Learning to spend after years of saving...

[texcurtis]

I'm in my third year of retirement (I'm 56) and like many I'm finding it challenging to spend money. I have a budget of $5K/month that covers everything and room for some extra and doesn't require me to dip into any savings. I don't want to spend over the budge, although I really can and the savings will hold up. I just don't wanna travel and splurge like I did when I was working. It's really an odd & surprising aspect of retirement that I hadn't expected. Maybe it'll change later. I'm toying with a vacation house but can't quite pull the trigger. It's as if I enjoy the search and planning more than the actual purchase.

 

[clobber]

We have the same problem. Upon retirement in 2013 I finalized the budget at $32k. We barely spent that in 2014 in spite of having a $9000 major exterior renovation project on the house (deferred maintenance). Then in 2015 we only spent $24,000. Way below what we could spend based on a reasonable withdrawal rate for a 30-something AND I was starting to get some pretty decent side hustle income flowing into the checking account.

So for 2016, I raised the budget to $40,000 per year because, hey, you only live once, right? Might as well try to make sure you're doing it right. We spent $39,000 but $8000 of that was a used vehicle purchase to replace our 16 year old cars. So far 2017 doesn't look like we'll hit $40,000 but we'll try We're spending 9 weeks in Europe however half of the trip expenses were already paid during 2016 (lodging, flights, lots of airline points spent).

Through March 2017 we are running $3,000 under budget (just under $7000 spent vs budget of $10,000 for Q1). So 2017 might be another low spending year too.

Things I'm doing to try to spend more money:
-tell myself "yes, we can afford it" whenever it's a purchase or expenditure that will be highly rewarding (travel, gadgets, outsourcing not fun home maintenance tasks)
-be looser with replacing things (kid stuff, clothes, shoes, electronics, etc)
-gift more generously
-host more parties to treat friends nice (kind of failed in this regard; life gets busy )
-don't worry about the $1-10 expenditures as much. Driving 20-40 miles for something kind of frivolous used to bother me but now it's no big deal. If the grocery store overcharges me by a buck I'll no longer go back in the store to get my $1 back.
-occasionally go out to eat or get takeout even when there's perfectly acceptable food inside the fridge.

Ha - this is the "problem" with people in this forum. And by "problem" I don't really mean problem, because it got most people where they are. BUT - for the love of [insert your deity here], stop fretting over single George Washington expenditures. I'm sitting here imagining you driving home after they charged you an extra $1. I bet you don't go back now, but I also bet it is killing you inside. I also bet you do make more $1-$10 expenditures, but you probably go through an agonizing analysis for each one. Suggestion: change your numbers - especially if you are someone like OP with $2.7M. How about, if you want something that is $100 or less, just buy it. Who cares.

Ohh - and you know what? If you are having trouble spending your budget, that means you don't need a budget!! Just spend freely and check the account balance every month to ensure you are not off the rails. This completely goes against virtually every forum member's rules to live by.

I realize this post might come off somewhat like I am attacking you, but I am not. I'm really attacking me. When I read your post it sounded exactly like me. So I am giving myself some terse advice.

 

[clobber]

Yup...been retired a little over a year and still can't spend much. My one "extravagant" purchase was about $2000 on a nice bass...irrelevant in the grand scheme of things. I've also been researching 2-3 year old vehicles to replace my older car and have even taken a few test drives, but I just can't pull the trigger on anything.

I have to ask....why not a new car?

 

[Hermit]

We have the same problem...

I have the perfect solution: Send the kids to private school!

 

[RobbieB]

Hehe, I don't even return stuff anymore.

I do a lot of DIY and I'll go buy some stuff for a project and later change my mind and go a different way. I just buy new stuff and toss the old (still brand new) stuff inna trash.

It's not worth the time to return it.

 

[fritz]

I retired at 52 this year. We have saved and lived well below our means for decades. We have 2.7M of which half is untaxable...our house is paid off, cars paid off, no debt....but we are struggling learning how to actually start spending the money. All those years of being miserly have become ingrained. Anyone else have this problem??

We retired at 58/57 (in 8th year). Fit your description (no debts - house, car, etc, and half of seven figure investments in taxable accounts). No pensions or annuities - just investments for retirement income along with Social Security. We do manipulate income for ACA subsidy. ACA (healthcare) has been a very expensive early retirement issue. I'm on Medicare now, and wife will be next year.

Since retiring, we've spent winters along the gulf, as it was a goal of ours, but everything else spending-wise kind of chugs along as before retirement (no change in the rest of the LBYM). We have spent considerable time looking for a 2nd place, but can't seem to get serious about it (and don't really care for VRBO style winter rentals no matter how much we've spent on them). Buy inexpensive cars. Only own one now - current 2013 Kia Forte. Get rid of them before the 5 year/50k miles bumper to bumper warranty has expired. Don't want trouble with an older car on the road. Budget has increased for travel/entertainment over the years, but most of it goes unspent.

Will probably keep this up as we've been so long in the LBYM mode finding it's difficult to change old habits, but we're trying...

 

[Scuba]

DH & I retired less than 6 months ago. So far we have spent whatever we want to without worrying about it. We're spending more on travel & dining out, less on gas, dry cleaning and a few other areas. In total, we're spending about what we expected, which is roughly 10% more than we spent while w*rking. It probably helped that I had to take a lump sum payout from a deferred comp plan so we have been living on that without having to withdraw funds from our remaining portfolio. Plus the market's performance has helped. I'm sure when the inevitable market correction happens, we will reduce our discretionary spending to avoid selling assets at a loss. We do have a reserve set aside in a short term bond fund to carry us through a correction, but even so I think we'll be more conservative with spending if we see a large drop in our portfolio value. So far our WR has been about 4%, which will decrease when we start taking my pension and SS.

 

[kitesurfer2]

2 years AND 21 days retired. I've bought a new motorcycle, twice. I bought a new Transit van...and then a new vette, and i'm still throwing money into savings every month. my $400k nest egg remains untouched.

 

[grasshopper]

Ohh - and you know what? If you are having trouble spending your budget, that means you don't need a budget!! Just spend freely and check the account balance every month to ensure you are not off the rails. This completely goes against virtually every forum member's rules to live by.

I realize this post might come off somewhat like I am attacking you, but I am not. I'm really attacking me. When I read your post it sounded exactly like me. So I am giving myself some terse advice.

This is us, we have a big number that we have never hit for spending in 11 years, so now we just spend as we want.

 

[Palmtree]

Start planning a remodel. You'll learn how to spend very quickly.

You got that right. We are doing a major remodel plus a new driveway. Despite DIYing most of it and carefully shopping for materials we are spending like drunken sailors.

 

[Hermit]

2 years AND 21 days retired. I've bought a new motorcycle, twice. I bought a new Transit van...and then a new vette, and i'm still throwing money into savings every month. my $400k nest egg remains untouched.

Can I assume you have a very good pension or rentals or some other income stream?

 

[brett]

I am about to get a quick lesson. Moving to a new home in two months. DW plans to buy a load of new furniture. She has good taste and likes quality product so it won't be inexpensive. We have not bought much furniture over the past 10 years. We tend to buy higher end product that lasts so I guess that it is time.

 

[MichaelB]

I am about to get a quick lesson. Moving to a new home in two months. DW plans to buy a load of new furniture. She has good taste and likes quality product so it won't be inexpensive. We have not bought much furniture over the past 10 years. We tend to buy higher end product that lasts so I guess that it is time.

This is one reason I don't see downsizing our home as a source of funds. Between the cost of selling, moving, and furnishing / setting up the new home, a fair portion of the difference in price between the old and new disappears.

 

[REWahoo]

This is one reason I don't see downsizing our home as a source of funds. Between the cost of selling, moving, and furnishing / setting up the new home, a fair portion of the difference in price between the old and new disappears.

Doesn't that depend on how far you are willing to downsize?

 

[misshathaway]

Yes, I am miserly because I will always be alone. The money I have will need to last me for the rest of my life - even though my health issues are supposed to trim 20+ years off my life expectancy on average - still worried about outliving money!

I am alone too. It does add an extra level of caution. No safety net. I was thinking about a will the other day, although no immediate need, and I will actually have to do a little research to figure out who the closest alive next-of-kin is.

I spent completely out of savings for retirement year one, and the only non-necessity was for a new iMac when my laptop died. My first instinct was to scrounge around for used.

I'm in year 2 now and started "paying myself" with direct deposit dividends and cap gains that are going to get taxed anyway. So far that hasn't made a dent in the portfolio.

OP, I think others are right to tell you that it could take a long period of adjustment to see that you will still be OK if you spend a little. We are going against a lifetime of non-spending.

 

[Amethyst]

We're spending lots more. The after-tax entirety of both our pensions, plus investment income, plus my part-time job earnings.

Once I was home more, the floodgates opened on repairs and renovations, and they haven't closed yet, plus we had a plumbing leak that destroyed the basement carpet and led to a big plumbing upgrade. Plus all the teeth things. A new car, and other big expenses, some of which were anticipated.

We try to do some things ourselves, but as one poster already noted, that gets harder as you age and may not be worth it. I said in another thread that I arbitrarily value my time at $50 an hour (after tax!) and will pay for any chore whose hired-out cost works out to be less than $50 times the number of hours it would take me to do it. So far, that is almost everything except house cleaning, lawn mowing, and painting of walls no higher than 8 feet. We do those ourselves,

I tried hiring house cleaners, and absolutely hated the experience. And we could buy 3 lawn tractors for the quote I got to mow our yard for one season.

 

[Music Lover]

I have to ask....why not a new car?

A couple reasons...one of them being that I'm [-]cheap [/-] frugal and have a hard time justifying spending that much. My current vehicle is a 2007 Subaru Impreza bought new, but it was only $24k.

The other reason is that I want something a little more high end this time...maybe an Acura or Lexus. New ones approach $50k (+ taxes) to get AWD and some features, but a gently used one can be had for $30k or less. I don't drive much...maybe 10k a year, so a 3-year old vehicle with 30k - 50k on it will still easily last me a good 10 years.

 

[kcowan]

I am about to get a quick lesson. Moving to a new home in two months. DW plans to buy a load of new furniture. She has good taste and likes quality product so it won't be inexpensive. We have not bought much furniture over the past 10 years. We tend to buy higher end product that lasts so I guess that it is time.

When our landlord replaced our floors indoor and out for free, I had not anticipated all the new furniture and rugs that this "free" upgrade would require.

 

[Danmar]

I really don't have any problem spending money and could easily boost our spending by 10-20% per year. Could change a couple cars, get a new boat, upgrade a place or two, more charitable giving,more expensive trips with family, etc. Am already spending a fair bit but seem to be pretty good at identifying opportunities to spend more. All within our means of course.

 

[Sojourner]

I'm in year 3 of semi-ER now, and I'm still working on loosening the purse strings and not being so miserly. I think a big part of my slow progress towards spending more liberally is that I'm not yet 50 years old and have no pension coming my way. Have to live exclusively on the nest egg and SS down the line. But still, FIRECalc gives me a 100% historical success rate at spending levels more than 2x what I'm currently budgeting and spending. Knowing that's the case does help whenever I get bogged down trying to decide if I should spend X$ on some frivolous, fun purchase. More and more these days, I'm giving in to the urge and feeling good about it afterwards.

 

[broadway]

I am alone too. It does add an extra level of caution. No safety net. I was thinking about a will the other day, although no immediate need, and I will actually have to do a little research to figure out who the closest alive next-of-kin is.

I am leaving everything to charity even though I have a sibling.
No nieces or nephews.
Some first cousins but not close. They have kids.

 

[W2R]

I retired at 52 this year. We have saved and lived well below our means for decades. We have 2.7M of which half is untaxable...our house is paid off, cars paid off, no debt....but we are struggling learning how to actually start spending the money. All those years of being miserly have become ingrained. Anyone else have this problem??

I retired at 61 in 2009, and had the same problem. Once two or three years had passed, and I had a better sense of what I would need to maintain my lifestyle in retirement, I realized that I could be spending even more. And then the market started soaring and hasn't stopped. So, I spend more each year and my WR stays the same.

After a while I figured I'd solve the problem by buying the one thing in the world that I was longing for... my Dream Home. It wasn't all that big or expensive but overall, the associated costs of buying, selling, moving, closing costs, repairs, and fixing up the new house got rid of $92K for me. But I still need to loosen those purse strings.

Right now I am basically fluffing out my current lifestyle. I buy a lot of [-]cr*p[/-] doodads on Amazon. At first that was hard, but I am getting better at telling myself that it's just money, and that I can't take it with me.

There are worse problems. Don't forget that none of us live forever. I don't like traveling, but if you do, then you need to travel now before you get old and decrepit.

 

[daylatedollarshort]

I'm learning to save after years of spending. Actually we did always save money but in hindsight we could have done much better. We think of it as optimizing our spending - living better while spending less.

We go out to eat or to some kind of event most days using Groupons, library passes, free or low cost college events, museum and garden reciprocal passes, seat filler subscriptions, etc. Looking for the bargains for me is half the fun.

 

[Major Tom]

We spent very, very little our first 18 months, then gradually opened the purse strings. I think this pattern is typical as almost all of us need to gain a comfort level with our income/spending once the regular paycheck stops.

This was exactly my experience for the first year or two after stopping work. I took it to more of an extreme than probably most here. I was eating cheap (and not terribly healthy) food, never eating out (even cheap eats), and basically watching every dollar. I remember an old work friend coming into town to participate in a spoken word evening. I balked at the $10 door entry fee, managing to find a way to get on the guest list instead. In retrospect, I think he might have been mildly insulted, as the door fees probably went to support their group. I was just so heavily focused on keeping my spending to a minimum that it was clouding my judgement in other areas. I was in partial financial lock-down mode. It wasn't rational, as I knew very well that my income was enough to support my lifestyle. It had to do with the fact that I knew that my "stash" was all I had. It felt very finite.

I've loosened up considerably since then. I've seen my portfolio grow, and watched the regular dividend payouts being deposited automatically into my savings account. The portfolio stash no longer seems finite and minimal. I view it now as more of a dynamic thing - a source of income that will most likely grow over time.

I still don't like spending money on things I don't value, but am now looking for ways to maximize my spending on things I do appreciate, whereas previously, I was simply trying to spend as little as possible. I'm sure glad that phase didn't last long.

 

[FUEGO]

I have the perfect solution: Send the kids to private school!

Sounds like too much work. They won't even come to pick the kids up AND they have higher expectations that you volunteer Public school is working pretty well for us (though we did start carpooling the oldest to middle school mid-year splitting weeks with another family so we can avoid our 5:45 am school bus pick up)