Final 2023 Expenses

[BlueberryPie]

I'm surprised people spend so little of their portfolio. Why not spend more, even if it's through gifting?
I'm not retired yet but my plan is to exhaust my portfolio by 100. Well technically my wife's 100 bday, she's a couple years younger. Yes there will be contingencies for living past 100, but those won't affect our withdrawals till our mid-80s

I plan to use an amortization-style WR model, which typically yields a higher % withdrawal but it changes based on market conditions and portfolio sizes. The simplest version is VPW and I may stick to that one.

My target is that if I had retired in 1966 (the worst year to retire financially?) my income would have dipped to $100K after taxes in the worst year. That way if I get 1981-type market, I can spend $200K or more for my entire retirement. I have no idea how I'd spend that much money but I know I'd find a way!

 

[SecondCor521]

I'm surprised people spend so little of their portfolio. Why not spend more, even if it's through gifting?

For me:

I am meeting all of my needs and many of my wants. I'm already gifting at the level I think is appropriate for the recipients - more would risk TMND EOC.

Some will say it's to protect against big expenses later, like long term care or expensive medical stuff. That's part of it for me, but not something I think about much yet because of my age - I'm not close to that yet. I hope, anyway.

Part of it too is that it takes actual unpleasant effort for me to spend money. I do want some new things, like a new car and a new computer. But buying those things, independent of how much or how little money I have, involves for me: figuring out what I want, researching the market, making the purchase, doing any transfer-related activities, getting rid of the old one, figuring out which money bucket to spend from, thinking about tax implications, and then possibly being concerned that the one I got doesn't live up to expectations or meet the goals or was worth the money.

Another part too is that I value flexibility more than experience. I could spend $$K on a Viking River Cruise, and I would probably like that. But then that $$K would be locked in and the cruise would be over. If I keep that $$K in my stash, then I can dream or imagine about a Viking River Cruise for the rest of my life, *and* I can also switch and decide to spend that $$K on something else.

Some too may be left over from the last decade or so of my working career where I enjoyed seeing my WR% drop lower and lower and approach safer and safer (and then safe and ultra safe) levels.

Some is also due to lack of planning things out. I have never really done a prospective budget for any future period, and I've never penciled out life plans with the associated price tags exactly. I just wave my hands and say "sub 1% covers it all" - LTC, expensive medical care, wanting to spend more, periodic lumpy expenses like a car, new roof, etc.

Part of that not planning was ignoring non-portfolio income (NPI). When I was approaching FIRE, I adopted the reasonably conservative idea that I didn't want to count on future income, so I assumed $0 in future income. That has turned out unnecessarily conservative. Currently my non-portfolio income equates to about a 1% reduction in my WR%. So my nominal WR% is 1.78%, subtract my 1.03% in NPI, and I get a 0.75% net WR%.

 

[Dtail]

I'm surprised people spend so little of their portfolio. Why not spend more, even if it's through gifting?
I'm not retired yet but my plan is to exhaust my portfolio by 100. Well technically my wife's 100 bday, she's a couple years younger. Yes there will be contingencies for living past 100, but those won't affect our withdrawals till our mid-80s

I plan to use an amortization-style WR model, which typically yields a higher % withdrawal but it changes based on market conditions and portfolio sizes. The simplest version is VPW and I may stick to that one.

My target is that if I had retired in 1966 (the worst year to retire financially?) my income would have dipped to $100K after taxes in the worst year. That way if I get 1981-type market, I can spend $200K or more for my entire retirement. I have no idea how I'd spend that much money but I know I'd find a way!

A decent number of folks on this site got to their levels with high savings and practiced strong LBYM lifestyles.
Thus it is hard for them to turn off the switch in retirement, even though many state that they will BTD.
As for me, I had a high paying career and spent over double what I am spending now but saved too. However it was in a HCOL area with a partial Wall Street style lifestyle, where it is not so now.
However happy financially now, I could always more stuff to spend on if I could.

 

[Tom52]

Our total spending for 2023 was $135,998.88. Broken down as follows:

$64,481.94 for normal expenses, taxes, medical, food, travel, insurances, etc.
$37,516.94 for home improvement projects
$34,000.00 gifting to DD

We withdrew about 2% from our overall investments. All from after tax accounts in form of interest and dividends.

 

[Koolau]

$360,000

$35,000 in Taxes
$100,000 in College Payments, etc.
$45,000 for a new Car
$39,000 for Vacations
$32,000 for Medical
Those are the biggies.

3% NWR so no worries. Need to get these kids out of college!

Heh, heh, now what was that I was saying about no "1-percenters" here?


IIRC in 2019, one had to have $12Mil NW to be in the 1-percent club. YMMV as it's a bit subjective and nebulous - not to mention "site specific."

 

[Dtail]

Heh, heh, now what was that I was saying about no "1-percenters" here?


IIRC in 2019, one had to have $12Mil NW to be in the 1-percent club. YMMV as it's a bit subjective and nebulous - not to mention "site specific."

Well technically one can have massive income streams and the WR% relative to spending might not indicate massive assets.

 

[wmc1000]

You lucky guy ! My wife got reductions...
(Oh did you mean dental ?)
LOL

yes, dental, a lot less fun!

 

[FLSUnFIRE]

Just filed my taxes and these are my "final" expenses for 2023. Total was $43,921 but $1,800 was my auto sinking fund/depreciation and I received $6,888 PTC towards my health insurance (accounted for under health) so my actual cash paid expenses were $35,233. Sales tax ($726) was included in the totals and not broken out and household includes property tax.


Caught an error, self-employment taxes from my fun job were only $601 and not $806. There's probably another +/- $50-200 in errors and omissions but I'm pretty good at capturing stuff and no one but me is grading this.

 

[athena53]

I'm surprised people spend so little of their portfolio. Why not spend more, even if it's through gifting?

First, I've always had a fear of ending up old and poor. I'm 71 and it looks like I'll avoid it but my top priority is not outliving my savings even if I need LTC. I also want to be able to choose an LTC based on something besides price.

Gifting: I give DS and DDIL about $15K/year- enough to make a difference but not enough to make my gifts their primary source of income (DS makes about $70K/year, DDIL is a stay-at-home Mom). I'm very proud of what they've built together on their own. They'll likely inherit a lot, which they say they don't care about and I believe them. My charitable giving is already a big enough % of my income I don't plan to increase it. I DO hope to accumulate enough in the 529 plans to fund my 3 grandchildren's educations.

Spending: I really don't want more than I have. Two major trips a year are enough. I don't need or want a lot of new clothes, cars are not a priority, and while I'm investing in home upgrades I don't feel a need to update furniture or the things that change with the fads (lighting styles, appliance colors, etc.).

So, I over-saved for retirement. DS and DDIL are likely to inherit a $1 million+ IRA that they'll have to withdraw over 10 years under current tax law but that's a good problem to have.