Retirement Spending Is Not a Straight Line

[haha]

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Originally Posted by youbet There's more to this than just the academic question of whether spending will decrease in later years or not. It seems like the real issue is whether or not to actually spend more while you're younger assuming you'll spend less when older. If the question as to whether or not an octogeneran will spend less is strictly academic, it makes no real difference other than as a chat topic. But, if your intention is to spend more today on the assumption that you'll desire to spend less later, then you have to accept the risk of that being true and your opinion matters and has consequences. For those of you who feel that beginning in your late 70's, you'll desire to spend less, who of you are actually spending more now because of that belief? If you're not actually spending more now, it makes little difference what your opinion is other than as chat.

It just spent a week with some guys 1 year older than me. I spent more than I ever had before in my life. And that was just food and drinks. I'd say if people are counting on eating less as they age, they had better start the countdown quite a bit later.


Ha

[NW-Bound]

Youbet, you are telling real stories, and Katsmeow and myself have observed reduced spending with our relatives, which did not have to do with lack of funds. For people who have exhausted their savings and depend solely on SS, they really do not have a choice, in that case there's not much to talk about.

If we are talking about reducing true discretionary spending, then we have seen different stories. It will be up to the individuals who will decide whether that extra spending is worthwhile. When I can no longer wander the streets of Europe by myself, I think I will just stay home, while somebody else may pay to have his wheelchair pushed around for sightseeing. There is no right or wrong, is there?

And haha, yes, I can see one wanting to move up in the "food chain". But boy, one has to eat a lot to spend much money, and I have seen my own geezers eating so little as they aged. Of course they were older than you are right now, and definitely not in the same health condition.

Anyway, as all this talk does not change my planned 3.5%, it is just chat, as youbet said. And chat is what I have been doing, until I recover and hit the road again. But that will not happen for a while, so this is my past time right now, hanging around here...

[haha]

Quote:

Originally Posted by NW-Bound And haha, yes, I can see one wanting to move up in the "food chain". But boy, one has to eat a lot to spend much money, and I have seen my own geezers eating so little as they aged.

Not sure about that. I have been to dinners for 5 with a $2300 check. I guess that is not much compared to buying a new 911, but it is a helluva lot for one meal. Fortunately I was a guest at these, or I would not be here now. I might have died on the spot.

Ha

[NW-Bound]

You surely keep higher-class company than I have. My friends thought I was a big spender compared to themselves.

[youbet]

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Originally Posted by NW-Bound Anyway, as all this talk does not change my planned 3.5%, it is just chat, .

By this I assume you mean that your chosen 3.5% WR is not impacted by an assumption that you'll spend less as you age?

The "age related spending" talk is only "chat" if your opinion is not affecting your decisions regarding today's spending level. For example, DW and I do spend a bit less today than we would if we were comfortable assuming we'd definitely spend less as we progress deeper into geezerhood.

BTW, I too have seen examples of folks spending less as they age. Especially if you do not include LTC expenses during the final years. But my point is, we're willing (and able) to spend a bit less today to empower us to continue spending at the same rate through our final years. If we don't want or need to, that'll be great news for the grandkids' inheritance I guess!

There's no doubt that overall financial well being has to do with our decision. There are folks here on the board who have described how they are living on a small fraction of our yearly spend. I think I recall $20k being tossed out. I doubt they'd want to reduce that to enable constant spending throughout life since they'd likely be giving up some basic necessities.

[NW-Bound]

As described earlier, although I anticipate spending less as I age, I like to stay at 3.5%, so that my stash hopefully will stay the same, if it does not grow. And the latter seems unlikely, given my gloomy outlook of stock return.

Yes, I derive some pleasure from successfully managing my money and watching that bottom line of Quicken. I do not have to convert that into spending to be happy.

Go ahead and call me Scrooge. I do not mind as I call myself that repeatedly here in this forum.

Still, if and when my stash grows beyond expectation like the wildest traces in FIRECalc, then I may visit each of the fancy and expensive restaurants the like have been described in a book by Michael Ruhlman to see for myself. However, it is likely that I may just say I can't really tell the difference from my hometown bistro. But that of course may just be my peasant's palate.

[Lsbcal]

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Originally Posted by youbet ...(snip)... DW and I cherish being on our own and calling our own shots. If the time comes when we can't stay in our own home independently due to physical limitations, we want to be able to afford expensive services to allow us to do so. Our family won't have the time to be our independence enablers but will likely be able to oversee our expenditures to ensure we're not ripped off. With an on call handyman, house cleaner, lawn and garden service, driver, shopping service, etc., we've seen older friends and relatives stretch their years of independence significantly. ...

Well said, youbet. We only have our son and I cannot imagine him (currently living and working in another city) doing much of the care giving. So I'd like to ensure we have plenty of $'s for the future. And when the time comes to sell the big house, that will free up more cash. Hopefully there will be some really nice choices to make the transition easier but who knows for sure. That may be 15 years off, or more.

Right now I do all the gardening and we use very few services. A lot of this is not to save money but because we prefer it this way.

We find that DW is more challenged by trips that involve long plane flights and maybe cold (unseasonable) conditions. So age takes its toll on our versatility. Little aches and pains. Shorter hikes, etc.

[Lsbcal]

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Originally Posted by NW-Bound ...(snip)... Go ahead and call me Scrooge. I do not mind as I call myself that repeatedly here in this forum.

As a Srooge, you have lots of company here.

Quote:

If and when my stash grows beyond expectations like the wildest traces in FIRECalc, then I may visit each of the fancy and expensive restaurants the like have been described in a book by Michael Ruhlman to see for myself. However, it is likely that I may just say I can't really tell the difference from my home-town bistro, but that of course may just be my peasant's palate.

Instead of going to a fancy restaurant, we are more likely to do more nights out at the current favorites. Seems there is an amount of spending beyond which one just buys pretentious living -- too uncomfortable for my tastes.

[youbet]

Quote:

Originally Posted by NW-Bound As described earlier, although I anticipate spending less as I age, I like to stay at 3.5%, so that my stash hopefully will stay the same, if it does not grow. And the latter seems unlikely, given my gloomy outlook of stock return. Yes, I derive some pleasure from successfully managing my money and watching that bottom line of Quicken. I do not have to convert that into spending to be happy.

OK, that makes perfect sense. You're just saying that you've seen examples of folks voluntarily spending less as they age and that you think that will be the case with yourself as well. But you're uninfluenced by that belief in your current spending which is more determined by the desire and enjoyment of seeing your portfolio grow.

We're a bit the same way. We spend a bit less now than we might if we believed we'd definitely want to spend less later on. But, we're comfortable with our current spending and have people that are important to us that will receive any residual if in fact we don't spend it later on.

Having the resources to maintain independence as long as possible is important to us however.

[NW-Bound]

Quote:

Originally Posted by Lsbcal As a Srooge, you have lots of company here. Instead of going to a fancy restaurant, we are more likely to do more nights out at the current favorites. Seems there is an amount of spending beyond which one just buys pretentious living -- too uncomfortable for my tastes.

I am never pretentious, but often wonder if all the luxury things that are hyped are really real, or if I could tell the difference (or care). Hence, the willingness to try, if I have the dough that is.

Sometimes, it's not even scrooginess that makes me spend less.

For example, when we discovered a nice bistro in town, after dinner, I told my wife I liked to come back next week to try different dishes. My wife talked me out of it, saying that we then would not appreciate it as much and need to space it out. The place is not too expensive that we cannot eat there every week.

In fact, I was thinking that if I were a single old gentleman who lived nearby by myself, I could even walk there for dinner everyday and just have their lower-cost du jours to save the hassle of cooking. But then, I suspect I would soon get tired of the cuisine and have to intersperse that with some Cup-o-Ramens.

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Originally Posted by youbet OK, that makes perfect sense. You're just saying that you've seen examples of folks voluntarily spending less as they age and that you think that will be the case with yourself as well. But you're uninfluenced by that belief in your current spending which is more determined by the desire and enjoyment of seeing your portfolio grow. We're a bit the same way. We spend a bit less now than we might if we believed we'd definitely want to spend less later on. But, we're comfortable with our current spending and have people that are important to us that will receive any residual if in fact we don't spend it later on. Having the resources to maintain independence as long as possible is important to us however.

Some posters have said that they would regret not spending more if they end up with a lot of money. Hence, they tried to optimize their spending now. I think it's OK to die rich (again, not too likely given the stock prospect). I would enjoy watching it while alive, then other people can partake in it later too.

[youbet]

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Originally Posted by Lsbcal We only have our son and I cannot imagine him (currently living and working in another city) doing much of the care giving. So I'd like to ensure we have plenty of $'s for the future.

Our situation as well except our son lives 20 miles away. But with a time consuming job and three kids, overviewing out spending to guard against ripoffs is all we could expect.

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Right now I do all the gardening and we use very few services. A lot of this is not to save money but because we prefer it this way.

The only regular service we currently use is lawn service. I can still walk behind the mower just fine but we now travel 2+ months a year and that was way too much to ask a neighbor to handle. We're mentally preparing ourselves to spend much more if we need a handyman, cleaning person, shopper, etc. later on.

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We find that DW is more challenged by trips that involve long plane flights and maybe cold (unseasonable) conditions. So age takes its toll on our versatility. Little aches and pains. Shorter hikes, etc.

Currently we own a camper and our trips involve towing that around the country and visiting places we never had time to visit earlier in life. We're heading out for 3 weeks to see the Badlands and Yellowstone shortly. We also like to fish. We're anticipating the camping thing (despite our little trailer being quite comfortable) only lasting another 2 - 3 years. Then, if we're willing and able, it will be flying west, renting a car and staying at the lodge at Yellowstone.

But who knows? Maybe we'll feel up to staying in our own home and continuing travel (with the help of extra services) or maybe we won't. Maybe one of us will have a stroke and we'll wind up in an assisted living arrangement long before we really wished to give up independence. Ya pays yer money and ya takes yer chances!

Our risk from our assumption that we'll keep spending at about the same rate is that we're not doing a few things now that we might do if we were confident we'd want to spend less later.

[Katsmeow]

Quote:

Originally Posted by youbet If the question as to whether or not an octogeneran will spend less is strictly academic, it makes no real difference other than as a chat topic. But, if your intention is to actually spend more today on the assumption that you'll desire to spend less later, then you have to accept the risk of that being true and your opinion matters and has consequences. For those of you who feel that beginning in your late 70's, you'll desire to spend less, who of you are actually spending more now because of that belief? If you're not actually spending more now, it makes little difference what your opinion is other than as chat.

At this point we are in a high spending time period in any event because we still have 2 kids at home, one in college and the other starting soon. So, for the next few years we are spending a lot more than we will be after they are gone.

That said, I've prepared sample budget looking at each item of spending for the future, year by year. I do have some categories of spending decreasing as we get older based upon what I have seen with relatives and others (for example, dining out). At the same time I do have some expenses that I increase (for example, yard work. Right now, DH does it but we realize that with an acre he won't always be doing it). I do find that the overall does decrease in the future. I do think that once the kids are gone and I have a better representation of how certain expenses change once they aren't here (utilities, groceries, for example) that I will firm up those budget categories and may well end up spending a bit more in the nearer future than what I expect to spend 20 years from now. FWIW, I expect this to be a difference of a few thousand dollars, not a huge difference. For long term care possibility we don't have LTCI and if we don't get it I expect we will be setting aside some money for that future possibility.

[youbet]

OK Kat, that's great. It sounds like you have a firm belief that you'll desire to spend less as you get older and therefore are choosing to spend more today based on that belief.

Depending on how things work out for you and DH, that may very well turn out to be optimum for you.

[Katsmeow]

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Originally Posted by youbet OK Kat, that's great. It sounds like you have a firm belief that you'll desire to spend less as you get older and therefore are choosing to spend more today based on that belief.

Actually I don't think that is what I said at all.

I said we are spending more now in any event because we have kids at home and in college. That is, our spending now is higher than it will be in the future independent of whether we decide later to spend more based upon thinking spending will be less in the future. We are spending more now because kids are still at home and in college not because we expect to spend less in old age.

As for that later period (after kids are gone), I also don't think I said I had a firm belief I would spend more then based upon lower spending in the future. I think I indicated a possibility I might spend a few thousand more a year depending on what the budget indicated after the kids are gone.

I tried to show the tentative nature of this through my language:

I do think that once the kids are gone and I have a better representation of how certain expenses change once they aren't here (utilities, groceries, for example) that I will firm up those budget categories and may well end up spending a bit more in the nearer future than what I expect to spend 20 years from now. FWIW, I expect this to be a difference of a few thousand dollars, not a huge difference.

[teejayevans]

Quote:

Originally Posted by MichaelB Building a plan based on a real decline in future spending is a dangerous approach. The downside risk is much greater than the upside and represents a scenario with few options if the reality is different. I'll continue to assume our later years will be just as expensive even if the spending mix is different.

Which is one reason why I think postponing SS till 70 makes sense, it will give you a nice monthly paycheck. Maybe enough to live off depending on your lifestyle, in case you overspend in the early years.
TJ

[Major Tom]

Quote:

Originally Posted by youbet There are folks here on the board who have described how they are living on a small fraction of our yearly spend. I think I recall $20k being tossed out. I doubt they'd want to reduce that to enable constant spending throughout life since they'd likely be giving up some basic necessities.

I've been living on ~17K/year for the last 4 1/2 years since stopping work (the most recent 2 1/2 of those years have been as a result of portfolio draw) and, at least in my case, you are correct. Although I know I could reduce my expenses significantly if I absolutely had to, thankfully, that need doesn't exist, and it wouldn't come without a significant reduction in quality of life (i.e. giving up my pets, less healthy diet, etc)

Although as time progresses, I'll be able to find ways to keep my budget at this level, the hope is that I can slowly increase my spending as I age. With a WR of ~2.5% based on the starting portfolio value and SS coming along in 12 years, the option for increased spending should be a near certainty. The only thing I'm a little concerned about is whether, after living on a lower income, I will be able to increase my spending without feeling that I am frittering the money away needlessly. Not that income excess to one's needs is actually a problem though...........

PS - I spent $75 yesterday having the rear wheel on my bicycle replaced. This was a major transportation expense (no motorized transport here). The wheel was repairable and no doubt if I were Jacob, I'd have bought the tools and learned how to do the repair myself. Telling the mechanic in the bike shop to go ahead and install a brand new wheel felt a little indulgent compared to the option of repairing it at home myself. Back when I owned an older Volvo wagon, 3K/yr maintenance and repair bills were normal. Nowadays, $100 - 150/yr for bike maintenance is normal and could be reduced even further were I to take my living to Jacob levels but instead, I chose to pay a guy to repair the bike for me and felt like I was living the life of Riley as a result. It's all relative.

PPS - the neat thing about living on 17K/yr is that 20K/year would make me feel frisky, and 25K/yr would feel positively opulent.

[Midpack]

We are watching this play out on two fronts. DW's Mom went into a nursing home, obviously her expenses increased by at least two fold, and she'll be there for her remaining years.

Nursing home and assisted living expenses aside, I am watching this play out in real time with my parents in their early 90's who are determined to stay in their home. So they've hired maids, lawncare, pool maintenance - all things they did for themselves until the past 2-3 years. They have also had to hire people for most basic household breakdowns that my Dad would have happily fixed himself, he simply can't do it himself anymore. And I live 2200 miles away, so I do all I can when I am there - I repaired their fence gates last time, Dad knows what to do just doesn't have the strength to do it. Bottom line, their living expenses have increased by at least 1/3rd, and the inconvenience of having to call someone and wait to fix things has been frustrating for them. DS has offered to move in with them, and that will eventually be the next chapter one of these days.

So expenses will probably go up somewhat at least with/without nursing/assisted living IME.

[Mulligan]

Quote:

Originally Posted by Midpack We are watching this play out on two fronts. DW's Mom went into a nursing home, obviously her expenses increased by at least two fold, and she'll be there for her remaining years. Nursing home and assisted living expenses aside, I am watching this play out in real time with my parents in their early 90's who are determined to stay in their home. So they've hired maids, lawncare, pool maintenance - all things they did for themselves until the past 2-3 years. They have also had to hire people for most basic household breakdowns that my Dad would have happily fixed himself, he simply can't do it himself anymore. And I live 2200 miles away, so I do all I can when I am there - I repaired their fence gates last time, Dad knows what to do just doesn't have the strength to do it. Bottom line, their living expenses have increased by at least 1/3rd, and the inconvenience of having to call someone and wait to fix things has been frustrating for them. DS has offered to move in with them, and that will eventually be the next chapter one of these days. So expenses will probably go up somewhat at least with/without nursing/assisted living IME.

Great example for increased spending. They have already beaten the odds of a 1in 10 chance of being alive at 90. Their long healthy retirement life hopefully will be passed on genetically to you. I think that is awesome a 90 plus year old couple are still living in their same home. I would be like them and do everything possible to stay in my house until the end of my life. Having a nice nest egg to draw on ensures that possibility.

[W2R]

Quote:

Originally Posted by Mulligan Great example for increased spending. They have already beaten the odds of a 1in 10 chance of being alive at 90. Their long healthy retirement life hopefully will be passed on genetically to you. I think that is awesome a 90 plus year old couple are still living in their same home. I would be like them and do everything possible to stay in my house until the end of my life. Having a nice nest egg to draw on ensures that possibility.

+1 Personally I have a hard time understanding why some assume that expenses will be lower in old age (edit: this first/previous comment is not meant to refer to any particular post in this thread, but is meant as a general comment). Even though one may not travel as much, and may not be engaging in as many physically demanding pursuits, it will really be nice to have a bigger budget to pay for one's comfort as well as necessities during the later stages in life.

I am only 65 now, and hopefully not very close to extreme old age, but even now I really enjoy and appreciate certain comforts that I didn't need when younger. For example, I am sitting about 12 feet from a 60" television. With early cataracts, a heavy dose of astigmatism, and other vision problems, I love the fact that I can SEE this TV whereas I would have been perfectly happy with a 19" TV when younger. I also regard my gym fees and lawn guy as necessities at this age. Pretty soon I will probably have to get a housekeeper too, although I am putting that off as long as possible.

Like Mulligan, I would love to stay in my own house until the end of my life if that turns out to be possible. I didn't always feel this way, but the older I get, the less appealing group living seems to me.

[NW-Bound]

Many posters have shared positive experience with moving their parents into assisted living arrangements. I have to remember that, so when our time comes, we will be more willing to give up the large single home we can no longer take care of, nor be able to enjoy.

There are phases in life, and we need to adapt as our needs change.