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Spending Your Money
Old 10-07-2015, 11:29 PM   #1
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Spending Your Money

Have any you been retired for a number of years, and at first wondered if you'd be able to make it?

To now, realizing you'll never come close to spending all your money.

I would think that for many on this forum, it's become a reality.
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Old 10-07-2015, 11:56 PM   #2
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I've been retired 7 years, and have been drawing $40K per year out of my IRA rollover account. I still have 115% more in the IRA's than I had 6 years ago when I started making withdrawals.

After an estate settlement, I have the cash to last 5 years until required withdrawals @ 70 1/2 years old. Therefore, I should be okay even if I live to be 95 years old.
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Old 10-08-2015, 06:48 AM   #3
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I've only spent dividends/interest and pension since retiring 9years ago. Obviously with the great markets we have had since the financial crises my portfolio is higher now. Can't continue this way too much longer or our legacy will be too big. Good problem to have.
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Old 10-08-2015, 07:17 AM   #4
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I'm headed there but not yet. Been using dividends/interest for expenses which just covers things. By age 70 there will be pension+SS+RMDs in addition to dividends which will be way more than I need without touching savings.
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Old 10-08-2015, 07:45 AM   #5
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Retired in Dec 2013, DW still working, and our portfolio is still growing, looking ahead pensions+SS will be more then enough to pay our bills and fun time activities when DW retires. The portfolio and dividends will be mad money or for emergencies that we have not planned for.
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Old 10-08-2015, 07:49 AM   #6
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Last year I spent less than 70% of what i-orp and FIREcalc said I could spend, and this year about 80%. But only two years in, I'm still learning how to increase the budget.
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Old 10-08-2015, 08:01 AM   #7
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I'm not retired yet but FI. DW and I spend the equivalent if about a 3% withdrawal rate so income basically all goes to savings. I'm 40 so 3% is not that conservative but we live in a high cost area (socal so mortgage and insurance/taxes is 4250/no). So once I retire we can easily cut that in half which brings it closer to 2-2.5% (assuming market doesn't drop like mad).

So... Barring some kind of major personal disaster I expect we'll have a lot at the end. Just don't really have that much we want to spend money on . And I think for many of us changing our spending habits is pretty hard. I really hate seeing the numbers go down... So with things like the August/September drop we kind of automatically became more careful even though not necessary.

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Old 10-08-2015, 08:48 AM   #8
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Just don't really have that much we want to spend money on . And I think for many of us changing our spending habits is pretty hard.
I've been retired for over 15 years now (was 50) and still have two high school boys. For many years, I was concerned about having enough to raise the boys, send them to college, and still have enough for another 25 or so years. Maintained our LBYM lifestyle, nothing extravagent regarding housing, private schools, or cars (I'm the one who never spend $20K on a car) and don't believe in expensive toys. Never taken in by cable (early adopter of streaming), vacations were towing the pop-up from Maine to Florida and west to Wyoming. Largely lived off my COLA'd pension and part-time seasonal work and dipped into investments for major item such as remodeling house, newer cars.

Now I find that I could have been less frugal all these years as net worth is 2.5 times what it was in 2000 and years the boys with us is down to a few (I hope). Major expenses of college coming up but not really worried. May be a slight chance of financial aide when both boys in school, depending on what school they attend. Older boy wants to go to local, but very good state school (4 yr branch of Penn State).

So, it has worked out well but in hindsight, we could have done more ambitious travel when boys were younger, around middle school. Once they hit HS, their activities have made it difficult to get away much.

Just beginning to talk to wife about, when boys in college, that we could escape our snowy winters for a couple of months each year.
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Old 10-08-2015, 11:16 AM   #9
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Retired 6+ years now (64/62). No pension income streams available. Living on Social Security (two years now), taxable account dividends, and CGs when needed (only used CGs once so far to replenish cash reserves used for medical issue). We are paying our own individual health insurance policies since B/4 ACA. Have not touched our IRAs or Roths, and probably won't until we're both over 65 (Roth conversions).

We had kept spending conservative to see how things would go in retirement - just living off taxable account dividends and cash set aside to cover the years in retirement until SS income stream was available. Was also 1 1/2 years away from being able to tap any retirement funds (59 1/2) w/o 72T option.

We're uncomfortable with spending our hard earned savings on ourselves, now that we have a good handle on retirement. For two years now we've set aside funds to travel, but other than wintering in Florida for two months every year (actually since retiring), we haven't done much else. Even with wife's SS kicking in this year and it being set aside for other things (to remind us it goes away when one of us does), still can't seem to let go. A lifelong LBYMs habit is hard for us to change, but we'll get there eventually (hopefully).
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Old 10-08-2015, 12:11 PM   #10
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My earned income stopped in 2012, so I have had only 3 years of living on my stash. I have not drawn on the tax-deferred savings, and am still a couple of years from even early SS, so live completely on taxable accounts.

When I run FIRECalc and include SS for a 30-year retirement, it does not matter whether SS is started at 62, FRA, or 70, the amount FIRECalc says I can spend is roughly about the same. And most importantly, for the last 3 years I spent less than 75% of that amount.

And yet, I have incurred extraneous non-recurrent expenses in the last 3 years, and the spending is significantly higher than what I projected that I would spend. I do not anticipate spending that much in the next few years. I can live comfortably on 1/2 the amount FIRECalc says I can spend.

The 30-year retirement is already optimistic; I never think I will live that long. And I already had my close brush with death. My wife may live till 90, but then she spends even less. I have no craving for fancy cars, or a larger house. So, what can I spend more money on? We still look for bargain when shopping whether for food or clothes. We still travel frugally and cringe at the thought of the price of a business-class ticket. I still do a lot of maintenance on my homes. I need that physical exercise.

It is likely we will leave our kids a good sum of money when we croak. So, why not spend some with them when we are still alive and in decent health? There is a concurrent thread on wedding costs. For me, it is a perfect occasion to spend money to have a good time with our extended family and friends. After that, what's next? Most likely, we will pay for some family vacation travel together. And I will fund my kids' Roth IRA.
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Old 10-08-2015, 12:22 PM   #11
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Been retired 12 years. At first we were fairly cautious with spending. Then after 5 years, we bought a condo in Mexico and have been spending 6 months there every year.

Guess what? Our annual budget has dropped by 30% since doing that! So we can live forever...

(When we downsized in 1997, we chose to rent rather than own and that left us a big nest-egg which has grown faster than our rent, even with the 2008 swoon. We also socked away most of two large salaries in the last five years before pulling the pin.)
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Old 10-08-2015, 12:28 PM   #12
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Been retired 12 years. At first we were fairly cautious with spending. Then after 5 years, we bought a condo in Mexico and have been spending 6 months there every year.

Guess what? Our annual budget has dropped by 30% since doing that! So we can live forever...
I don't know about anyone living forever, but I believe Bernicke's spending model strikes more often than people think. When people get older, they do spend less. I think it's because they care less about stuff.

Yes, retirees travel more at first, but then that slows down too. And when some ailment or malady gets to you, you spend more time contemplating the meaning of life than going out to spend. And spend on what?
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Old 10-08-2015, 12:54 PM   #13
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Last year I spent less than 70% of what i-orp and FIREcalc said I could spend, and this year about 80%. But only two years in, I'm still learning how to increase the budget.
This is me exactly. Two years in. Spending 75% of the i-orp/FIRECalc numbers. And this is pre-downsizing from our huge house. Just can't bring myself to loosen the purse strings yet. Not even really sure what I would spend more money on. I think I need more time watching things work out OK... and maybe successfully navigating a recession.
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Old 10-08-2015, 04:41 PM   #14
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I think once you adopt a LBYM mentality, increasing your spending feels like a DECREASE in lifestyle. I have friends with fancy clothes and shoes and watches. In my head I'm thinking... Thank god I'm rich enough that I can afford to wear cheap and comfortable clothes and shoes and don't really need to care what time it is .

Also DW is even cheaper than I am. We were broke when we first met and I bought her this cheap-o gold band engagement ring. She refuses to get a nicer one... Waste of money and zero value for her.

So... Yeah... I can't see how our spending will ever go up very much unless some disaster...



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Old 10-08-2015, 05:10 PM   #15
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Because my ER plan included rarely if ever having to tap into principal (i.e. only using interest and dividends) to pay my expenses, I don't expect to ever run out of money in my still-growing portfolio. And that doesn't count SS and my frozen company pension, 2 of my 3 reinforcements awaiting me in 10-15 years.
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Old 10-08-2015, 06:05 PM   #16
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Because my ER plan included rarely if ever having to tap into principal (i.e. only using interest and dividends) to pay my expenses, I don't expect to ever run out of money in my still-growing portfolio. And that doesn't count SS and my frozen company pension, 2 of my 3 reinforcements awaiting me in 10-15 years.
I am only a year in ER and this is my approach as well. Want to get to the reinforcements (pension and ss) living on interest and dividends in the mean time. I call it the low and slow approach. Keep spending low in the front years and open up a bit as the reinforcements arrive. Hopefully I can transition to spending more but it will be difficult since I have been in frugal mode for decades. Not spending enough is not a bad problem to have, if it happens.
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Old 10-08-2015, 06:26 PM   #17
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I think once you adopt a LBYM mentality, increasing your spending feels like a DECREASE in lifestyle. I have friends with fancy clothes and shoes and watches. In my head I'm thinking... Thank god I'm rich enough that I can afford to wear cheap and comfortable clothes and shoes and don't really need to care what time it is .

Also DW is even cheaper than I am. We were broke when we first met and I bought her this cheap-o gold band engagement ring. She refuses to get a nicer one... Waste of money and zero value for her.

So... Yeah... I can't see how our spending will ever go up very much unless some disaster...



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This is pretty much us as well. We have a common statement - "dress like a millionaire" when wearing our finest threadbare garments and worn out shoes. When we were hot on volunteering at oriental rug shows there was a dumpy couple dressed on the poor side of casual - they also were about the most knowledgeable on rug history and weaves, owned rugs of amazing age and beauty, had collections in various museums, were gracious to all.. - but you would have guessed them as low middle income by their dress. Quite unlike the hawk eyed flashy watch wearing sock-less snakeskin loafer wearing salesmen who also frequented the shows.
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Old 10-08-2015, 06:28 PM   #18
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Sounds like this forum is full of Uncle and Aunt Scrooges.
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Old 10-08-2015, 06:48 PM   #19
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Sounds like this forum is full of Uncle and Aunt Scrooges.
The second chapter of The Millionaire Next Door book isn't called "Frugal Frugal Frugal" for no reason.

I think of a scrooge as someone stingy with expenditures like tips, gifts and donations. We aren't scrooges - we're just not that into spending a lot of money on ourselves. We have a house full of stuff now and there are a lot of fun free and cheap things to do in our area, so why spend more?
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Old 10-08-2015, 06:56 PM   #20
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Have any you been retired for a number of years, and at first wondered if you'd be able to make it?

To now, realizing you'll never come close to spending all your money.

I would think that for many on this forum, it's become a reality.
It is an issue that I constantly struggle with... am I being too prudent. Out nestegg is ~115% of what it was when we retired almost 4 years ago despite spending ~3% a year + building a $50k garage with loft.

We have a couple older vehicles (7 and 10 years old) and it is time to replace one and the other doesn't fit our current needs but I'm having trouble pulling the trigger on spending ~$30k on a new vehicle... or $60k for two.
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