Poll:Big Ticket spending

[tofer]

I'm wondering how FIRE folks (those who are retired) think about "big ticket" expenses like new cars, home improvements, and perhaps new RV's (if you're into that lifestyle). i.e. things that cost upwards of $50K and come every 5-10 years. Do you...

A. Deprive yourself of these things for the rest of your life, or
B. Allow them only if your portfolio is beating expectations, or
C. Set aside a certain amount of your SWR to "save up" for them

Putting it another way, is retirement living a constant struggle to stay within budget and say no to anything that doesn't fit?

 

[MichaelB]

I'm wondering how FIRE folks (those who are retired) think about "big ticket" expenses like new cars, home improvements, and perhaps new RV's (if you're into that lifestyle). i.e. things that cost upwards of $50K and come every 5-10 years. Do you...

A. Deprive yourself of these things for the rest of your life, or
B. Allow them only if your portfolio is beating expectations, or
C. Set aside a certain amount of your SWR to "save up" for them

Putting it another way, is retirement living a constant struggle to stay within budget and say no to anything that doesn't fit?

D. Include this extra spending in the pre-retirement finances calculation.

 

[NW-Bound]

^^^^ +1

By spending less than 3%/yr all in, I hope to have plenty of reserve for infrequent large purchases. And then, there's SS to claim too.

 

[HI Bill]

I voted C, but am hoping that the markets are kind to me over the next four years. If so, I'll take 28% of the next egg to buy a house, and still maintain my initial standard of living/spending level.

 

[audreyh1]

E. Pull the large amount from the retirement account, and reduce future income by recalculating your SWR.

Just another option.

 

[RobbieB]

I just buy the stuff as needed

 

[REWahoo]

Putting it another way, is retirement living a constant struggle to stay within budget and say no to anything that doesn't fit?

Not for us.

Since retiring 14 years ago we've purchased two RV's, a new truck and two nearly-new cars. I don't think we've said no to anything we really wanted to buy.

My poll answer is both C and D.

 

[NW-Bound]

^^^^ +1

By spending less than 3%/yr all in, I hope to have plenty of reserve for infrequent large purchases. And then, there's SS to claim too.

Forgot to say, I do not spend any differently than I did when still working.

Perhaps I can spend more now thanks to the bull market, but do not feel like it, and do not want anything. Too much "stuff" already.

 

[W2R]

I'm wondering how FIRE folks (those who are retired) think about "big ticket" expenses like new cars, home improvements, and perhaps new RV's (if you're into that lifestyle). i.e. things that cost upwards of $50K and come every 5-10 years. Do you...

A. Deprive yourself of these things for the rest of your life, or
B. Allow them only if your portfolio is beating expectations, or
C. Set aside a certain amount of your SWR to "save up" for them

Putting it another way, is retirement living a constant struggle to stay within budget and say no to anything that doesn't fit?

Struggle? Not for me! I am not wealthy, but seriously this is not a problem.

I voted "C. Set aside a certain amount of your SWR to "save up" for them", but it's not really a specific amount. I just live a slightly LBYM lifestyle, buy whatever I need or want without ramping up the lifestyle, and whatever I don't spend is what is set aside.

From David Copperfield, by Charles Dickens:

“My other piece of advice, Copperfield,” said Mr. Micawber, “you know. Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

 

[RunningBum]

D. Include this extra spending in the pre-retirement finances calculation.

D for me too.

B to a small part, if things weren't going well, I wouldn't get them.

C is totally foreign to me; I only withdraw what I spend, so withdrawing and saving makes no sense because i'm already saving.

 

[REWahoo]

C is totally foreign to me; I only withdraw what I spend, so withdrawing and saving makes no sense because i'm already saving.

RMD's could change that for you.

 

[Ronstar]

None of the above - I buy as needed.

 

[Senator]

I wish the big ticket items came every 5-10 years...

I use my cash available, and my HELOC for periods of ~3-months or less. Charge the stuff first, and get as many points as I can. Then pay off the card with my HELOC and cash available.

My Checking account has my HELOC as a reserve. When I have a HELOC balance, I typically have less than $1 in my checking account. It's all on my HELOC saving interest. As checks and bills clear, the HELOC gets hit. But I do save a lot of interest.

The rental income eventually catches up to the amount I owe on the HELOC. You can use the same technique with whatever income you have coming in.

 

[RunningBum]

RMD's could change that for you.

I'll have little or no tIRA by 70, but even if I did, I'd consider that a transfer of money to my taxable account. Yeah, technically a withdrawal, but not for spending. I consider withdrawals what I move over to my checking account, which is where all of my expenses are funneled through.

 

[RunningBum]

I understand that some people do set withdrawal amounts, and set aside what they don't spend. I'm not stating any opinion on that. I'm just saying that's not what I do so to say that I save from withdrawals simply isn't an option for me, unless I changed my method.

 

[easysurfer]

I must have dyslexia as when first reading, thought the thread was "Big Speeding Ticket" .

 

[Floridatennisplayer]

I just buy the stuff as needed

This. I don’t need permission or whatever. If I deem that I need it...just freaking buy it.

 

[kgtest]

I think the one and only time I had a $50k expense was for the down payment on McMansion. I had planned ahead to save cash (BUT, we are not FIRE yet).

I sure hope we don't have too many other 50k expenses.

 

[rk911]

i answered "saved up...." but we do it a little differently. coming from govt i learned about sinking funds...the process of setting a target X-months or years away and setting aside, or sinking, Y-dollars each month for the number of months required to meet that target. simply put if we need say $12k in a year we set aside $1k per month for 12-months. we currently set aside ~$7600 per month into a variety of "funds": vacation, new car, entertainment, pet care, etc. when the CC bill comes in or i write a check for something i simply transfer an equal amount from the MM fund into checking to pay off the CC or "reimburse" the checking acct. i then "debit" the appropriate sinking fund. i use Quicken to keep track of all this so it's all automatic.

 

[tb001]

Not yet FIRE’d, but I have a part of our annual budget that is set aside for big ticket expenses. Overall, about 10% of our annual budget consists of these big ticket expenses. I don’t expect to withdraw the funds if they’re not needed, but it’s part of our planning process.

As a cross check, I went through major house systems and expected longevity, typical car cycles, etc... and ammortized the spend out over time to make sure we are accruing an appropriate amount and the $ came in very close.

The reality is that in tough times, we would make the car last a little longer, or not do that kitchen revamp, so hopefully that gives us a bit of buffer.

 

[robnplunder]

I just buy the stuff as needed

Me, too. The choice is missing from the poll.

 

[Badger]

Just like during my accumulation phase I have continued to set aside funds so I can pay cash for any expense I need/want. My wife just bought a new car she wanted with cash so no monthly payment and no interest to pay. Actually the interest isn't much of an issue as is the annoyance of keeping track of those monthly payments. The cash accounts continue to grow with RMD so any future purchases will be covered as well.


Cheers!

 

[Midpack]

D. Include this extra spending in the pre-retirement finances calculation.

I call the spending category accruals (from my P/L days) and it’s about 20% of our overall budget. Items that hit (much) less often than annual but are predictable, I include appliances, boats, cars (scheduled every 5 years), furniture, major home repairs/remodeling (roof, HVAC, HW, etc.), PC-TV-electronic, other and travel. It’s not hard to predict how much they’ll be and conservatively assume frequencies as well.

A good spending plan includes everything one can think of IMO, even the expenses that occur infrequently.

There’s absolutely no reason to accept “retirement living a constant struggle to stay within budget and say no to anything that doesn't fit.” You retired too early financially if that’s your plan.

As for the beating (or losing) the market, we reevaluate our WR and therefore spending every 5 years. Hopefully that’s often enough to avoid getting too far off track with the best egg balance.

And our overall budget is about 2/3rds essential and 1/3rd things we could easily cut back on should it become necessary.

 

[DrRoy]

D. Include this extra spending in the pre-retirement finances calculation.

I just buy the stuff as needed

+1

 

[RunningBum]

A good spending plan includes everything one can think of IMO, even the expenses that occur infrequently.

There’s absolutely no reason to accept “retirement living a constant struggle to stay within budget and say no to anything that doesn't fit.”

Examples in the OP were >$50K expenses like a new car, home improvement or RV. Many choose or are forced to retire on a budget that can't afford things like that. If you were forced out due to health reasons and unable to find other work, you may have to accept that. Hopefully they can afford to make necessary home repairs and replace an old car with a reliable newer pre-owned one, but that wasn't in the OP, nor are those >$50K.