Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 05-09-2008, 08:23 PM   #41
Moderator Emeritus
Khan's Avatar
 
Join Date: Aug 2006
Location: Pine Island, Florida
Posts: 6,868
Send a message via AIM to Khan
Just a data point;

I retired at 54, now 57; I spent very little starting at 50. In the last year I have had to buy a car and clothes, and will have to start replacing more stuff.

Having spent very little, will have to spend a bit more.
__________________

__________________
"Knowin' no one nowhere's gonna miss us when we're gone..."
Khan is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-09-2008, 08:30 PM   #42
Thinks s/he gets paid by the post
 
Join Date: Dec 2007
Posts: 4,764
Quote:
Originally Posted by youbet View Post
How about planning on spending less at 56 yo as the Bernicke plan/data suggest?

It seems like folks aren't actually reading the Bernicke article and are assuming he means that when geezerhood arrives, probably in your late 70's or 80's, you'll spend less. But Bernicke actually says the reduced spending starts at 56 and continues sloping downward until 76 when it levels off. That's very different...... That's saying that long before geezerhood, you voluntarily cut back on spending so that by 76 you've reduced by over 50%.

He has data that shows that that is the case. But his data also shows there are no/few retirement financial issues because people's portfolios increase in value as they age.

Maybe I've just got a guilt complex going. A distinguished FA like Ty Bernicke says that at 60 yo DW and I should have already made significant cuts in our spending compared to when we were 55 yo and we haven't. We're not usually trend busters....... I feel very strange about this, yet have no intention of telling DW to cancel having the hardwood floors refinished.....
Actually our spending will go up at retirement. Due to increased travel and fun money. We have budgeted for it.
__________________

__________________
Notmuchlonger is offline   Reply With Quote
Old 05-09-2008, 08:41 PM   #43
Thinks s/he gets paid by the post
lazygood4nothinbum's Avatar
 
Join Date: Feb 2006
Posts: 3,895
utilizing the ever accurate sexual activity scale to measure my, um, base spending: don't have to pay for it yet; expect it will cost me at least a dinner into my 60s; dinner and some shopping in my 70s; my 80s you ask? not even a trip to the mall is gonna get me laid. i fully expect my expenses to increase as i age.
__________________
"off with their heads"~~dr. joseph-ignace guillotin

"life should begin with age and its privileges and accumulations, and end with youth and its capacity to splendidly enjoy such advantages."~~mark twain - letter to edward kimmitt 1901
lazygood4nothinbum is offline   Reply With Quote
Old 05-09-2008, 10:49 PM   #44
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,616
Quote:
Originally Posted by chinaco View Post
I believe we spend less as we age. I have witnessed it with my grand parents, my parents, DW parents. I have read several papers that conclude the same.
As you age, you will become more sedentary. Many people (like folks on this board) will likely die with a pile of money because they are too conservative (i.e., fear). A good conservative projection of expenses and understanding what is discretionary vs non-discretionary spending is important. Add to that some reserves for an emergency... and spend the excess (if you have it).
We are planning to spend more in the early years, but not to the point of jeopardizing necessities in late life. Of course, we have acquired more than we need to fund Retirement... I have every intention of enjoying it.
Quote:
Originally Posted by youbet View Post
How do you explain the fact that five years into the period during which DW and I should be spending less according to Bernicke, we're not? In fact, we're spending a little more.
And, going forward, we're looking at ways to extend the years we can participate in outdoor activities by switching from DIY adventures to adventures involving professional help and more expensive equipment. All with a price of course.
Frankly, it would be a bummer right now to have to say no to solutions to issues of more limited physical abilities due to aging just because we planned on spending less. We're enjoying continued spending and a bonus round of activities we love.
Quote:
Originally Posted by lazygood4nothinbum View Post
utilizing the ever accurate sexual activity scale to measure my, um, base spending: don't have to pay for it yet; expect it will cost me at least a dinner into my 60s; dinner and some shopping in my 70s; my 80s you ask? not even a trip to the mall is gonna get me laid. i fully expect my expenses to increase as i age.
What LG4NB said.

I can understand elderly reducing their spending out of fear, ignorance, and dementia. ("Now what was I going to do with this money?!?") I can't see them reducing spending due to a more sedentary lifestyle.

When I've kicked my last hook kick and have to commit to a "sedentary" lifestyle-- that's when I start up the Netflix Unlimited subscription, the unlimited bandwidth ISP, the digital cable service in my new 300-inch OLED TV, the 24-hour Thai massage service, and a whole host of other house-call "contractors"...
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 05-10-2008, 02:59 AM   #45
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Quote:
Originally Posted by Nords View Post
What LG4NB said.

I can understand elderly reducing their spending out of fear, ignorance, and dementia. ("Now what was I going to do with this money?!?") I can't see them reducing spending due to a more sedentary lifestyle...

Activity and the relationship to spending... there could be some good arguments about which is the cause and which is the effect.

I would agree that most people only become extremely sedentary if they had some physical limitation or health problem. Or that of their spouse (which impact the healthy one).

Perhaps sedentary was too strong of a word... many become less active. Maybe I did not not elaborate enough. I was thinking in relation to Travel, hiking national parks, more active leisure pursuits, etc. (that drives much of our discretionary spending)

My comments were based on what I have witnessed with people in their late 70s and more often in the 80s. Perhaps some of it is due to less energy, or less interest, or becoming more fearful.

A large part of our planned discretionary spending is for travel. We are planning to do more at a younger age... Of course, I would love to continue doing that into a ripe old age. If we are lucky enough to be able to continue traveling, we will... but the probability is that we will do a little less of it.
__________________
chinaco is offline   Reply With Quote
Old 05-10-2008, 03:07 AM   #46
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,408
i would think as we get older and older spending on ourselves would go down but medical and spending on our grand children or kids would go up pretty much keeping things even
__________________
mathjak107 is offline   Reply With Quote
Old 05-10-2008, 07:24 AM   #47
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
youbet,

FWIW I'm right at that magic 56 of Bernacke fame. I've already seen my spending go down in many areas. I'm factoring these into my base living expense budget. This includes amortizing for predictable but not annual expenses like autos and repairs. I'm not going to discount this spending in my plan but increase it with inflation. I'll also maintain a $300,000 reserve for LTC which will also increase with inflation.

The extras like travel will be covered in a Bernacke type budget where it will start quite high but will drop in real spending terms by 3% every year. When I'm in my mid-70's I'll still have 50% of this spending available so my goal isn't to live a meager lifestyle. My intent is to front load my spending so I can do the more exotic trips now and in the early part of my retirement. If in my 80's I can't go as often or to as exotic locations, I'm willing to take that risk. I also think my desire to travel as much will diminish so I won't mind the reduction in assets available to do it with.

It may be perfect timing to pay for my grandchildren's college.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 05-10-2008, 10:46 AM   #48
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by 2B View Post
youbet,

FWIW I'm right at that magic 56 of Bernacke fame. I've already seen my spending go down in many areas. I'm factoring these into my base living expense budget. This includes amortizing for predictable but not annual expenses like autos and repairs. I'm not going to discount this spending in my plan but increase it with inflation. I'll also maintain a $300,000 reserve for LTC which will also increase with inflation.

The extras like travel will be covered in a Bernacke type budget where it will start quite high but will drop in real spending terms by 3% every year. When I'm in my mid-70's I'll still have 50% of this spending available so my goal isn't to live a meager lifestyle. My intent is to front load my spending so I can do the more exotic trips now and in the early part of my retirement. If in my 80's I can't go as often or to as exotic locations, I'm willing to take that risk. I also think my desire to travel as much will diminish so I won't mind the reduction in assets available to do it with.
It sounds like you're not following the Bernicke plan then 2B...... By increasing your travel budget for the early years, you're overcoming his formula which has RE types cutting back at a fairly aggressive pace starting at 56. You're actually increasing, the opposite of what he says. And following that you're cutting back less aggressively by only reducing the "extras" budget and not the total budget.

I also note that someone's age is key in how that person views Bernicke. For a pre-RE "youngster" the concept of cutting back spending beginning in your late 50's might sound good because it means needing to accumulate less before RE. But, when you're already RE'd and in your late 50's, it's hard to stomach Bernicke when you're active, having fun and not wanting to begin cutting back. In fact in our case, we're making decisions to spend more so we can hire some services to enable continued semi-wilderness travel. We're able to do this not because I was smart enough to specifically plan for it, but just through some unplanned favorable circumstances. I'm certainly glad we did not actually plan to decrease spending during this time!

Quote:
Nords said....

I can understand elderly reducing their spending out of fear, ignorance, and dementia. ("Now what was I going to do with this money?!?") I can't see them reducing spending due to a more sedentary lifestyle.
Great insight Nords! This concept helps me understand the outcome of Bernicke's research a little better. When he presents data that shows 56+ yo retirees spending falling and portfolios growing, it flunks my common sense test. Yet, he's quoting govt statistics, must be true (?). But perhaps folks have the money and are just afraid to spend it, or the kids are helping them be afraid to spend it, or? Again, I'm referring to folks in their 60's and early 70's more than the 80+ crowd.

Well, this has been an interesting discussion. I'm walking away with:

1. Many folks seem to misunderstand Bernicke and the Bernicke option in FireCalc. They think it means that when you're very elderly, say in your mid 80's and up, you'll spend less. Actually, it means beginning rather aggressive spending cuts in your late 50's. Look at the outputted projected spending graphs!

2. If you are going to use Bernicke-like spending reductions in your planning, think carefully about your beginning budget and perhaps a less agressive reduction schedule, as 2B as done.

3. The closer in age you get to Bernicke's magic "56," the less sense it seems to make.

youbet (who is over 56 and unwilling to cut back yet!)
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 05-10-2008, 12:09 PM   #49
Thinks s/he gets paid by the post
SteveR's Avatar
 
Join Date: Jul 2005
Posts: 2,803
Quote:
Originally Posted by Nords View Post
What LG4NB said.

I can understand elderly reducing their spending out of fear, ignorance, and dementia. ("Now what was I going to do with this money?!?") I can't see them reducing spending due to a more sedentary lifestyle.

When I've kicked my last hook kick and have to commit to a "sedentary" lifestyle-- that's when I start up the Netflix Unlimited subscription, the unlimited bandwidth ISP, the digital cable service in my new 300-inch OLED TV, the 24-hour Thai massage service, and a whole host of other house-call "contractors"...
Just hope you are not blind, deaf or brain dead by then.

My mom is blind and disabetic living in assisted living and has always been sedentary. It is amazing she has survived to age 86. She does not travel, does not drive, rarely goes shopping and has no other spending items other than basics and the assited living monthly bill.

Still, she has nothing she really wants to buy except replacement clothes, cable TV (she listens to it) and upgrades to her reading machine. That leaves a lot of cash not spent that she could be spending if she were sighted and mobile.


We are spending more before we get so bad we can't do anything anymore. With DW's disability we know we are on a short fuse before she can no longer travel or care for herself. We plan on living and spending now.

It is hard to spend much (other than medical-related bills) when you are confined to a wheelchair or bed.
__________________
Work? I don't have time to work....I'm retired.
SteveR is offline   Reply With Quote
Old 05-10-2008, 12:14 PM   #50
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
Quote:
Originally Posted by youbet View Post
It sounds like you're not following the Bernicke plan then 2B...... By increasing your travel budget for the early years, you're overcoming his formula which has RE types cutting back at a fairly aggressive pace starting at 56.
Very true. It's a modified Bernicke. I don't consider the cuts to be dramatic in themselves (3% in real dollars) but you don't grow your reduced spending with inflation. After 20 years, you see spending at 40% of the original starting point but it is adjusted for inflation.

My travel budget will increase because I am assuming I will have more non-committed time. I'm starting to wonder if I'm being too aggressive in this spending because DW, and to a lesser extent me, will defer some of our trips now that we've talked about doing.

I'm attributing it to still officially w*rking even though I've got lots of time off available, my FIL in the Memory Care facility that DW is involved with and conflicts with the kids schedules (all adults but still have schedule commitments).
__________________

__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Retirement Spending mickeyd FIRE and Money 1 08-21-2007 06:56 PM
Spending in retirement aenlighten FIRE and Money 17 08-20-2007 05:45 PM
Spending In Retirement bookman51 FIRE and Money 45 07-23-2006 04:10 PM
Bernicke "Reality Retirement Plan" 2B FIRECalc support 3 05-21-2006 06:10 PM
spending less in retirement maddythebeagle Young Dreamers 1 06-28-2005 03:31 PM

 

 
All times are GMT -6. The time now is 12:10 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.