Does anybody want to be rich when they get old?

[robnplunder]

I can definitely relate to this as it happens to our family - 5 children fighting over my dad's assets. Money brings out the evil side of all of us.

Fortunately, my parents are broke .



In some culture, if you are rich, you have "obligations" to help your relatives. Some would abuse that and go after relative's money as if it is his/her own. I could have RE'd already if it weren't for my poorer relatives and family members.

 

[Spanky]

.. If one likes to accumulate wealth in an ethical and legal manner, how is that greedy?

Greed is an inordinate desire to acquire or possess more than one needs regardless of the means. It can be viewed as an endless effort satisfy the need without ever reaching satisfaction.

 

[growing_older]

It boils down to the perpetual questions: What do you do with money that you don't need?

Security. Even if something goes even worse than FireCalc predicts, even if some new super expensive medical treatment is invented, even if political turmoil starts boiling over, the more margin of safety the more secure I will feel. At some point I have my number and i FIRE, but even once FIREd I'm happy to see my portfolio grow if it provides a bigger margin of safety. I'm not willing to compromise safety to get a bigger portfolio.

 

[Spanky]

In some culture, if you are rich, you have "obligations" to help your relatives. Some would abuse that and go after relative's money as if it is his/her own.

Sounds like some Eastern culture.

 

[NW-Bound]

... Money can attract parasites, schemers, robbers, .... In many countries, you can be kidnapped for having too much, senor. Greed can bring .

So, don't flash it. Keep it securely hidden, and you will be OK. No conspicuous consumption here. But I do not yet have enough to worry about that, of course.

I can definitely relate to this as it happens to our family - 5 children fighting over my dad's assets. Money brings out the evil side of all of us.

It is indeed a good thing that at this point we all have more assets than my parents.

"Lack of money is the root of all evil." -- George Bernard Shaw

 

[Spanky]

Security. Even if something goes even worse than FireCalc predicts, even if some new super expensive medical treatment is invented, even if political turmoil starts boiling over, the more margin of safety the more secure I will feel. At some point I have my number and i FIRE, but even once FIREd I'm happy to see my portfolio grow if it provides a bigger margin of safety. I'm not willing to compromise safety to get a bigger portfolio.

Agreed. Once you achieve the "number" or target SWR, why would you risk it for a much larger portfolio?

 

[robnplunder]

Security. Even if something goes even worse than FireCalc predicts, even if some new super expensive medical treatment is invented, even if political turmoil starts boiling over, the more margin of safety the more secure I will feel. At some point I have my number and i FIRE, but even once FIREd I'm happy to see my portfolio grow if it provides a bigger margin of safety. I'm not willing to compromise safety to get a bigger portfolio.

Isn't that greed disguised as security? One feels more secure if he has more money. Therefore, he wants to be richer and richer and richer ....

 

[Major Tom]

To be searching for security in this physical life that is fleeting at best is, in my humble opinion, perhaps not the best goal to be aiming for. I'd argue that the best we can achieve is an illusion of security. If that illusion makes us feel better then it serves it's purpose, but it is still an illusion.

For anyone who has already retired and is thinking that a larger portfolio would help them feel more secure, there is another way of looking at it - you could reduce your expenses and achieve a lower (and thus safer) WR much more quickly. How do you do that? By controlling your desires. Controlling your desires and living well within your means will also have the happy side-effect of curbing that "I'll be happy when......." game that we often play with ourselves.

So kick back and pour yourself a glass of wine or a good beer (if you drink). Relax, count your blessings and enjoy the moment because (in my humble opinion once again) these moments are all we have.

 

[NW-Bound]

I was just having fun with y'all here. Have you noticed that the "Fire and Money" forum has the most posts, and the most readers and lurkers?

I am not afraid to say that I want more money. Maybe other people looking at me say that I have enough, but a person from a 3rd world country can say that about any of us. Am I greedy? Well, during my working years, we have helped out our parents when they were in need, and never added up the amount to see what it was. Recently, with the aid of Quicken, I discovered that my charity donation for 2013 amounted to 0.5% WR of my 3.5% WR total. I am not the most charitable person on earth, but a lot more than many others.

I want more money, so I can do more of what I want, if I want it, whatever that might be. I derive some pleasures from seeing my money providing a meal to destitute and hungry people in impoverished 3rd world countries. Perhaps it's to make me feel good, so there's selfishness in it even though the donation was anonymous, I dunno.

When I was working, I wanted to get paid a lot of money. It would prove to me that my work was "good stuff" so people were willing to pay for it. Now, I can only make money by investing, and I am more active in this endeavor than I was. It's something to do, and a puzzle to solve as history evolves in front of us. It's mentally more interesting to me than other passive pastimes that I could have done. I do not want to take platitudes as god-sent without questioning them, and I have found some discrepancies here and there.

So, there you have it. Despite my professed love of money, I do not believe that I spend any more time thinking about it than many people here.

 

[Major Tom]

I want more money, so I can do more of what I want, if I want it, whatever that might be. I derive some pleasures from seeing my money providing a meal to destitute and hungry people in impoverished 3rd world countries. Perhaps it's to make me feel good, so there's selfishness in it even though the donation was anonymous, I dunno.

In a sense, there is selfishness in it. Most of us are wired to feel good when we help others. If we weren't made this way, our communities and societies couldn't operate. I suppose that is what you would call having empathy. So keep on helping others - it's the good kind of selfishness.

My charitable donations are minimal right now but I look forward to being able to donate significant amounts on a regular basis when I am older and the portfolio has grown. There's a good chance that most of my contributions will be to animal rescue organizations, but not entirely. I want some of my money to go to good human causes too.

 

[daylatedollarshort]

Supposedly, historical data shows that they would still be OK retiring at a market top, provided that the WR is 4% or less. However, there will be sleepless nights in the next roller coaster ride.

I am probably missing something, but when I put a 30 year all equity portfolio into Firecalc with a 100% success rate, and then a 29 year all equity portfolio after a 30% market drop (year 2 of retirement), the success rate drops significantly.

So I guess a 100% success rate starting out doesn't necessarily stay 100%? I suspect I must just not be using it right but what am I doing wrong? Or is it that a continued 100% success rate is not necessarily the goal? That anything in the 80s or so is close enough?

 

[Animorph]

I am probably missing something, but when I put a 30 year all equity portfolio into Firecalc with a 100% success rate, and then a 29 year all equity portfolio after a 30% market drop (year 2 of retirement), the success rate drops significantly.

So I guess a 100% success rate starting out doesn't necessarily stay 100%? I suspect I must just not be using it right but what am I doing wrong? Or is it that a continued 100% success rate is not necessarily the goal? That anything in the 80s or so is close enough?

You put in the portfolio value and 30 years and FIRECalc starts the Great Depression or 60's inflation just at the start of your 30 years. But you had enough to make it anyway, yea!

Now you subtract 30% from your portfolio and go for 29 years and FIRECalc starts the Great Depression or 60's inflation just at the start of your 29 years. Your portfolio runs out, boo!

What happened? That 30th year essentially comes off the end of your retirement, not the start. Even if you told FIRECalc you had no expenses in the first year, it would just wait a year and then hit you with the worst cases.

 

[CaliforniaMan]

Actually I have used the Wh*** signal to market time and it has been extremly effective . Anytime the Wh*** is mentioned I harvest my gains .

Regarding the whee factor - one thing I have noticed lately is an uptick in posters on other forums with mostly equity portfolios saying "I have reached my number. I can retire now."

I think people who post here are more sequence of returns risk factor savvy, but I have noticed comments like this on other forums with a younger crowd.

Well, maybe they can retire, but if they keep the same percent in stocks and the market goes down the same percent in 2014 it went up in 2013, then they could quite easily be 30% below their number and unemployed as well.

Sometimes I have gone weeks or even months without looking at my balances in stock or retirement accounts. I am usually a pretty passive investor. One thing I have noticed is that when I start to look at them daily, look out below. Unfortunately, I am looking at them daily now

I have a spreadsheet to calculate my withdrawal, right now it assumes a 15% stock and 5% bond decline before calculating the draw. Then I have an additional box for a 20% decline, to see how I would do on that, if I am still at my "number."

I will pull the trigger in a few months, I hope I get to the point where I stop thinking about all this, and can concentrate on just enjoying the freedom of retirement. I don't really need or want to spend a lot of money.

Still the fact that I am now looking at it almost every day worries me.

 

[CaliforniaMan]

...
I don't really need or want to spend a lot of money.
...

That is not the same as saying I wouldn't enjoy spending more should the markets deem me worthy.

 

[NW-Bound]

...
Still the fact that I am now looking at it almost every day worries me.

In the years of 1980-2000, there were periods when I did not look at my 401k or my MFs for a couple of years. I kid you not!

During the late 90s, I was so busy with my involvement with a couple of start-ups. Only in late 2000, I then realized that we were going to crash and burn. That forced me to make an inventory of my assets to see how long I could hold out before selling my soul to a megacorp again. I discovered a pile of MF statements that were unopened for a few years. Good thing that I arranged for automatic investment every month throughout the good boom years. My 401k's at past megacorps of course also did well. Passivity worked for me then.

Ever since, I made a conscious effort to be more aware of my investment. As I hold individual stocks and ETFs wherever possible (my wife's 401k of course has to be in MFs), I have been looking at my portfolio a few times a day whenever there's internet access, even though I do not day trade. In fact I believe my portfolio turnover is quite lower than that of Wellesley, which is at 36%. I have been training myself to look at the daily up/down with a curious eye more than an impassionate one.

That is not the same as saying I wouldn't enjoy spending more should the markets deem me worthy.

Well, as I said, we all want more money, but we vary in the amount of effort we want to put in it. It's not the same as saying we do not want any.

 

[Options]

Greed is an inordinate desire to acquire or possess more than one needs regardless of the means. It can be viewed as an endless effort satisfy the need without ever reaching satisfaction.

To be searching for security in this physical life that is fleeting at best is, in my humble opinion, perhaps not the best goal to be aiming for. I'd argue that the best we can achieve is an illusion of security. If that illusion makes us feel better then it serves it's purpose, but it is still an illusion.

For anyone who has already retired and is thinking that a larger portfolio would help them feel more secure, there is another way of looking at it - you could reduce your expenses and achieve a lower (and thus safer) WR much more quickly. How do you do that? By controlling your desires. Controlling your desires and living well within your means will also have the happy side-effect of curbing that "I'll be happy when......." game that we often play with ourselves.

So kick back and pour yourself a glass of wine or a good beer (if you drink). Relax, count your blessings and enjoy the moment because (in my humble opinion once again) these moments are all we have.

Beautifully said. Both.

 

[Shawn]

Security. Even if something goes even worse than FireCalc predicts, even if some new super expensive medical treatment is invented, even if political turmoil starts boiling over, the more margin of safety the more secure I will feel. At some point I have my number and i FIRE, but even once FIREd I'm happy to see my portfolio grow if it provides a bigger margin of safety. I'm not willing to compromise safety to get a bigger portfolio.

Agreed. More is better than less since the future is not known. Unexpected events can happen at any time.

About a year ago, there was a possibility that my 79 year-old mother would be required to move from her low-cost apartment. My mother lives almost entirely on social security (~$1000/month) and was understandably concerned. Very concerned. While the required move did not materialize, my proposed solution was simple. I would buy my mother a house. I would write her a check for ~$250K and be done with it. Problem solved without any stress or worry on my part. It was a non-issue. My only concern was that my mother would refuse financial help.

I was in a position to buy my mother a house because I have significantly more than I need based on standard metrics. However, I probably would not have been in a position to help if I retired as soon as I reached "my number" 10-15 years ago, or if I had been conservatively invested. Some people call this greed. I call it being prepared. I call it it options and flexibility. I call it security. I call it financial freedom.

Suppose Person A has $2.5M. He retires on $100K/yr based on a 4% WR. While he does not live lavishly, he enjoys a few luxuries such as first class plane tickets on his annual international vacation. He lives in a 3000 sq ft house with a manageable mortgage.

Suppose Person B also has $2.5M. He retires on $25K/yr based on a 1% WR. He enjoys his life and lives comfortably. His vacations consist primarily of camping and backpacking adventures to U.S. national parks, reached by automobile. He lives in a 1200 sq ft house with no mortgage.

I fail to understand why Person B is more greedy than Person A. Does Person B really need to spend an additional $75K/yr on himself for him to be considered less selfish?

 

[NW-Bound]

Suppose Person A has $2.5M. He retires on $100K/yr based on a 4% WR. While he does not live lavishly, he enjoys a few luxuries such as first class plane tickets on his annual international vacation. He lives in a 3000 sq ft house with a manageable mortgage.

Suppose Person B also has $2.5M. He retires on $25K/yr based on a 1% WR. He enjoys his life and lives comfortably. His vacations consist primarily of camping and backpacking adventures to U.S. national parks, reached by automobile. He lives in a 1200 sq ft house with no mortgage.

I fail to understand why Person B is more greedy than Person A. Does Person B really need to spend an additional $75K/yr on himself for him to be considered less selfish?

No, not this person A, who would not call person B greedy, although this person A even has two homes.

Person A likes to take vacation to US national parks in his motorhome and has been doing so, but can use more money to pay for international business-class tickets. He does not think he is greedy either.

If "greed' is thought of as being desirous of more than the basic needs, people in developed countries are all greedy in the eyes of the people dying of hunger in places that I have been trying to help with my donation, which is a drop in the bucket.

 

[Shawn]

No, not this person A, who would not call person B greedy, although this person A even has two homes.

Person A likes to take vacation to US national parks in his motorhome and has been doing so, but can use more money to pay for international business-class tickets. He does not think he is greedy either.

Agreed. I do not believe A or B are greedy, at least based on the limited information provided. Granted, pretty much everyone is greedy at some level and all of us probably should do more to help others. However, I do not believe wanting, pursuing, having, or spending money explicitly makes a person greedy.

 

[NW-Bound]

... I do not believe wanting, pursuing, having, or spending money explicitly makes a person greedy.

+1. That has been my point in all the preceding posts!

People like to judge others according to their own criteria and situation. If someone spends more for a luxury car, then he is wasting money. If a neighbor does not indulge in expensive wine, then he's a cheapskate. If someone has a higher stock AA, then he is a gambler.

People do the above all the time, never realizing that their particular personal preference is not absolute, and the condition that they are in is just one of the many and has no qualifications to be used as a reference point.

 

[aim-high]

+1. That has been my point in all the preceding posts!

People like to judge others according to their own criteria and situation. If someone spends more for a luxury car, then he is wasting money. If a neighbor does not indulge in expensive wine, then he's a cheapskate. If someone has a higher stock AA, then he is a gambler.

People do the above all the time, never realizing that their particular personal preference is not absolute, and the condition that they are in is just one of the many and has no qualifications to be used as a reference point.

You mean anyone driving slower than me is NOT an idiot, and anyone going faster than me is NOT a maniac? Darn!

 

[SteveL]

While we won't all get there, statistics suggest that half the population at age 85 has dementia. What would happen to all our carefully laid plans and SWRs if our SO needed to be in a memory care facility at $60 to $90k per year?

I'm not sure what amount of funds would be needed to support those costs while maintaining the rest of ones lifestyle. I think it would take more than $2.5million.

This is where the definition of rich is important. The truly rich could do this without much thought and wouldn't notice the expense. For a lot of people in the top 10% of household by assets, it could be a struggle.

So, while I am living retired on less than that 4% magic number, I continue to hope my stash will increase.

 

[daylatedollarshort]

While we won't all get there, statistics suggest that half the population at age 85 has dementia. What would happen to all our carefully laid plans and SWRs if our SO needed to be in a memory care facility at $60 to $90k per year?

I'm not sure what amount of funds would be needed to support those costs while maintaining the rest of ones lifestyle. I think it would take more than $2.5million.

This is where the definition of rich is important. The truly rich could do this without much thought and wouldn't notice the expense. For a lot of people in the top 10% of household by assets, it could be a struggle.

So, while I am living retired on less than that 4% magic number, I continue to hope my stash will increase.

I think the odds are that the vast majority of people who enter nursing homes don't stay there for 20 years, plus the Medicaid look back period is 5 years. Before five years you can give away money to your kids and move it to an assortment of the many Medicaid exempt asset classes for the healthy spouse.

From Consumer Reports -

"Studies estimate that 35 percent to 50 percent of 65-year-olds will probably need nursing-home care in the future. The average annual cost for a private room in a nursing home is about $79,935, according to MetLife's 2009 Market Survey of Long-Term Care Costs. The average nursing-home resident moves in at age 83 and stays two to three years."

That makes the average-high cost in today's dollars $80K X 3 = $240K, with Medicaid, or possibly Central America, as a fallback option.

We are also exploring retiring to a country outside the U.S. where the medical and long term care costs aren't so crazy high, so we don't have to worry about them bankrupting us. We have noticed that our relatives in the EU just don't seem to have the same profound, long term money worries as most Americans because of the stronger social support programs for the disabled and the elderly that America lacks.