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Old 05-04-2021, 01:10 PM   #21
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+1



I think the bucket approach is really more suited for people who, during their working years, need a mental accounting hack to help them save up for big purchases and not spend everything they make. Folks like us who've achieved FIRE typically don't need those kinds of hacks, as most of us were (and are) prolific savers and investors by nature.

Ahh. But many of us do have income in retirement from pensions, SS annuities or real estate, so yes it does make sense to set aside some of that income, if that is the preferred method of accruing for major expenses of that subset of retirees. We don't need to do it that way. We prefer to do it that way, perhaps because we are accustomed to "this kind of hack". I really did have to laugh as that phrase.
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Old 05-04-2021, 01:11 PM   #22
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These "large items" were factored into our planned retirement spending, so we do not need to specifically save for them. All I do is look at how overall cash flow is tracking to expectations. Any "surprises" are more than covered by our buffer (ongoing discussion in another thread) and growth from our investments.
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Old 05-04-2021, 01:17 PM   #23
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No. We simply pay from our savings.
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Old 05-04-2021, 07:26 PM   #24
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When I say save, I mean for things like car replacement, home upgrades, huge vacation and the like. Like us, I know many have savings buckets for these things before retirement to allocate money toward, but, after retirement, do you still continue to save in these same buckets? Or do you just pull from your Roth, 401K or other for these pricey purchases.
yup. we have a number of sinking funds for new car purchase, vacations, etc. but this is nothing new for us. we've been doing this for years.
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Old 05-04-2021, 07:34 PM   #25
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Yeah, because we don’t spend all our income, so we naturally build excess that can be spent on big ticket items, splurges or gifting/charity.
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Old 05-04-2021, 10:56 PM   #26
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I have learned that I need to consider large purchases, to simply smooth out taxable income. By having a cash cushion and even spread withdrawals over a couple of tax years.


When newly retired I went and bought a new vehicle for $31K cash, which because I had not considered taxable income, forced me to scrimp more than I wanted as I was suddenly having a cash flow problem.

I could have simply used Roth money, or took more out of IRA, or sold some more stock, but I wanted to avoid more taxes. I refuse to pull from my Roth at this time.
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Old 05-05-2021, 04:04 AM   #27
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I can't break a lifetime of habit. I maintain sinking funds for car, home, and vacation. Obviously, if I had a major home repair and my sinking fund was low, I'd just pull from savings.
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Old 05-05-2021, 07:22 AM   #28
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We plan on continuing to build our savings as we can.... That way when we come across something... just say yes

But that does bring up a question....
say you wanted to pull 50K out of your 401K to buy a new truck... for the purpose saving or spreading the taxes out...
pull 25K in dec, then 25 in Jan
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Old 05-05-2021, 07:51 AM   #29
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We plan on continuing to build our savings as we can.... That way when we come across something... just say yes

But that does bring up a question....
say you wanted to pull 50K out of your 401K to buy a new truck... for the purpose saving or spreading the taxes out...
pull 25K in dec, then 25 in Jan
Sure, if having the entire 50K withdrawal in 1 year pushes you over to a higher tax bracket, or to a higher health insurance cost, whether that's ACA or Medicare. If it does not put you in a higher bracket, then it does not matter.

If it does not help, it does not hurt to split.

PS. Ugh, I take back the above. Sometimes, it may make sense to bundle the WR in one year. Others will want to chime in here.
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Old 05-05-2021, 08:52 AM   #30
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No. We simply pay from our savings.

It's that simple for us too.
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Old 05-05-2021, 08:56 AM   #31
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No I don't save for big ticket items any longer. My regular withdrawal rate is quite a bit below what FIREcalc allows so I don't worry about it.
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Old 05-05-2021, 09:35 AM   #32
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Yes we still do buckets. Its all an accounting exercise but we like to see them fill then turn off that stream of savings in favor of another. If they ever all fill up it once we will turn them all off and dump into the market again.
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Old 05-05-2021, 10:42 AM   #33
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We have income in retirement from pensions and social security that more than covers our expenses, including our normal vacation spending. We also have a portfolio that would more than cover our expenses at a 4% WR. Our current actual WR is zero. I do budget a certain amount for home and vehicle repairs every year, which we usually don't spend in full, so that piles up over time and helps with normal things like replacing the dishwasher, new tires on the car, etc. If we have a lumpy spending need beyond that, we'll just pull it from our portfolio. We keep enough in after tax cash to cover several years of the most conceivable types of extraordinary expenses, which at this point mostly would be luxury travel if we ever again get the opportunity.
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Old 05-05-2021, 11:11 AM   #34
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Yes, I do continue to save for high ticket items. Like some others having mentioned, I have non-portfolio income (pensions, etc...) and what I don't spend, I either keep in my short-term fixed income holdings to fill several savings buckets in my mental accounting, or I add to my longer-term investment holdings, if those buckets are full.
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Old 05-05-2021, 12:37 PM   #35
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Monthly amounts for items that are somewhat random say like appliance repair or replacement are line items in our lean retirement plan calculation as are things like property tax etc. Dave Ramsey had a chart with suggested % amounts of income for each of them. I made a similar spreadsheet and that is how we determined our annual expenses without missing anything significant. We have certain banking accounts reserved for some of the major categories. I know it limits the upside, but it buffers downside.

Our goal was to have conservative buckets to handle 7 years of lean expenses without having to sell stock. Again it calms the % of change in the portfolio.

And yes the car replacement/repair acct is funded monthly as is the property tax/housing account.
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Old 05-05-2021, 12:42 PM   #36
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No budget or money set aside for larger items. If we need it, we we get it, that is how we have done it from the start.
this is me. generally I don't have a lot of "high" ticket items. I will have to replace my car soon (it's currently at 178K miles) but no need to have a separate account for that.
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Old 05-05-2021, 04:23 PM   #37
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I'm actually trying to think what I'd call a big ticket item now. Last car was $13K used. We just wrote a check - well, talked the dealership into accepting $5K on the cash-back CC and wrote a check for the rest. A couple of gifts (kids or charities) have been bigger than that and we just wrote checks from our RMD that year.

Never thought I'd find myself in this situation - but it's kind of nice. I don't need much, but if I do, I just write a check. Yeah, I'm sure I could finesse a bit more interest, growth or income from my cash-stash. It's just more effort that I want to invest since it will all be gone by the end of each year anyway. IF I need more, I can always go back to the 401(k) and get it. Don't even consider breaking into a ROTH, though, that's what it is there for, so YMMV.
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Old 05-05-2021, 04:38 PM   #38
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I don't continue to save because all of my funds are savings. I have no pension/annuity/soc.sec. income (yet). When my and DW's soc. sec. comes on line, I don't expect it to exceed our annual expenses so we still won't be saving.
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Old 05-05-2021, 05:01 PM   #39
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I just pull whatever we need from equities on a regular basis. No savings, no budget, no buckets.
I guess you have a lot of built in gains over the years. So you don't have to sell in the red?
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Old 05-05-2021, 05:43 PM   #40
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Most high ticket items are optional in my experience, so no need to save or have buckets. Whether the market is up/down will effect my decision to buy.
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