Flat spending rate

[DrRoy]

We have taken advantage of the rising market and our sub 3% WR to spend more, much on remodeling the house and travel.

 

[mrfeh]

But do I need to pick a higher withdrawal rate and stick to it no matter what?

Spend money just for the sake of spending money?

 

[explanade]

Spend money just for the sake of spending money?

Spend more than I have been spending, so that there won’t be too much left.

Arguably relative to assets, which have almost doubled in 7 years of ER, I’ve lived way way below means.

 

[mrfeh]

Spend more than I have been spending, so that there won’t be too much left.

Arguably relative to assets, which have almost doubled in 7 years of ER, I’ve lived way way below means.

Perhaps time to open a donor advised fund?

 

[racy]

There are a lot of charities that you could help. And, do it now while you can enjoy the experience. https://tinyurl.com/yfbj2ump

 

[explanade]

I do give, probably could give more.

I limit donations to a couple of organizations and they send me requests for more throughout the year. But fortunately they didn’t sell my contact info to other charities so that I get solicitations from dozens more.

I will increase my giving and look into adding more charities.

 

[bobandsherry]

Look at what makes you happy and spend more on that for additional happiness and content. Seems there's always something creative you can do to enjoy your money. If you don't, someone else surely will at some point.

If you enjoy traveling, splurge on first class seats (much more comfortable), nicer hotel room or cruise cabin. If you have family you enjoy spending time with ask them to travel with you and cover their expenses, especially nice if they can't afford to do on their own. Go somewhere special and memorable.

If you enjoy food, then splurge on the best of those items.

If you enjoy giving, set up a foundation for something that is of special interest to you. You can then make a difference in something that brings you happiness to an otherwise bad situation for others.

If you are already doing the things above then maybe you can underwrite some additional happiness for me. [emoji39][emoji274][emoji41]

 

[RunningBum]

I limit donations to a couple of organizations and they send me requests for more throughout the year. But fortunately they didn’t sell my contact info to other charities so that I get solicitations from dozens more.

In a donor advised fund (DAF) you can give anonymously. I love that feature, I'm sure it keeps me off of a number of lists. The other features to love is that you can get the full tax write-off on appreciated stocks and the charity owes no CGs; and you can commit a large chunk to the DAF for a one-time write-off, and dole it out over many years. The latter is very helpful if you normally take the standard deduction.

 

[H2ODude]

In a donor advised fund (DAF) you can give anonymously. I love that feature, I'm sure it keeps me off of a number of lists. The other features to love is that you can get the full tax write-off on appreciated stocks and the charity owes no CGs; and you can commit a large chunk to the DAF for a one-time write-off, and dole it out over many years. The latter is very helpful if you normally take the standard deduction.

I pumped up our DAF during the last year before the standard deduction was raised. It's getting a bit depleted so I may make a big transfer to it next year and do itemized.

 

[donheff]

I'd hate to be at this particular stage and not have planned for the extra expense of using fishing guides instead of continuing to do it on our own, for example. For us, there is a long list of things like that. We don't want to stop, we just need to buy a little help.

So, Bernicke be damned! On we go!

YMMV

Please share some examples of what types of services you’re paying for now.

I feel the same way Youbet. If you have other examples, please share. There may be ideas I didn't think of that I can steal.

 

[teej1985]

Sounds like you could move to Hawaii if you wanted to!

 

[chassis]

I spoke not long ago with a long-retired relative. He did well during his career and also with investing after retirement. He told me his biggest problem is spending all the money he and his wife have.

I asked him if he was aware of the gift tax exemption. He was not. I shared with him the amount of money he and his wife could give away to family members, annually. He has an above average number of children and grandchildren. He grew quiet after that.

When people talk about low withdrawal rates and wondering what to do with the large portfolio, how many of them proactively start gifting money to heirs or charity, to the maximum extent of the gift tax exemption?

 

[Sunset]

I spoke not long ago with a long-retired relative. He did well during his career and also with investing after retirement. He told me his biggest problem is spending all the money he and his wife have.

I asked him if he was aware of the gift tax exemption. He was not. I shared with him the amount of money he and his wife could give away to family members, annually. He has an above average number of children and grandchildren. He grew quiet after that.

When people talk about low withdrawal rates and wondering what to do with the large portfolio, how many of them proactively start gifting money to heirs or charity, to the maximum extent of the gift tax exemption?

There are various issues with gifting money to relatives, it's not all roses and sunshine.
Sometimes it's good, other times it's not.

Some possible issues are:

• Inspires jealousy in relatives
• Kills motivation to save/earn/succeed in relatives.
• The given money is practically thrown away as "easy come easy go".
• It supports a drug habit
• The giver ends up with long term cancer treatments and needs the money that is gone.
• Relatives view the Giver as an open wallet for the asking.

 

[Sunset]

OP - You made me look, and our spending has also been very consistent for the past 3 yrs.
We are at the 2% rate, so could increase, but it's hard to get past the frugal habits

 

[ncbill]

There are various issues with gifting money to relatives, it's not all roses and sunshine.
Sometimes it's good, other times it's not.

Some possible issues are:

• Inspires jealousy in relatives
• Kills motivation to save/earn/succeed in relatives.
• The given money is practically thrown away as "easy come easy go".
• It supports a drug habit
• The giver ends up with long term cancer treatments and needs the money that is gone.
• Relatives view the Giver as an open wallet for the asking.

Run it through an attorney's office and remain anonymous?

 

[rodi]

Our spending has also been pretty flat with the exception of a lump bump when DH bought a new car. We're running just under 3%. (Excluding kids college bills, which are paid from 529s which I don't include in my 'nestegg' number used for withdrawal rate.)

I don't worry about needing to withdraw more - if I need the money, I'll pull it out...

I suspect, at some point I'll be like youbet and start paying for services that I currently do myself... Housekeeper, gardener (if we don't downsize to a condo), etc. Plus - as I get older, I want more perks in my travel... (minimum premium economy, better airbnb and hotel accommodations). Heck, even camping is being upgraded from tent to beater van. LOL.

Anything we don't spend will be passed onto our boys. And at this point it doesn't look like we'll spend it all.

 

[explanade]

Well maybe pullback or correction in progress.

The "problem" may partially solve itself.

 

[rayvt]

There are various issues with gifting money to relatives, it's not all roses and sunshine.
Sometimes it's good, other times it's not.

Some possible issues are:

• Relatives view the Giver as an open wallet for the asking.

As we found out one year when we didn't send the kids a check on July as we had the previous 3-4 years. DIL called wife and said "Where is it? We have included it in our budget and now we are all messed up because the check didn't come."

Had to hose down my wife after she got off the phone with DIL, to cool her down.

 

[daylatedollarshort]

So far our spending has gone down quite a bit since we retired. We had kids at home then and college expenses. They are employed now and off the payroll. We were pretty time strapped when working, and didn't watch the expenses very closely. Since retiring we have found many ways to live better for less. Some expenses have gone up like our earthquake insurance, but others were much less than we budgeted for like health insurance (ACA), college (tax breaks, financial aid, community college credits, transfer programs, co-op programs, etc.), our mortgage (refinanced twice when rates went down), entertainment (annual passes, free event passes at the library and seat filler memberships) and groceries (mostly just from changing where we shopped and tracking prices better). If I'd known how low we could get our expenses for a better lifestyle, I would have retired another ten years earlier.

 

[tmm99]

[/LIST]
As we found out one year when we didn't send the kids a check on July as we had the previous 3-4 years. DIL called wife and said "Where is it? We have included it in our budget and now we are all messed up because the check didn't come."

Had to hose down my wife after she got off the phone with DIL, to cool her down.

That is hard to swallow. I would probably change my strategy of gifting them after that.

This has nothing to do with relatives or with your situation, but I had a female friend who was receiving a fairly expensive gift for her birthday from her male friend every year (around $300?) They were not dating, but I'm sure the guy wanted to date her. But the gifts she received were usually not something she enjoyed (wrong style, wrong colour, whatever.) After several years, she asked him if he could give her a gift certificate from a particular mall instead. The ticker is, he did. I told her I would have cut her off completely if someone said something like that to me.

 

[tmm99]

There are various issues with gifting money to relatives, it's not all roses and sunshine.
Sometimes it's good, other times it's not.

Some possible issues are:

• Inspires jealousy in relatives
• Kills motivation to save/earn/succeed in relatives.
• The given money is practically thrown away as "easy come easy go".
• It supports a drug habit
• The giver ends up with long term cancer treatments and needs the money that is gone.
• Relatives view the Giver as an open wallet for the asking.

A good list! Gifting needs to be done with care.

 

[tmm99]

I'm coming up on 7 years since FIRE.

My spending rate has been flat. I'm not talking flat percentage, but flat sum.

It's been 6 years for me and my spending rate has been flat (sum-wise) as well despite inflation, except for one year I travelled more. I am planning to increase my spending...

 

[explanade]

One thing about increasing spending is that I haven't done much to optimize for taxes, like the ROTH conversions.

But the only funds I have which would be eligible for ROTH conversion is my 401k, which is 7-9% of my total assets.

So still worth doing? I guess so before I start making RMDs and paying taxes. But wouldn't those conversions cause a tax hit now, as the theory is to do those conversions before you get SS and take RMDs which will increase your taxable income?

 

[Out-to-Lunch]

One thing about increasing spending is that I haven't done much to optimize for taxes, like the ROTH conversions.

But the only funds I have which would be eligible for ROTH conversion is my 401k, which is 7-9% of my total assets.

So still worth doing? I guess so before I start making RMDs and paying taxes. But wouldn't those conversions cause a tax hit now, as the theory is to do those conversions before you get SS and take RMDs which will increase your taxable income?

I don't think the decision depends on the fact that your tax-deferred accounts are a small portion of your assets. I think it only rationally depends on whether the RMDs will bump your effective tax rate up significantly over what it is now.

Having said that, if you have ~100x expenses, I am not sure I would worry too much about optimizing!

 

[RunningBum]

One thing about increasing spending is that I haven't done much to optimize for taxes, like the ROTH conversions.

But the only funds I have which would be eligible for ROTH conversion is my 401k, which is 7-9% of my total assets.

So still worth doing? I guess so before I start making RMDs and paying taxes. But wouldn't those conversions cause a tax hit now, as the theory is to do those conversions before you get SS and take RMDs which will increase your taxable income?

Yes, of course it's a tax hit now to convert now. Is it worth it? Depends on your current tax rate vs. future. Pay those deferred taxes now, or later. Your choice. I would do it, spread over the remaining years until you start SS, assuming your current tax rate is the same or lower than you forecast your future tax rate. You can't spend any of that 401K money until you pay the deferred taxes, either via conversions or withdrawals.