US News Article: Socking Too Much Away

[cute fuzzy bunny]

Speaking of generations, is it because we're analyzing current retirees who are largely depression era babies? Will this look differently when the free spending boomers retire?

[SteveR]

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Originally Posted by Cute Fuzzy Bunny Speaking of generations, is it because we're analyzing current retirees who are largely depression era babies?* Will this look differently when the free spending boomers retire?

I believe part of it may be the depression era folks...it is in my parents case. Boomers are used to spending more but those of us that grew up with depression era parents who ingrained into us the value of money and the evils of debt will be more careful about over spending. Some of course went the other direction and spent like crazy so their kids learned to spend and not save.

In one believes the popular media...all baby boomers are broke, deep in debt and will work until they die. There are millions that are not in this camp and what they do will be interesting. I know my proposed spending is initially near my current levels but drops off by 50% by my 70s; more in my 80s if I live that long. Time will tell.

It will be interesting to say the least.

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Originally Posted by Cute Fuzzy Bunny Speaking of generations, is it because we're analyzing current retirees who are largely depression era babies? Will this look differently when the free spending boomers retire?

The ones that are truly 'free spending' won't be able to retire. -

[jdw_fire]

Being from the Depression era may affect the overall level of spending but do you really think it explains the decrease of spending in later years?* In other words yes I think the "free spending" baby boomers will be spending more in constant dollars for any given age than the depression era retirees, but I also see some good reasons that spending decreases for older retirees that seem to apply as much to baby boomers.

[Coach]

We're an interesting, self-selected group. While most people apparently spend little time in retirement planning, we research the subject deeply enough to find this board, read it regularly and over time, and have learned enough that the number of really uninformed posts is extremely low. And we're cautious by nature -- we add 10 years to our life expectancy "just to be safe", analyze and then pad our expense projections "just to be safe", and model the worst years in stock market history "just to be safe."

Folks, between us we're gonna leave a lot of money on the table, come the end! But that sure beats ending up eating Alpo.

Coach

[Outtahere]

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Originally Posted by Cut-Throat When I get to the home I'm gonna be talkin about Big Fish, Wine, Women and Song!

Arn't you doing that now?

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Originally Posted by Outtahere Arn't you doing that now?

I'm not just talkin Now -

[Texas Proud]

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Originally Posted by Coach We're an interesting, self-selected group.* While most people apparently spend little time in retirement planning, we research the subject deeply enough to find this board, read it regularly and over time, and have learned enough that the number of really uninformed posts is extremely low.* And we're cautious by nature -- we add 10 years to our life expectancy "just to be safe", analyze and then pad our expense projections "just to be safe", and model the worst years in stock market history "just to be safe." Folks, between us we're gonna leave a lot of money on the table, come the end!* But that sure beats ending up eating Alpo. Coach

I agree... I have NO problem with my portfolio growing the older I get... I made a decision when I was about 17 that I would retire when I hit 55... no reason to change a good plan... and I do not care if someone in the family gets something.... but to tell the truth, I am thinking of setting up an education trust for anybody in the family line so they all can go to college.. many thoughts on how to manage this... but have not put it on paper.

[SteveR]

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Originally Posted by Coach We're an interesting, self-selected group.* ... Folks, between us we're gonna leave a lot of money on the table, come the end!* But that sure beats ending up eating Alpo. Coach

Yes most folks here are not a good cross section of the rest of the country or the world. *Very few people would jump without at least some amount of number crunching to see if they would splat or bounce once they hit. *

There is a good chance that we as a group will be leaving a ton on the table for family or charity. *Even if inflation runs wild like in the 1980s most of us would be able to easily adjust and do just fine. *The belt and suspenders approach to FIRE is not a bad thing....if it allows you to sleep at night and retire early.

[laurence]

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Originally Posted by Texas Proud I agree...* I have NO problem with my portfolio growing the older I get...* I made a decision when I was about 17 that I would retire when I hit 55...* no reason to change a good plan...* *and I do not care if someone in the family gets something....* but to tell the truth, I am thinking of setting up an education trust for anybody in the family line so they all can go to college..* many thoughts on how to manage this... but have not put it on paper.

I was thinking about that, too! I was, in fact, thinking beyond family and imagining setting up a local scholarship fund (worthy graduates of the local high school, something like that). See, the only barrier to college for my family members is desire, really. But if a kid has all the academic qualification to go to a top 20 school, but couldn't get enough grants to cover the dorm room, I'd love to help be that critical piece that lets them reach their dream. Like you, I haven't fleshed out this plan, my portfolio is too small for me to get ahead of myself!

[larry]

I still like the old saying, "rich people plan for 20 years from now, poor people plan for Saturday night."

I'd always rather err on the side of being too conservative when it comes to savings.

[d]

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The ones that are truly 'free spending' won't be able to retire

... they'll be the ones who do in fact end-up spending less as the age ...

[Texas Proud]

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Originally Posted by Laurence I was thinking about that, too! I was, in fact, thinking beyond family and imagining setting up a local scholarship fund (worthy graduates of the local high school, something like that).* See, the only barrier to college for my family members is desire, really.* But if a kid has all the academic qualification to go to a top 20 school, but couldn't get enough grants to cover the dorm room, I'd love to help be that critical piece that lets them reach their dream.* Like you, I haven't fleshed out this plan, my portfolio is too small for me to get ahead of myself!

I agree... but if I am able to live 40 plus more years I hope to have a big bag of cash at that time... and I would do the same as you.. set it up at the two colleges I graduated for scholorships if family members were not there to utilize the funds... a lot of my thinking is how to have the principal protected from somebody in the future saying "lets spend more now as it will help more people now"... I want it to LAST... since I was a trustee for a few years, I know how to put some instructions on the accounting so they can not go hog wild...

[heyyou]

Trust Fund for Education: Mom had one for the decendents of employees of Dad's business. The trust fund industry assumes you have so much money that expenses don't matter. Significant legal fees for set-up, ongoing banking and professional accounting fees for complying with IRS regulations, even mutual fund fees similar to variable annuities. No, it was not at Vanguard.
The trust was eventually folded due to the carrying expenses. It was just easier to write checks to deserving kids than to report amounts and SS numbers to accountants to file tax returns on the trust. Those kids were mostly living at home while attending the local junior college. This was in the late 1970's.

[gstander1]

Of course, it's easy to spend less. Just don't take inflation into account! Doing that will drop your spending by about 3% per year (the inflation amount) - hardly noticable year to year. This allows you to take a 7% withdrawal rate (well, at 90+% survival according to firecalc) starting now...

If you assume that inflation stays at 3%, the 7% (non-inflation adjusted) withdrawal will be higher than a 4.2% inflation adjusted amount for the first 16 years so you get more now with a gradual decrease in spending as time goes on.

Greg

[mountaintosea]

I like the last line in the article. "You don't want to be the richest man in the graveyard."

[spideyrdpd]

Maybe the confusion here is that these people had a financial planner and there portfolios went up?
If your following yer rules and you shoot for an 8 % return and your spending 4 % of your portfolio you actually have the ability to increase spending as the portfolio rises. The I assume you guys will live long enuff to get ss . These guys did. Then I am guessing that somehow medicaid will lower your health costs ?
So then using the rule of 72 if you retire with 2 million and your spending 4% you would only need 3.6% above that to double your money in 20 yrs.

[Jay_Gatsby]

I guess I don't understand what's wrong with dying and leaving an estate worth far more than when you retired. If you allocate your money properly so as to avoid taxes and spendthrifts, your money can continue to benefit generations of your family. This is how one provides opportunities to one's family that aren't possible to achieve during one lifetime. Sure, you learn a great deal about money by working your way through high school and college, but wouldn't it be better in some ways for your kids to never worry about paying for an education?

[rs0460a]

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Originally Posted by Jay_Gatsby I guess I don't understand what's wrong with dying and leaving an estate worth far more than when you retired.*

An answer to that is the situation that I/DW have, in which we have no "generations of your family" to consider.

We plan to leave the "remainder" to charity, but don't want to leave a lot (sorry, I don't trust others with "our money", and where it will go...)

I know that we are the minority in this situation, but please consider it in your "equation"...

- Ron

[Jay_Gatsby]

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Originally Posted by Ron'Da An answer to that is the situation that I/DW have, in which we have no "generations of your family" to consider. We plan to leave the "remainder" to charity, but don't want to leave a lot (sorry, I don't trust others with "our money", and where it will go...) I know that we are the minority in this situation, but please consider it in your "equation"... - Ron

You have no nieces, nephews, cousins, etc... to whom you could leave some of your money? Even if you chose not to have kids, I'd like to think that you might want to ensure that future generations of your family (not necessarily your direct descendants) might have better opportunities than their parents or even you enjoyed.

On the other hand, spending your hard earned money on things you want, rather than saving it for future generations isn't something of which you should be ashamed or have a need to explain. It's your money. You earned it, you can spend all of it if you choose.