Luxury Retirement Lifestyle

[Nords]

Plus, since I tried like you do to impart my values to them, who is more likely to use the money in ways that I would like? My kids, or some foundation?
It is also possible that they might consider an inheritance a welcome reward for putting up with me all these years. 

You raise some very good points, and here's a couple thoughts:
- I wonder if it's better to give our kids an inheritance that may be susceptible to divorce or bankruptcy or liability litigations, or,
- To give our kids inheritor's trusts designed to allow them to do whatever they want with the principal but shield their assets from creditors, or,
- To establish a charitable foundation and make the kids trustees (at an appropriate annual salary).

Since spouse and I have a significant probability of at least one of us reaching our 90s, it would mean that our kid wouldn't get anything before she was at least 59 years old. So by then maybe she could handle any of those options.

It's the unexpected dying that really messes up estate planning. Maybe the best bet is a combination of all three options, with the foundations/trusts shutting down and disbursing their assets as the kid gets older.

 

[haha]

You raise some very good points, and here's a couple thoughts:
- I wonder if it's better to give our kids an inheritance that may be susceptible to divorce or bankruptcy or liability litigations, or,
- To give our kids inheritor's trusts designed to allow them to do whatever they want with the principal but shield their assets from creditors, or,
- To establish a charitable foundation and make the kids trustees (at an appropriate annual salary).

You are definitely putting up some good ideas here. I would want to shield them from losing an inheritance to divorce. That would have me turning in my grave for sure.

Might be tricky psychologically. Wouldn't want my DILs to think I didn't like or trust them. I do like them, but I’m a Bayesian. 

Anyway, many rivers to cross before I know that I am even making it into Firecalc nirvana.

Ha

 

[tryan]

...Time is the ultimate luxury...

This hit the spot ... FIRE defined.

 

[peggy]

You raise some very good points, and here's a couple thoughts:
- I wonder if it's better to give our kids an inheritance that may be susceptible to divorce or bankruptcy or liability litigations, or,
- To give our kids inheritor's trusts designed to allow them to do whatever they want with the principal but shield their assets from creditors, or,
- To establish a charitable foundation and make the kids trustees (at an appropriate annual salary).

I'm not an estate lawyer, but AFAIK if you leave the money to your CHILD, individually as his/her sole and separate property, unless the child commingles the funds with another person (i.e., dumps it into a joint mutual fund account), that money remains his/hers separately.

I'm sure state laws vary on this, but it shouldn't be too difficult to verify.

 

[Rich_by_the_Bay]

I'm definitely on the "time is luxury" wagon here, but certainly know that many of the things which newfound time will allow is going to cost.

This is the hardest part of FIRE planning for me. Just on intuition, I am counting on maintaining current expenses and being flexible enough to scale up or down if this turns out to be off by alot.

 

[perinova]

FIRE is kind of the antithesis of luxury lifestyle.
LBYM is the antithesis of conspicuous consumption.

Look at the following post
http://www.fool.com/fribble/1999/fribble991105.htm
I kind of relate to that guy. Driving an old beat-up car, not taking super luxury vacations anymore, not with the most expensive cell-phone. At work people may think I am getting screwed by the company and that my career sucks or maybe think I am in debt to my eyeballs that I can't afford anything. In other words feel sorry for me :
Little do they know...

To avoid being ostracized folks that LBYM in order to ER should advertise it and spread the word. Or they will get it the day you will shake hand good bye.

Naturally what might seem luxury to someone planning to ER on a $30k income might not be to someone planning to ER on a $180k. It's all a question of %.

 

[5yearstogo]

Hmmm... Our take home will be larger but because of some strange contraints. We plan to ER from the University of California at age 50. We have to work until 50 to qualify for retiree health insurance. Even if this health benefit is cut in the future, we believe that we will be eligible for access to a group plan which could be valuable. In the next year or two, our disposable income will be the same as what we spend now working and saving but we will work for 4 more years to qualify for the health benefits and to gain some additional financial cushion. We might switch to part time in late FY07 if our employeer will go for it though.

 

[Jay_Gatsby]

FIRE is kind of the antithesis of luxury lifestyle.
LBYM is the antithesis of conspicuous consumption.

Look at the following post
http://www.fool.com/fribble/1999/fribble991105.htm
I kind of relate to that guy. Driving an old Honda, not taking super luxury vacations anymore, not with the most expensive cell-phone. At work people may think I am getting screwed by the company and that my career sucks or maybe think I am in debt to my eyeballs that I can't afford anything. In other words feel sorry for me :
Little do they know...

To avoid being ostracized folks that LBYM in order to ER should advertise it and spread the word. Or they will get it the day you will shake hand good bye.

Naturally what might seem luxury to someone planning to ER on a $30k income might not be to someone planning to ER on a $180k. It's all a question of %.

I liked this paragraph:

"For living below your means sometimes means living at a permanently lower standard of living than your peers. That's the downside. Like the Foolish Four, LBYM is a deeply contrary thing. It's going against the tide of consumerism. Fun at first and fruitful in the end, living below your means can make life seem dowdy and unfashionable in the mid-term."

 

[doug]

....Time is the ultimate luxury.....

This hit the spot ... FIRE defined.

Better spot of FIREd..........Time AND MONEY$$$$ is the Ultimate Luxury!

 

[haha]

Better spot of FIREd..........Time AND MONEY$$$$ is the Ultimate Luxury!

¡Salud, amor y pesetas, y el tiempo para gustarlos!

I guess this has been known for a long time by a lot of people in many different places. We seem to be kind of forgetting lately, at least here in the US.

But it is kind of a superfecta, and about as hard to hit.

Ha

 

[modlair]

My 2 cents is I like the OP's point. I sort of object to the concept of "what you need in retirement is 70% of your pre retirement income". Yes, I know that is mathematically bogus. It is the concept I find objectionable -- that there will be a downshift in money "needs". I, like the OP, intend to upshift my expenditure level.

Here's the thing:

1) Time is the ultimate luxury? Not if you're poor. But if you have "enough", with the definition of enough being entirely subjective, then sure, no question, time is the ultimate luxury. Period and full stop and logically, because clearly you have the time to enjoy that which is enough.

2) The definition of "luxury" was also left subjective by the OP's phrasing -- but then he or she tossed in 100K to 150K and that hurt his overall point because it translates to most probably quite a few more years of sacrifice of that ultimate luxury in item 1. But if one rejects 100K or 150K as the definition of luxury and instead relies on the original "subjective" description, then one can pick any number or level of indulgence one wants and the OP's original question still stands -- My question is how many wish to live a luxury retirement lifestyle (definition subjective), so that you can reap the benefits of all the hard earned/years saving/investing, etc. This phrasing makes clear that he is asking do folks intend to enjoy more non-time luxuries post retirement than pre retirement?

3) A Rolex is a great wristwatch. How great is it? Pretty great. Do you need/want two? Is that luxury? Or stupid? All subjective. Maybe you don't buy a Rolex. Maybe having one would not feel luxurious to you (though . . . you do realize it's an investment and not an expenditure ). If it doesn't feel luxurious then it would not be a luxury, subjectively.

4) Flying first class. I gotta tell ya, US to Singapore is 20 hrs door to door. That is just painful in coach. Is that a luxury? Yep. And I want it. And I will have it in retirement. And I don't now, pre retirement. Don't matter if it's miles or dollars. It's a luxury embraced post retirement vs pre retirement and that was the OP's question.

5) Is a Ferrari a great car? Don't know. Is a Mercedes? Don't know. Is a high end Lexus? Probably. It gets good reviews. Is their ES330 worth $10K more than their high end Camry? Almost, there is extra sound deadening, beyond replacing the Toyota T with a Lexus L. Is that 10K a luxury? Yep. Do you want to spend for it? Your call. Purely subjective. It's not 10K, of course. It's 3K/yr.

6) Ocean view cabin or inside cabin on the cruise ship? Your call. Is it a luxury? Yep. Would you work another 3 mos to have ocean views vs a no view cabin for each yearly cruise you take until death? Is 3 mos enough to buy that forever? Dunno. Regardless, it's purely subjective. Your call. Some people will want that little luxury. And to get it they will deny themselves it pre retirement. Some people never intend to cruise.

Anyway, I guess generically my point is yes, I do expect to enjoy a few more luxuries post retirement than pre retirement beyond simply the one of having more time. And yes, that has been part of the motivation over the years for adopting the discipline and sacrifice.

 

[SteveR]

Interesting discussion...

As usual, there is not right or wrong answer to the OP's question. There is only what works for each of us as individuals.

My next ER will be in under 11 months...sooner if I get really fed up with where I am. DW will retire 7/31/07. 55 and 20 years at mega mega corp. Small pension, small 401k but no stress and no BS buckets to carry around all day and night (can't seem to learn to leave the buckets at the front door.)

We intend to continue our semi-frugal life style (compared to many people we know) and continue to feather the nest. We want to live well in retirement but not necessarily "luxury". That is sort of hard to define and is a moving target. If you make $100k a year luxury looks a lot different than if you make $25k per year. Our post FIRE life-style will include quite a bit of travel; both international and domestic. We intend to be comfortable but not what we would call luxury with the exception of 1st class air on trips over 3 hours. We have a ton of frequent flier miles so that will take us a lot of places once we can plan 6 months ahead and use the cheaper miles. Hotels will be 3-4 star and meals will be whatever we want (we are pretty basic eaters so that is not a concern).

Cruises will be in outer cabins. My claustrophobia prevents inside cabins. I am willing to pay the upgrade. We don't need the suite cabins so outside balcony cabins are our level of luxury. We plan on one 14 day cruise a year with maybe a longer one during the season changes when the ships rotate from one area to another every couple of years.

Our other luxury will be to get a medium size RV that fits our personal needs for some extended trips; not full time; but a few weeks here or there. We will buy used to save money and get a nicer rig rather than buying brand new. Frugal luxury.

We are selling our money pit cabin in the woods and the equity from that will fund a lot of travel and all the RV stuff for several years to come. Whatever is left over will be invested for future toys or other recreational needs.

We will be living on less than 50% of our current income and it is projected to decrease over the next 10 years as kids and grandkids grow and move on with their lives. We will downsize at that time and will be looking for a retirement community where we can have a small home with a very small yard but not a condo. I like gardening and so does DW we don't like condos and will resist that for as long as we can.

Could be spend more and buy more luxury? Yes and we may upgrade some aspects of our lives over time but that remains to be seen. Our needs are more from a physical comfort viewpoint that a true luxury one.

I don't have a Lexus but might buy a used one someday. It is about value not about luxury. Rolex? Never! No value there for me.

 

[Billy]

I liked this paragraph:

"For living below your means sometimes means living at a permanently lower standard of living than your peers. That's the downside. Like the Foolish Four, LBYM is a deeply contrary thing. It's going against the tide of consumerism. Fun at first and fruitful in the end, living below your means can make life seem dowdy and unfashionable in the mid-term."

This is where personal creativity and independence plays a strong role, IMO.

It is about value not about luxury.  Rolex?  Never!  No value there for me. 

Exactly.

Akaisha
Author, The Adventurer's Guide to Early Retirement

 

[jclarksnakes]

....OMG, We are going to have to figure out how to spend more money. The two big things many people save for are college for the kids and retirement. I retired from the army and went back to college at the same time both of our daughters were in college. We were actually saving some money from DW's salary and my pension while three of us were in college. Now we are looking at the fact that we will have more COLA'd pension income after DW retires four years from now than we are now spending.  If we take 4% per year (plus COL adjustment) out of the portfolio we will have to boot our lifestyle up big time to spend enough. Those PICs of the Mcmansions are pretty but not anything I would want in life. It would be too much work to keep them clean and I would not be comfortable having paid help. I would feel silly wearing a Rolex. What are we going to do? When SS kicks in 12 to 17 years from now we are gonna really be behind the 8-ball. I may have to find a mistress or something to help spend the money. Life is tough.
....On a more serious note. Donzo's post on this thread has more profoundly effected my thinking on ER than anything I have ever read on this forum. If I did not enjoy my parttime job I would put my resignation in monday.
jc

So many good posts.....still, I have to jump in with mine(2 white Russians tonight after a great stress free day)
I retired recently (2 mo.) on about half my take home salary (not counting commisions) and could not be happier.
I am really enjoying my free time and have never gotten along with my DW so well-
I have had the time to plan and surprise my kids with with various trips and "adventures" - I am really getting to know them (used to travel 2-5 night per week).
Tomarrow I am pulling them out of school for the day to go to the state fair -
I sleep .... like my college years (but w/o the "variety" )
I am so glad I pulled the plug when I did - 5 more years of work for what? Another pile of money I would not spend...
You get one shot here - IMO if you stay in the rat race longer that what it takes to produce a reasonable ER, you are caught up in the race.
Get out while you are young/alive and can appreciate the freedom -- not need it.

 

[unclemick]

Hmmm

1993-2005, then Katrina and three deaths in the household.

It's not always about money. You gotta get your licks in while you can.

Party on folks.

heh heh heh heh - ran 12 to 40% of combined preretirement income. Now about 110% of mine - at the 13th year.

 

[Nords]

If we take 4% per year (plus COL adjustment) out of the portfolio we will have to boot our lifestyle up big time to spend enough. Those PICs of the Mcmansions are pretty but not anything I would want in life. It would be too much work to keep them clean and I would not be comfortable having paid help. I would feel silly wearing a Rolex. What are we going to do? When SS kicks in 12 to 17 years from now we are gonna really be behind the 8-ball. I may have to find a mistress or something to help spend the money. Life is tough.

Well, you could share that mistress idea with your spouse-- and all your current money "troubles" will pale in comparison to your new challenges!

But seriously, here's some ideas:
- Start a new self-insurance fund for LTC (may not apply to all if they're currently insured or otherwise covered)
- Invest in a long-term capital expense like a photovoltaic solar array for the house
- Get a second PV array to charge up your battery-powered Prius (if you get spouse approval for this, please tell me how)
- Turn your yard into a vegetable garden or an orchard, complete with an automated drip irrigation system
- Replace every light bulb in your house with a compact fluorescent
- Install the ultimate water conditioner/reverse osmosis system
- Buy Energy Star ceiling fans and a new refrigerator
- Every kid that has the guts to ring your doorbell for a fundraiser gets at least $10. Girl Scout cookies and Zippy's chili get at least $25.
- Drink only gourmet coffee
- Defer Social Security until you're 65... or even 70
- Spend a couple months in vacation condos every year
- Buy four gigabytes of high-speed RAM. What the heck, buy eight. Or ask Wab to design you the ultimate gamer's computer and buy one for each of you.
- Buy the textbooks for your favorite college student, or send your favorite school teacher to graduate school
- Give $500 to every sports league in your community-- Little League, AYSO, Pop Warner football, the Police Activities League, local basketball.
- Pay for a graffiti paint-out (coordinate with a local newspaper and neighborhood boards)
- Give $100 cash anonymously to each & every teacher in your local elementary school-- and don't tell the principal!
- Donate appreciated stock directly to Meals on Wheels, Habitat for Humanity, the local food bank, and wherever else your money doesn't pay for a bunch of administrative overhead
- Pay every kid in the neighborhood to do your chores. Never cut grass or shovel snow again.
- Start 529 funds for your grandkids.
- Gift your kids every year.

 

[perinova]

We are selling our money pit cabin in the woods

How did your cabin become a money pit? Upkeep? Property taxes?

 

[modlair]

A cabin can very well be a luxury beyond time that people indulge in post retirement that they did not indulge in pre-retirement.

And it's one of those things that need not be expenditure, rather than investment.

 

[youbet]

But seriously, here's some ideas:

Nords,  those are fabulous ideas!  It's not surprising that in a discussion group focused on accumulating wealth to enable ER, that there is a certain amount of self-centeredness and, frankly, greed.  I include myself.  Your suggestions are a refreshing change of pace.  

 

[Alan]

We plan on spending more after we ER than before. We could ER now but would not be able to do all the traveling we want to do etc, and 3.5 years is not too far away to ER at 55 and achieve the top of the range of our target. (actually DW has already ER'd)

As for the kids, we have invested in them quite a bit already with college and will be here to help them buy an affordable house etc. (We believe in "the teach a man to fish" philosophy). There may be a decent sum for them to inherit, but they don't expect it, and one goal we do have is to not be a financial burden for them while we are living.

 

[SteveR]

How did your cabin become a money pit? Upkeep? Property taxes?

Upkeep, repairs, plowing fee increases every year, HOA fee increases, increasing taxes, but also time required to keep the cabin and 5 acres of property under some level of control in a hostile environment at 8000 ft. elevation in the Utah mountains with 500 plus inches of snow each year, etc. etc.

We don't seem to find the time to really enjoy it much any more and would rather use the money for travel rather than stay in one place. It is too small to live in full time so I end up taking care of two houses year round plus the expenses of two houses. Water, power, gas, etc.

We just want to take out our equity and some gain over the past 5 years and simplify our lives and our expenses.

 

[Billy]

How did your cabin become a money pit? Upkeep? Property taxes?

Upkeep, repairs, plowing fee increases every year, HOA fee increases, increasing taxes, but also time required to keep the cabin and 5 acres of property under some level of control... We just want to take out our equity and some gain over the past 5 years and simplify our lives and our expenses.

On this same note, a quote from The Cost of Working: "A recent Wall Street Journal study found that "the cost of keeping a typical home up to current standards for 30 years is almost four times the purchase price." The sobering conclusion, according to the Journal: "Almost every house, no matter how recently or expertly built, is a money pit." It's enough to make the "Home Sweet Home" sign in the kitchen shudder right off the walls." http://www.retireearlylifestyle.com/cost_of_working.htm

There's a lot to be said for simplifying one's life and infrastructure... 8)

Akaisha
Author, The Adventurer's Guide to Early Retirement

 

[haha]

On this same note, a quote from The Cost of Working: "A recent Wall Street Journal study found that "the cost of keeping a typical home up to current standards for 30 years is almost four times the purchase price." The sobering conclusion, according to the Journal: "Almost every house, no matter how recently or expertly built, is a money pit." It's enough to make the "Home Sweet Home" sign in the kitchen shudder right off the walls." http://www.retireearlylifestyle.com/cost_of_working.htm

I read that article and I couldn't figure out if they indexed the cash flows so that they were comparable, or OTOH if a $15,000 improvement you made in 2005 was measured in the same dollar that you paid $85,000 to buy the house in 1985.

Anyone who felt they could decode this?

Ha

 

[Billy]

Here is the link to the original article: http://www.realestatejournal.com/buildimprove/20001003-fletcher.html

I think your question is a valid one, however... the point is that homes (and vehicles and our tax structures) cost us more than what most people want to consider.

Having a home and several vehicles and a certain income has become a way of life that we don't like to question too much.

Akaisha
Author, The Adventurer's Guide to Early Retirement

 

[haha]

Here is the link to the original article: http://www.realestatejournal.com/buildimprove/20001003-fletcher.html

I think your question is a valid one, however... the point is that homes (and vehicles and our tax structures) cost us more than what most people want to consider.

Maybe so, but that is a pretty broad brush point. Given enough time between the purchase price and the improvements it could be meaningless.

Thanks for repeating the link.

Ha