Depressing Thoughts about Retirement

[madatrub]

Was talking to a friend this weekend, and we were chatting about retirement income, and he made a pretty simple comment to me. At first, we just moved on in the conversation. But throughout the weekend, I've been thinking more and more about it, and its sort of depressing.

He said "isnt it strange that we save our entire lives so that we can retire, and we choose the goal-line as the point in time where we don't have to work to support our current way of life."

One of the fundamentals of retiring early is clearly to avoid living beyond your means, but what if what you want out of retirement involves spending more, traveling more, seeing more, doing more?

Im curious how you all approach this. Did you spend more in retirement than you did while working? Did you adjust your retirement draws to accomplish this task before you actually retired? I see many comments by retirees in these threads at how difficult of a concept it is to spend more, especially when you trained yourself for a lifetime to not life beyond your means.

Maybe the depressing part of it is knowing you'll never have enough money to ________, which I would suspect is common in most americans as we age...

And yes, part of these are shallow thoughts. But curious what others think.

 

[W2R]

One of the fundamentals of retiring early is clearly to avoid living beyond your means, but what if what you want out of retirement involves spending more, traveling more, seeing more, doing more?

If I had been in that situation, I'd have kept working until my nestegg could support spending more, traveling more, seeing more, and doing more, to my satisfaction.

However, for me it was a bit different. In my case, I had to work longer (past FI) until I had enough time in to qualify to maintain my FEHB (Federal Employee Health Benefits) on into retirement. There wasn't any ACA back then. So, for me, spending and retirement date were not as closely linked as they probably are for most people.

Im curious how you all approach this. Did you spend more in retirement than you did while working?

Yes, but not as much as I thought I would. When that extra money is available, sometimes you discover that you really didn't need to spend all THAT much more to retire very nicely. When I was working, I didn't know that.

Did you adjust your retirement draws to accomplish this task before you actually retired? I see many comments by retirees in these threads at how difficult of a concept it is to spend more, especially when you trained yourself for a lifetime to not life beyond your means.

I wouldn't say "difficult"... I'd say that I found that beyond a point, I really had no desire to just devote all my time and energy to shopping and spending and shopping and spending and shopping and spending. There are other aspects of retirement to explore, and some of them are actually even more interesting than shopping and spending.

Maybe the depressing part of it is knowing you'll never have enough money to ________, which I would suspect is common in most americans as we age...

I can't speak for others, but in my case I have more than enough money to do everything I have ever wanted to do or dreamed of doing, in retirement. I guess that's the "up side" of having to work years and years past FI to be able to afford health insurance, back in the rotten old days before ACA existed. I just continued saving at the same rate until I retired, figuring it would be more fun to spend it in retirement than while working.

And for me, IT IS!

 

[pb4uski]

It's all baked into the spending assumption that you use in your retirement planning. Use an amount that reflects the expected cost of your desired lifestyle in retirement, which may be the same or different from your current lifestyle.

We spend a little more in retirement than we did while working. Our biggest expense is recreation and entertainment, which includes golf, travel, dining out, etc.

 

[W2R]

It's all baked into the spending assumption that you use in your retirement planning. Use an amount that reflects the expected cost of your desired lifestyle in retirement, which may be the same or different from your current lifestyle.

We spend a little more in retirement than we did while working. Our biggest expense is recreation and entertainment, which includes golf, travel, dining out, etc.

Yes, exactly! Very good explanation, pb4uski. I made a graph of my spending for the past 13 years since I retired, and attached it below. I spend pretty much whatever I want to spend. Still, as you can see, it goes up and down but I don't really see any scary trends. I have enough.

 

[RunningBum]

This is why any advice to save enough to spend X% of your current expenses is bad.

I came up with a budget for what I expected to be doing in retirement, which included more travel and hobby related expenses then I had while working. It also included what I was spending at the time, modified for how those things would change.

On the other hand, some people just want or need to stop working, perhaps due to health issues and stress. Had that been the case for me I'd have been willing to maintain a lower budget lifestyle just to stay healthy and alive. There's a lot to do and see without traveling the world.

As it turned out, I don't travel or eat out nearly as much as some here, and less than I expected, and my hobbies aren't too expensive. I wouldn't be surprised if I spend about the same now, inflation adjusted, as I did then. Probably a little more though, because I do upgrade on things that make a difference to me.

Anyway, set your retirement budget for how you want to live, which sets your retirement target for 25-30X that, and decide whether that's attainable. If not, then you have to make some choices, and cut down or out on things that won't make you depressed to lose.

 

[24601NoMore]

This is why any advice to save enough to spend X% of your current expenses is bad.

Couldn't agree more. ER planning is all about estimating what your expenses will be in retirement (as much as is reasonably possible), then determining how you're going to pay for it all - whether it's replacement income stream(s), pulling from the piggy bank / portfolio, etc.

The frequent and all-too-common advice to assume X% of current spending rates (or worse, X% of pre-retirement salary) is absolutely horrific, IMHO.

 

[Midpack]

It's all baked into the spending assumption that you use in your retirement planning. Use an amount that reflects the expected cost of your desired lifestyle in retirement, which may be the same or different from your current lifestyle.

We spend a little more in retirement than we did while working. Our biggest expense is recreation and entertainment, which includes golf, travel, dining out, etc.

+1. There’s nothing depressing about it to me. If you plan to spend more in retirement, you save more or work longer, it’s that simple. Sounds like your friend didn’t have a plan. Besides, there are millions of people around the world who will never retire, they will work until they can’t and then their families will take them in if they’re lucky? Depressed, no way…

 

[HI Bill]

Like many here, I wr$ked until my earnings on investments exceeded my income from my j#b. I did the OMY thing for five additional years to be able to spend more in ER, including upgrading from a condo to a house, and increasing the travel budget. It is a trade-off that cost me dearly, though, in terms of no travel during COVID, and an injury that my wife sustained two years later that's keeping us from going on dive travel trips. But the comfort and luxury of being able to live a nicer lifestyle are probably worth it!

 

[MarieIG]

. . .

One of the fundamentals of retiring early is clearly to avoid living beyond your means, but what if what you want out of retirement involves spending more, traveling more, seeing more, doing more?

Im curious how you all approach this. Did you spend more in retirement than you did while working? Did you adjust your retirement draws to accomplish this task before you actually retired? I see many comments by retirees in these threads at how difficult of a concept it is to spend more, especially when you trained yourself for a lifetime to not life beyond your means.

Maybe the depressing part of it is knowing you'll never have enough money to ________, which I would suspect is common in most americans as we age...

. . .

- Well then I would have saved more. As an aside, our lives were not "on hold" pre-retirement, although we did save diligently, and work a bit longer, to be able to sustain a particular standard of living.

- Probably I spend about the same. I am no longer saving for retirement, but taking up the slack with Roth conversions. We did not take some planned vacations - but not due to financial constraints.

- Nope. I don't spend time pining for luxuries. We have a roof over our head, food on the table, working air conditioning, and time with each other and the family. I enjoy watching the birds, brushing the pup, going to the beach, walking, reading, talking to friends, etc. Time with the grands is a huge plus.

 

[Gumby]

This is why I have always said that, in retirement planning, the first thing you need to know is how much you want to spend. Everything else flows from that. If your friend wants to do ______ in retirement, then he should figure out what ______ will cost and work backward from that. Retirement is not going to be much fun if you first pick a number, retire and only then find out that you can't do ______ within that number.

 

[Flyfish1]

Couldn't agree more. ER planning is all about estimating what your expenses will be in retirement (as much as is reasonably possible), then determining how you're going to pay for it all - whether it's replacement income stream(s), pulling from the piggy bank / portfolio, etc.

The frequent and all-too-common advice to assume X% of current spending rates (or worse, X% of pre-retirement salary) is absolutely horrific, IMHO.

Totally Agree

 

[Stormy Kromer]

I didn't over think it at all.

When I was 17 I started investing and told myself that I would work as hard as I possibly could, live modestly and invest the rest and when I turned 50 I'd stop working and live on whatever was there.

It worked. I stopped cold turkey at age 50. Today I turned 58 and have a lot more than when I was 50. DW and I live on about 1% of investable NW with SS coming in a few years.

 

[madatrub]

This is why any advice to save enough to spend X% of your current expenses is bad.

I like this. A lot of calculators out there, though, ask you for % of current earnings. I feel this method is even more outlandish. For example, in my case, we live so far below our means that all of our non primary mortgage bills total about 15% of our gross earnings. We dump every other dime into early retirement (or after tax accounts). And the primary mortgage goes away before retirement.

Maybe, inherently, thats part of the rub here... we spend so little now.

And thanks for the charts and feedback to the rest. I appreciate the perspectives... We are definitely approaching our spend goals with all of the above in mind, and we are expanding it beyond our current spend (otherwise, we would have probably already retired)

 

[Ronstar]

I wanted to retire at 52, but hung on to keep working as long as DW needed to work to get retiree medical. That said, I worked part time for the last 5 years, only 1-2 days a week for the last 2 years, retiring fully at 58.

I had tracked expenses for more than 10 years, so I knew what my expenses were and didn’t expect them to change much in retirement.

I knew my expenses and how much savings I had, so retiring was easy. Simple math, but knowing expenses is key.

 

[pb4uski]

I like this. A lot of calculators out there, though, ask you for % of current earnings. I feel this method is even more outlandish. For example, in my case, we live so far below our means that all of our non primary mortgage bills total about 15% of our gross earnings. We dump every other dime into early retirement (or after tax accounts). And the primary mortgage goes away before retirement.

Maybe, inherently, thats part of the rub here... we spend so little now.

And thanks for the charts and feedback to the rest. I appreciate the perspectives... We are definitely approaching our spend goals with all of the above in mind, and we are expanding it beyond our current spend (otherwise, we would have probably already retired)

Often is it 80% of earnings, I think the 80% of current earnings is premised on people who live paycheck-to-paycheck and the 20% difference is payroll and other taxes and withholdings. For many people it probably is close. But even if someone is living paycheck-to-paycheck but maxing out 401ks, HSAs and other savings, then 80% is stupid.

 

[madatrub]

Often is it 80% of earnings, I think the 80% of current earnings is premised on people who live paycheck-to-paycheck and the 20% difference is payroll and other taxes and withholdings. For many people it probably is close. But even if someone is living paycheck-to-paycheck but maxing out 401ks, HSAs and other savings, then 80% is stupid.

Agree. We could be at 50% of current earnings and still be too high, considering our current bills are 13% of current earnings. And in many calculators, 50% is the minimum you can input!

 

[mrfeh]

One of the fundamentals of retiring early is clearly to avoid living beyond your means, but what if what you want out of retirement involves spending more, traveling more, seeing more, doing more?

Then that person needs to save more.

 

[Aerides]

He said "isnt it strange that we save our entire lives so that we can retire, and we choose the goal-line as the point in time where we don't have to work to support our current way of life."

If your current life is happy and includes activities and travel, whatever you really want to do, in a home you like, then I don't see why anything your friend says is depressing.

I mean sure, if they live a meager lifestyle, nose to the grindstone, no fun hobbies or adventure, living in a very modest house that they don't like, then a goal to keep that going is...bleak.

But pre-retirement and post for us was very much continuing our current way of life, just without working. We travel a little more, we've done a few home improvements, but we've traded those for other expenses when working that have faded away (far fewer clothing purchases, commuting costs, work lunches, etc.). We spend more time on our hobbies, or doing whatever we want.

Like PB said, it's all a matter of what goal post you want to hit before you retire.

 

[stepford]

It seems to me this isn't about retirement so much as one's satisfaction with life at any stage. If you always want MORE while you're working you'll probably want MORE and be dissatisfied in retirement. A big part of ER for most of us is deciding that a certain lifestyle is good enough and just enjoying its pursuit at that level.

 

[Koolau]

One man's situation: We spend at least twice what we spent when we were w*rking. Of course, when w*rking, we were saving (thus didn't spend it.) But by moving to Paradise, clearly it's more expensive than living in the heartland.

We PLANNED for that kind of spending as we prepared for FIRE, so it's not a problem.

 

[Major Tom]

It seems to me this isn't about retirement so much as one's satisfaction with life at any stage. If you always want MORE while you're working you'll probably want MORE and be dissatisfied in retirement. A big part of ER for most of us is deciding that a certain lifestyle is good enough and just enjoying its pursuit at that level.

+1

There is always more, whatever your material standard of living. I've lived my entire life spending less than I made, so I don't find doing the same thing in retirement at all difficult or depressing. We all need to learn that lesson at some point, or suffer the consequences.

 

[TheWizard]

Couldn't agree more. ER planning is all about estimating what your expenses will be in retirement (as much as is reasonably possible), then determining how you're going to pay for it all - whether it's replacement income stream(s), pulling from the piggy bank / portfolio, etc.

The frequent and all-too-common advice to assume X% of current spending rates (or worse, X% of pre-retirement salary) is absolutely horrific, IMHO.

Well, maybe.
It can be difficult to get an accurate estimate of discretionary expenses in retirement, related to travel mostly for me.

So before I retired in 2013, I decided to target getting roughly the same net income in retirement as when working, which was about double my BASIC expenses of living in place.

This has worked out well, with higher AGI and income taxes each year than I ever had when working. And I even have excess retirement income most months, so that's fun...

 

[DrRoy]

We have always spent more in RE than what we did the final year before. From 1.25X to 2.2X. Lots of travel and some of those years included remodeling the house. This year with no special project it will be 1.5X. That does not account for inflation.

 

[racy]

I've kept track of our spending since 2009 (four years prior to retirement). Although the amount seems to increase every year, it is actually pretty even when adjusted for inflation.
What changed was where the money went: kids' college and mortgage prior to retirement, then replaced by vacations.

 

[marko]

Had to look it up: with one exception, our average income is actually higher now than when we were working--and I was very well paid.

I suspect that this is is largely due to a hefty cash infusion when I retired, plus an inheritance, plus dissolution of a trust, all of which are now bringing in extra dividends. Dividends represent the bulk of our income.

Our spending is remarkably stable--within a few thousand dollars-- but we spend on different things each year.