoy the writers enjoining us to get a "guaranteed income", conveniently ignoring that even a guaranteed $ income is not a guaranteed standard of living. With governments around the world talking up inflation, how clever is it for the retiree to assume that they don't mean it, or that if they do mean it they cannot succeed in doing it?

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Old 07-07-2016, 10:30 AM   #53
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Originally Posted by laurence View Post
This site is full of intelligent, insightful people who help me stay on the path to ER, but I definitely think there is a little too much fear and this article is consistent with that. People are on here all the time saying, "I've got 3 million plus a pension and my house is paid off, I'm 65, I think I need to work another 5 years, thoughts?"

Our plan is riskier than most here, I think the 4% rule blinds people to the fact that they'll reduce expenses in bad years. If leaving a large inheritance is the reason the majority of those in the article are dramatically under spending their portfolio, that's cool - totally respect that. But people seem to discount all the safety valves they have built in - equity in paid off home, taking social security early etc. Heck, if you have a $2 million dollar portfolio, you could make zero return on it and withdraw 100k for 20 years, then reverse mortgage the house and live on that and social security. If the worst Monte Carlo simulation occurs in reality, we've got bigger problems in the world and you better stock up some ammo!
I agree with you that some of us here are so risk averse that it appears almost laughable. Yes, there are safety valves for those of us who have pulled the plug, and they should prevent financial mishaps from becoming financial disasters, so we shouldn't worry so much about running out of money. I get it.

However, once you no longer have a paycheck - or two, in your case - your perspective on all this may be subject to modification. You young whippersnappers will understand that some day if you are lucky.
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Old 07-07-2016, 11:04 AM   #54
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I've used VPW a lot. The latest simulation says that by age 100 we would have 75% of our inflation adjusted portfolio even if retiring in 1968 with all that 1970's inflation. The worst point would be 1982 (14 years into the simulation) at 50% of the current portfolio. And it says we could spend 4.4% this year.

Anyway, in a bad sequence which we could (but hopefully won't) be heading into, we should all be mentally prepared for significant portfolio drawdowns. I've always figured it is baked in that we will leave a significant inheritance -- as the article suggests.

Sounds like most posters here are realistic about the future. But I still think we will all get anxious in a mult-year decline.
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Old 07-07-2016, 11:08 AM   #55
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For me it's not either/or. For me the object is to feel fairly secure AND enjoy the oysters. If I stress that a lobster dinner will leave my family having to take care of me in old age I've seriously failed.
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I am sure travelover was talking of oysters as a metaphor. ..........
Yup, everyone draws the line for themselves. That's why I said "YMMV" in my earlier post. Plus, I don't really care for seafood.
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Old 07-07-2016, 11:13 AM   #56
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If you need a portfolio to fund retirement and aren't reckless, most of us die with a very large leftover. Because math. And longevity variability.

Say you retire at 55 and on average you'll make it to 83. 28 years of bliss. However, you can also make it to 105. 50 years of bliss. Even though on average 28 years is what you need, 50 years is what needs planning for.

Very few people want a >50% chance of being destitute in their most fragile years. Add in the uncertainty in returns so a little buffering, and viola! Most of us will never draw down their portfolio.

Most common way to sidestep this dynamic is by buying SPIAs with a COLA once you hit old age, and spend down whatever leftover capital. That's what SS actually is. Longevity insurance.

DIY retirement portfolio == almost a binary choice between large leftover and destitution.
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Old 07-07-2016, 11:14 AM   #57
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This site is full of intelligent, insightful people who help me stay on the path to ER, but I definitely think there is a little too much fear and this article is consistent with that. People are on here all the time saying, "I've got 3 million plus a pension and my house is paid off, I'm 65, I think I need to work another 5 years, thoughts?"
I wish you would quote some of these people saying this all the time.

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Old 07-07-2016, 11:19 AM   #58
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Not true in FA-ville, where everything comes up roses, regardless of the counter facts staring us in the face.

I especially enjoy the writers enjoining us to get a "guaranteed income", conveniently ignoring that even a guaranteed $ income is not a guaranteed standard of living. With governments around the world talking up inflation, how clever is it for the retiree to assume that they don't mean it, or that if they do mean it they cannot succeed in doing it?

Ha
Guaranteed income DOES NOT EQUAL guaranteed standard of living. No truer words were spoken. I think the economist term is Money Illusion.

Still, I don't need to count my money to have fun (although I think I do it now), and sometimes think I'm underspending what I comfortably could.

The (repulsive) idea of annuitizing a significant portion of my portfolio, with deferred starting date supplemental income streams coming on every few years to help mitigate inflation, could open spending, or charitable giving, possibilities that I currently don't recognize. It has a certain appeal.

But I just can't make myself seriously consider doing this. While it would minimize adverse sequence of return risk, turning current assets into guaranteed income, you don't know what that income will buy, and today's rates may not be the best for setting up a lifetime income. OTOH, today's asset values may turn out to be ridiculously overvalued and there won't be as much assets to turn in to income in the future.

You pays your money and you takes your chances.
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Old 07-07-2016, 11:32 AM   #59
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Occasionally I read these work related articles and that brings back the anxious feelings I had in those days. Would I be able to keep up my skills? Do I understand the newest tech ideas being bandied about? Etc, etc.

I have to stop myself before I work myself up into bad dreams occurring at night. I try to remember that we've got a great reserve and that it is a real security blanket. Those anxious days are behind me now.

Helps me to sleep better as others here have expressed.
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Old 07-07-2016, 11:40 AM   #60
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I agree with you that some of us here are so risk averse that it appears almost laughable. Yes, there are safety valves for those of us who have pulled the plug, and they should prevent financial mishaps from becoming financial disasters, so we shouldn't worry so much about running out of money. I get it.

However, once you no longer have a paycheck - or two, in your case - your perspective on all this may be subject to modification. You young whippersnappers will understand that some day if you are lucky.
touché! We, in fact, already feel it coming on as the ER date creeps closer.
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