Most retiree will never draw down their portfolio?

[NW-Bound]

...NW Bound, that food looks delicious.

Thank you. We still go to restaurants occasionally, but I try to do a lot of things at home. For me, part of the fun of food is in cooking, as I try to not eat too much.

I love grilled oysters. Even fried, just can't do raw.

I'm splurging tonight as I'm having buddies over for a cookout. Bought a few NY Strips to grill. Hope I won't regret it later when I'm counting my stash in my old age.

Eating at home saves money and makes your stash last longer. And for me, it can be more fun than going to restaurants, and certainly more challenging.

 

[bclover]

It's OK.



"Money is much more exciting than anything it buys" -- Mignon McLaughlin

lol, dude is not doing it correctly then, I most definitely did not work 30 years just to "watch" my money sit in a bank account.

Personally I think a lot of traits you had during your younger, working years, you keep when you are retired. If you tend to be on the frugal side of life while working most likely you'll remain that way.

Now I always say I'm the exception to the ER board rules. Yep, I like my toys and I have no problem spending money on my toys. while I have no intention of spending down to nothing, I also have no problem with spending $2,000 on a luxury handbag if I really like it.

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.

 

[hesperus]

I also enjoy building & counting the stash for the security & peace of mind. We've never had to spend principal, it's almost an anathema to me. But we don't want for anything with the six figure income the portfolio produces. But eventually we'll need to look at splurging a bit more, since we have no children and have no reason to leave a large legacy. But I'm only 57, DW is 48 so there is time. We're talking with our accountant about setting up a charitable trust or foundation of some kind.

 

[NW-Bound]

Hey, it's fine that some people do not like to cook. When we see so many restaurants, we tell each other that if people ate out as little as we do, so many workers would be unemployed. So, you are contributing to society by spreading your wealth. How do I criticize that?

If we were all alike, the world would be a boring place. Also, the right of people to seek happiness in their own way (as long as it does not harm somebody else) is written in the Declaration of Independence. Is this adopted country of mine great or what?

This issue is one I think of quite a bit. I have to admit it is hard to actually spend principal, and I guess that means I like to count it too. At some point though, I really need to spend it on something or give more away while alive. I think I can muster up the courage.

You have so much more than I do, and if you spend your stash down to 1/3 or possibly even much less, you still have more than I do now. But can you see yourself doing that?

Again, I have much less and I also cannot bear seeing having 1/2 of what I do now. I keep a diary logging the total of my investable assets (who cares about the homes), and can see when I had only 1/2 of the current value. Do I want to go back there? No. If the market god takes some back, I cannot help it, but I cannot willingly bear to do it myself. Call me Scrooge, I don't care.

By the way, grilling oysters obviates the hassle of shucking them. They've got a built-in cooking indicator too. When they open up, time to get out that lemon slice. Yummy!

 

[travelover]

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

 

[NW-Bound]

I doubt that many people want to spend down to nothing. Most would rather live well and leave as much as possible to heir families or charities. If I had no kids I would set up some kind of charitable foundation and leave everything to that. I would still try to maximize the remaining portfolio while living an active, comfortable life. We sold our weekend house earlier this year giving us substantially increased spending power (~4% of the principle + house costs) yet we haven't changed how large we live at all. The main difference we expect is more travel replacing the time spent at the weekend place.

Congrats on the sale of the weekend place. I still recall seeing some posts of yours about the place (how often have I told y'all about my superior memory?).

When I bought my 2nd place 10 years ago, I was not into RV'ing. Now, I like to do RV, and still want to do fly-and-drive, so do not spend as much time at my high-country home as I thought. I do not want to sell it though. At some point, I may be old and tired of travel, and the home will be the place to where I escape the summer heat and to rest my bones.

 

[NW-Bound]

So, you can have your Gucci, I have my oysters and peace of mind. YMMV

Fix it for you. For crying out loud, these oysters are not gold plated!

 

[jim584672]

Use it or loose it. You don't want to be the richest man in the grave yard.

 

[NW-Bound]

Most excellent, dude! Your spending stimulates the economy, driving up the price of the stocks that I hold. We both win.

 

[hesperus]

Use it or loose it. You don't want to be the richest man in the grave yard.

But when you're dead, it's not going to matter anymore.

 

[NW-Bound]

But when you're dead, it's not going to matter anymore.

Yeah, the important thing is while you are still alive, you feel rich and secure.

Note that I said "feel", as I do not believe in flashing it.

 

[jabbahop]

We we are spending down currently given market returns so far this year. Kids off to college next year then downsize which will reduce rate quite a bit. Finally SS kicking in @ 70 year which will cover nearly 1/2 of budget.


Sent from my iPad using Tapatalk

 

[jim584672]

Why should someone else spend it? "Feeling" rich is not as fun as spending it.

 

[NW-Bound]

Who says we are not spending?

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.

When I learned Optimal Control Theory in engineering school many years ago, the first thing taught was that there are an infinite number of optimal strategies. It is because there are an infinite number of criteria one can choose from. First, you decide what is optimal for you, then you apply the theory to find a way to achieve that criteria. The theory tells you how to get to the point you have chosen. It cannot chose the end goal for you.

So, some want to spend down to 0. Some spend minimally. Most of us are in between those two extremes, and there are infinite shades of gray.

 

[brett]

Our spending on things has gone down substantially in retirement. And it went down even more when we downsized our home and went down to one car.

But our travel costs have increased significantly, more so than the decreases in our living costs. So we are spending. Not the assets, but certainly a healthy portion of the income that is derived from those assets. Our intention is to be financially prudent but to keep doing this until such time as we do not have the health or the inclination to travel. After all, we could get hit by a bus tomorrow or drop dead with some ailment.

Neither of us want to be the richest person in the retirement home nor do we want to sit there regretting all the things we wanted to do but never got around to doing.


There are some n'er do well relatives that we could help but there would be little use in that. Any help would be squandered so why waste the money? Our assets will flow down to our children, and to some degree, our grandchildren.

 

[bclover]

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.

 

[NW-Bound]

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.

 

[JustCurious]

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.

 

[W2R]

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.

 

[NW-Bound]

... 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.

 

[NW-Bound]

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!

 

[laurence]

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!

 

[NW-Bound]

... 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?

 

[W2R]

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.

 

[MRG]

How do you know some of them are not stocking up ammo already?