Age old issue: the transition from saver to spender

[Danmar]

I have a related problem. No problem spending divs as this feels like an income stream. Just have a much more difficult time selling stock. At some point I should "bite the bullet". Not really sure what I would spend it on though. Maybe another house? Just kidding.

 

[MichaelB]

I have plenty to live on, but I do wonder what my / DW's long term care costs will be.

This is a real concern for me as well. A conservative assumption means continuing to live beneath our means and keeping a lid on spending. Oh well ..

 

[LARS]

I wonder if it's a matter of time and getting used to it.

After a while (11 years might be overly cautious) you slowly come to the realization that 'yeah....we're good'

No question time is a major factor. Probably "the" reason.

With each year that passes, it is one less year your stash has to last. I am certain I will feel substantially different about the "withdrawal issue" when at 70, for example, then I do now. I suspect that 5 year increments in this regard are readjust your thinking periods (assuming nothing dramatic occurs in the interim).

When you are young you assume your life is infinite: when you approach, or have claimed, SS, you realize that the horizon is quite a bit more definable/comprehendible.


Sent from my iPad using Early Retirement Forum

 

[ejman]

I have a related problem. No problem spending divs as this feels like an income stream. Just have a much more difficult time selling stock. At some point I should "bite the bullet". Not really sure what I would spend it on though. Maybe another house? Just kidding.

Funny, I also have no difficulty spending dividends (and CAP gain) distributions from my taxable fund accounts (which fortunately with the addition of SS and a tiny pension have been enough for a comfortable ER) but I am extremely reluctant to actually sell shares. I realize intellectually that there is no difference from a total return standpoint but it really bothers me when I contemplate actually selling shares...

 

[niven]

Funny, I also have no difficulty spending dividends (and CAP gain) distributions from my taxable fund accounts (which fortunately with the addition of SS and a tiny pension have been enough for a comfortable ER) but I am extremely reluctant to actually sell shares. I realize intellectually that there is no difference from a total return standpoint but it really bothers me when I contemplate actually selling shares...

I don't think it's that odd. After all, the dividends and cap gains from your funds are taxable whether you reinvest them or not. Selling shares is a taxable event you have control over.

 

[grasshopper]

No question time is a major factor. Probably "the" reason.

With each year that passes, it is one less year your stash has to last. I am certain I will feel substantially different about the "withdrawal issue" when at 70, for example, then I do now. I suspect that 5 year increments in this regard are readjust your thinking periods (assuming nothing dramatic occurs in the interim).

When you are young you assume your life is infinite: when you approach, or have claimed, SS, you realize that the horizon is quite a bit more definable/comprehendible.


Sent from my iPad using Early Retirement Forum

Agreed, after over ten years of retirement which is one quarter of what I expected to live after bailing, and with a portfolio 20% higher than 1996, I wonder if I will ever spend it all. Of course it is fun trying.

 

[EastWest Gal]

We are on a trip in Iceland. Last "family vacation" with DS who just finished college. Iceland is expensive. Everything here is double what it is in U.S. We searched travel companies and found the cheapest one. There have been interesting adventures going cheap. Instead of eating out every meal, we bought bread and mustard and lunch meat and fruit and are making lunches. I packed 2lb of nuts in our suitcases, as well as granola bars. We're mostly eating as cheaply as we can find, with only one meal being the quintessential Iceland food experience. Not buying alcohol here, except for one local beer. We went to the Myvatn nature baths instead of the Blue Lagoon for our mineral hot water soak, saving about $90 for the same experience.

Hiking is free. Seeing glaciers and moonscape a from the road is free. Seeing the birds is free. I accidentally got too close to an arctic tern's nest (in a parking lot and videotaped the bird trying to get into the car...free. Getting lost, quite fun actually, free (well, except for the extra fuel for the car).

Being frugal is about spending carefully as needed, not about not spending at all. No need to change frugal habits.

It is strange spending dividends instead of reinvesting though.


Sent from my iPhone using Early Retirement Forum

 

[kcowan]

I realize intellectually that there is no difference from a total return standpoint but it really bothers me when I contemplate actually selling shares...

Naturally selling shares is proof that you have entered the final phase, liquidating principal.

 

[kcowan]

We are on a trip in Iceland. Last "family vacation" with DS who just finished college. Iceland is expensive. Everything here is double what it is in U.S.

It is the same in mainland Europe. At The Hyatt, having breakfast included costs 27 euros pp more. We went to have a great breakfast on the main square (not the cheapest place) and it only cost 27 euros for two. Then we bought some buns and are having those in the room with the free coffee today. We also bring in wine and cheese for our late afternoon snack because we enjoy it better.

 

[HadEnuff]

My paternal grandparents were 2nd generation Sicilian immigrants to Upstate NY. My paternal grandma was on of 11 children. They took in laundry, sewed, worked in a canning factory, etc etc. She raised 5 children during the depression, 2 of whom were blind, one of whom could never leave the house.
She raised my dad to be very frugal. Dad did well financially, but letting of go of the lessons of frugality was hard.
Whenever we'd eat cheese he would repeat the story of his mom's admonitions to "never eat cheese without bread" because the cheese would stretch farther with bread.
During retirement he and my mom bought a place in a condo on the beach near Naples, Fl. While shopping for all of the furniture etc. needed for a newly build residence, he told me "with all of the money I'm spending, my mom has to be turning in her grave".

I put my arm around him and said, "no, Dad. She's smiling. She's happy that all of the hard work she put in raising you guys, it all turned out well. Wouldn't you be happy to see your kids doing well? Nobody gave you anything you didn't earn, every day. I'm sure she's happy"

I think it helped to hear that from one of his children. Now, I have to remind myself of that conversation from time to time.

 

[HadEnuff]

As for me, I seem to have a reluctance to spend money on stuff that doesn't retain some value, at least for a while. For example, while I love to eat, I don't enjoy really expensive meals "out". I love the food, but then, it's just a memory. I may spend more than I need to on a toy, like a fishing boat, but at least I can still enjoy the toy for years.

I think that's also one of the reasons (among some others)I don't love traveling to far away places. Clearly, some of my Dad's frugality has worn off on me. Probably a good thing in some ways, and curse in others.

 

[Christine]

It definately take some time to get used to!

I'm 1,5 years in and I'm basically living like I used to. I'm soon spending a few days in a town across the country and almost booked at the usual bargain price hotel. A couple of hours ago this. Then I remembered I don't need to - and don't really want to either. So now I'm having a break from browsing for hotels to post here. So many choices!

I just bought a new car - that is new for me 12 months used - the smallest Mercedes model. And I decided to upgrade to the in-car GPS system. But it's taken me like 3 months to actually call the dealer and order it. But today I did - picking it up on friday.

So today I have taken two small steps towards becoming a spender!

 

[Johnora]

Approaching the void between saving and spending

As someone who is quickly approaching the chance to FIRE, it was to be in 2017, but looks like near the end of 2016 now, I am already having the second guessing jitters. I have looked this over so many different ways, run Firecalc over and over just to make sure it keeps telling me the same thing. It is the unknown, it is the anticipation of finding out if my anticipated excel spreadsheet budget numbers are really going to become reality, whether my choice of low cost index funds will continue to perform as the market has for 80 years, if my plans on how much to draw from the funds is high, low, or just about right.

It has been great to see posts like these that help reassure me and I'm sure others that this type of thinking, overplanning, nervousness is all normal.

I will transform from Saver to Spender, cautiously over the next couple of years but everything is going to be all right.....

 

[H2ODude]

I've been at the retirement thing for about five years now. I've always liked the Fidelity RIP tool, mainly because it figures the taxes in and a lot of our stash is IRA. We're on vacation now away from home so don't have access to them, but about once a year I print out the "detail" of the output (withdrawals, sources, amount remaining, etc.).

We've kept our draw at about 85% of what the max amount FIDO says we can do (including all sources such as SS which is still dormant and waiting), amounts to pulling about 3.2% of portfolio. That draw was less (2.5%?) starting out but as we've gotten comfortable we're pulling more.

Point is, over 5 years the portfolio has grown 21%. If I run it today at what is CURRENT max til we're in 90's, it shows the portfolio dropping about 27% over the next five years (but still safe). What this tells me is that it's easy to forget all these calculators are built around more or less "worst case" and .... that's rarely the case. If we'd pulled the actual max the results wouldn't be that different.

I get it. I don't want to outlive the money or watch the portfolio plummet. But if you are reasonably conservative (and I think a lot of us here are a lot so) in time you can not only relax but realizing we're not in that outlier worst case, can increase spending. Of course if it happens, adjust as necessary. I suppose a lot depends on how much of a person's expense is considered essential. If a lot is discretionary then it makes it pretty easy to accept an adjustment for a few years.

 

[Danmar]

My paternal grandparents were 2nd generation Sicilian immigrants to Upstate NY. My paternal grandma was on of 11 children. They took in laundry, sewed, worked in a canning factory, etc etc. She raised 5 children during the depression,

She raised my dad to be very frugal. Dad did well financially, but letting of go of the lessons of frugality was hard.

Very similar story to mine. It was my paternal grandparents who emigrated to Canada from Italy (les Marches). My grandfather was 16 and penniless when he came over, in 1912. Was quite successful financially and instilled the same values of hard work and frugality in his 6 children. These values sometimes can get diluted over time but often last at least for a couple of generations. Cheers.

 

[old woman]

Now 2.5 years into retirement my plan is to have one million invested. When more I can spend freely when less back to basics and no raising monthly bills much. I can live with a 1% withdrawal rate now and after 70 income increases drastically so I should have a million left over when I die so no risk of broke. It would be easy to buy a nicer home and increase bills enough to go broke. I am about 982K now so waiting for growth to spend much, I had over a million twice before and will again soon.

 

[Dog]

I've been retired since 8/2014 and DH retired last month. We just sold our primary home (closes 6/28) and are now debt free...except for taxes of course. We surprisingly got quite a bit more for the house then we expected and DH is teasing me that I'll just want to hoard it. Nope! We have a nice nest egg, healthy emergency fund and he will receive a bit of a pension with healthcare, so this will be money we use for some upgrades on our current home, fix some debts/dings on my car and get a boat for running around on the sound and crabbing. We will also buy DD a new dishwasher and patio set for her town home .
I think I may finally feel secure enough to start loosening the purse strings. Yikes!


Sent from my iPhone using Early Retirement Forum

 

[RobbieB]

That's the spirit, blow some dough and have big fun!

 

[novaman]

We have enough savings and can start spending freely (within reason). My wife wanted to totally redo a room in our house and I told her to have at it. We visited many high end stores for window treatments and floor coverings. But in the end she just couldn't justify spending all that money when the inexpensive options we've always gravitated towards work just fine and look almost just as good. I chuckled at the whole thing because in the end she just couldn't change who she was. But on the other hand who we are when it comes to money allowed us to get to this point of FI


Sent from my iPhone using Early Retirement Forum

 

[W2R]

That's the spirit, blow some dough and have big fun!

I have noticed that blowing all that dough on my new-to-me Dream House and upgrades to it in the past year, has been lots of fun! It would not be everybody's dream home but for me that is what it is. I am so happy and haven't felt a moment of "buyer's remorse", at all.

But on the other hand, it also makes me feel a little less secure and unsure of myself because it upset my spending habits. So now, I am cutting back a bit even though I probably don't need to.

 

[RobbieB]

Good for you! I'm doing that too right now.

I've done all the "physical plant" stuff, new roof, new HVAC, new toilets and sinks, appliances and such, but the place has never been painted (inside) and the carpets are 30 years old too. Imma gonna do the paint, but all the flooring will be contracted with really good stuff. Hardwood, tile and the best carpet. My house isn't large so why not put in the best -

 

[W2R]

Good for you! I'm doing that too right now.

I've done all the "physical plant" stuff, new roof, new HVAC, new toilets and sinks, appliances and such, but the place has never been painted (inside) and the carpets are 30 years old too. Imma gonna do the paint, but all the flooring will be contracted with really good stuff. Hardwood, tile and the best carpet. My house isn't large so why not put in the best -

You only live once, after all, and why punish yourself with less than ideal flooring if you can afford better? Nice floors could add to the resale value later on, too. My small (1500 sf) home has absolutely gorgeous hardwood floors that look pretty new. Maybe the seller had the flooring re-done in order to sell? I have no idea. But the beautiful floors make a huge difference, much more than I would have thought.

 

[RobbieB]

I'm going to ask about marble tile in the bathrooms, see if I can get them with heaters under. I stayed in a hotel once where they had those heated tiles in the bathroom and they are really nice. You don't need those bathroom rugs that always get scrunched up to keep your tootsies warm.

 

[2017ish]

I'm going to ask about marble tile in the bathrooms, see if I can get them with heaters under. I stayed in a hotel once where they had those heated tiles in the bathroom and they are really nice. You don't need those bathroom rugs that always get scrunched up to keep your tootsies warm.

Our heated bathroom floor is much loved by DW. I installed resistance wiring when building; it stopped working after 7 or 8 years (should have bought more expensive supplies?). Instead of ripping up and retiling bathroom, I replaced it with hot water tubing and radiant barrier/insulation below the subfloor (garage is under mastersuite, so easy access).

When we eventually move, I'm afraid it is going to be a "have to have."

 

[W2R]

I'm going to ask about marble tile in the bathrooms, see if I can get them with heaters under. I stayed in a hotel once where they had those heated tiles in the bathroom and they are really nice. You don't need those bathroom rugs that always get scrunched up to keep your tootsies warm.

Flooring that feels good on your feet is such a delight! In New Orleans it is almost always hot, so I wouldn't want heated tiles. I have heated seats in my Venza, and have never once turned them on.

Anyway, I love the tile floors in my bathrooms which are the original 1950's-1960's tiles like one often saw in those days (white in one bathroom, pastel green in the other). They feel great on my feet, and always feel very cool. Even so I bought a bathroom rug with a good non-skid backing, just to keep from slipping and falling on wet tile.

I read somewhere that falls are the number one reason for hospitalization of women over 65, and I am 68. So, I have taken some steps like this to fall-proof my new home.

My shower and tub already had the sturdiest imaginable grab bars and I always use them.

I don't have loose throw rugs because of the tripping hazard, and I don't leave things on the floor that should be put away.

Four days after I moved in I tripped and fell on the 1 and 1/2 steps leading into my side door. I didn't know/remember about the half step and couldn't see it because I was carrying a full laundry basket. It was a pretty bad fall! Anyway, I put bright yellow duct tape across the front edge of each of the steps, and now I always hang on to a sturdy rail when I go up and down them. I never carry anything while going up and down those steps either.

I never thought I'd fall like that and it was gruesome. Now, I'd rather prepare as though I was 90 years old, than awaken in a hospital one of these days.

To relate this digression to the thread topic, I think that one way to justify spending money as we age is to spend it on safety and "elder-proofing" our homes, in preparation for growing old. If we don't croak first, then one thing's for sure, we'll grow old one day. Much better to shut the barn door before the horse escapes.