Has the wealth effect changed your spending?

[Danmar]

I'm not increasing anything based on the current bull, or anything recent.

But once we get close to SS/MC age, and have a good decade of ER behind us... well let's just say if we end up in one of the really good firecalc lines then yes I will definitely increase.

Agree. Pretty much where I am now. 11 years retired age 67.

 

[NW-Bound]

You made me look too. According to Quicken my stash has grown 125% in nominal terms since retirement 12/31/2002 to the close today. Heavens I really do need to do something about this! But I already have a wonderful sound system - maybe I'll really should consider those Utopias after all...

I've upped my spending a fair amount since my NW increased by more than 140% in the last 9 years. Why not? Not a lot, but I do get better grades of food and buy appetizers, and upgrade to balcony on cruises. I could go on and on but upgrading to better stuff really only adds about 25% to the costs and does improve our lives in meaningful ways.

Don't worry, I'll still leave plenty to the kids.

Now, you both make me look back further.

My current stash is 3.1x the value on 12/31/2002, in nominal terms. But I did not draw on it until 2012.

It is 1.9x the value on 12/31/2008, in nominal terms.

My earned income stopped in mid 2012, but I was working part-time since 2000 and and made enough to not draw too much on the savings.

With much of the previous expenses such as college costs gone, I can spend more on myself now, but I do not feel I need anything. When I was working part-time, there was a time we took 2 foreign trips and 2 domestic trips a year. Can't see myself doing that anymore. Getting old.

So, other than upgrading to better airline seats, I do not feel I need or want anything. Again, if my stash doubles once more, maybe I will "throw" some money away. Right now, with 2 homes, an RV, and lots of electronic toys (o'scopes, spectrum analyzers, signal generators, etc...) I have enough to entertain myself with.

PS. I bought the 2nd home in 2005. Paid more for it than for my main home. Its value is now less than that of the main home, as 2nd home market is still very soft. Would have lots more money if I didn't buy it, then spend more on maintenance and operating costs.

See, I took the reward early for the risk of being in stocks. Can't keep on rewarding myself again and again. That makes the market god angry.

 

[Koolau]

My RMD will increase significantly this year because of the "wealth effect" but that doesn't mean I have to spend it all. Back in 10 to 12, I didn't spend the "wealth effect" of my PM windfall. It's all part of the AA and I'm following the plan. At some point, I may up my spending somewhat, but not on the basis of a year or two of windfalls in the stock market or any other part of my AA. YMMV

 

[traineeinvestor]

Changes in our spending post-FIRE have been mostly explainable by factors that have nothing to do with increases in net worth - DD1 starting boarding school overseas as planned (there will be another increase in 2019 when DD2 goes to boarding school as well) and course fees for my return to university are the only significant bumps in expenses. Other than that, it's mostly a case of a little less in some areas and a little more in others.

I'm planning on spending more on travel once I've finished with study and our home mortgage is paid off.

 

[Throwdownmyaceinthehole]

Thanks fot the Perfect Prezzie for my hubby. Ordered it this morning. Just have to figure out how to store it and keep it away from the dog before Christmas. Oops this was supposed to post under the Serrano ham

 

[kcowan]

We have talked about this before, but I forgot the details. Put aside SSI (US) and OAS (Ca) which none of us here would be eligible, here's the US system for non-US citizens to compare....

Not so fast here NW. OAS is means tested but is not clawed back until $75K per year. And it is gradually clawed back until totally gone after $125k or so.

So most retirees get it after 65. Another welfare program, GIS, does get clawed back for most retirees here. CPP is a totally separate COLAd DB Pension, self-funded by mandatory personal contributions, and managed by fund managers. It is not government funded like SS.

If fully-earned, CPP/OAS would generate just over $24k p.a.

 

[MikeD]

What anxiety?

My annuity will be CPP, which I plan to take at 65. It’s index linked, secure and has no fees.

What does CPP stand for? I searched the FAQ but it dinna find it.

Thanks,
Mike D.

Added-On-Edit: Oh, I should have just kept reading. I have found out and no longer need a response.

Mike D.

 

[NW-Bound]

Not so fast here NW. OAS is means tested but is not clawed back until $75K per year. And it is gradually clawed back until totally gone after $125k or so.

So most retirees get it after 65. Another welfare program, GIS, does get clawed back for most retirees here. CPP is a totally separate COLAd DB Pension, self-funded by mandatory personal contributions, and managed by fund managers. It is not government funded like SS.

If fully-earned, CPP/OAS would generate just over $24k p.a.

Thanks for the explanation. OAS is not totally for the indigent as SSI is in the US, as I was mistaken.

Now, is OAS really a "freebie" or funded by a mandatory income tax? If the latter, what is the tax rate, I am curious?

 

[Danmar]

Thanks for the explanation. OAS is not totally for the indigent as SSI is in the US, as I was mistaken.

Now, is OAS really a "freebie" or funded by a mandatory income tax? If the latter, what is the tax rate, I am curious?

OAS is not “funded” but paid out of normal tax revenues. Canadian income taxes are high(also need to fund health care) topping out at 48-53% for regular income over about $200k. Cap gains taxed at half regular income and divs taxed at sliding scale (zero up to about $70k in total income then up to about 31-40% for incomes over about $200k depending on the province). Deemed disposition of capital assets on death with any cap gains taxes owing at that point. No step ups, estate or gift taxes.

Better to be rich in the US but maybe better to be a lot less than rich in Canada methinks.

 

[NW-Bound]

Thanks for the explanation. I guess I could look it up, but was too lazy.

 

[Meadbh]

Apologies for my failure to explain CPP. So many acronyms are tossed about here, and when I am unfamiliar with them, I Google them. Sorry I wasn’t quick to the mark in answering your questions. I was out spending money. Thank you to those who stepped in to explain.

 

[W2R]

Apologies for my failure to explain CPP. So many acronyms are tossed about here, and when I am unfamiliar with them, I Google them. Sorry I wasn’t quick to the mark in answering your questions. I was out spending money. Thank you to those who stepped in to explain.

Hope you found something nice and appealing to you when you were out spending money!

 

[Meadbh]

Hope you found something nice and appealing to you when you were out spending money!

Yes I did, thank you! Groceries $40, wine $15, lunch with friends $25, flu shot.... oh wait, my flu shot was free!

 

[dallas27]

Yes, i have been paying down mortgage instead of putting it all in the 401k. Really just psuedo market timing, i have to admit.

 

[ugeauxgirl]

Yes. I relaxed a bit when we crossed a threshold, and then again when the nw got a little bigger. Not so much that its noticeable, (we haven't bought nicer cars) but the other day, my kids asked me to buy name brand bottled water. Paying for bottled water annoys me to begin with. I was ready to say no, when they explained that flipping water bottles is a "thing" at school, and they can't do it with the cheap water because the bottles bend, plus the caps are short and hard to put back on correctly so they tend to leak in backpacks. I thought about our net worth and said "Sure. Prefer Dasani or Aquafina?" And naturally, being 10 and 13 there was an argument about THAT as well.

On the other hand, I ragged my husband for bringing home Tito's vodka. Ridiculous waste of money. Vodka is supposed to be tasteless, how can you have vodka with improved taste??

 

[kcowan]

So which brand of water bottle won the most? Inquisitive people need to know...

(I always have a bottle of high end vodka for guests who prefer it served on ice or with a dash of water.)

 

[flintnational]

So which brand of water bottle won the most? Inquisitive people need to know...

(I always have a bottle of high end vodka for guests who prefer it served on ice or with a dash of water.)

Years ago I kept a bottle of stoli in the freezer to make dirty martinis. Then I decided i liked dirty martinis a little to much. We don't keep vodka anymore.

 

[Danmar]

Yes I did, thank you! Groceries $40, wine $15, lunch with friends $25, flu shot.... oh wait, my flu shot was free!

Yes, I also got my free flu shot yesterday. More than made up for this “freeness” at wine store though. Our favourite Chardonnay (Rombauer) which we bought last week at Costco in Scottsdale for $29.95 was over $61 in Canmore. Yikes, got something a little cheaper, J Lohr and La Crema.

 

[kcowan]

Yes, I also got my free flu shot yesterday. More than made up for this “freeness” at wine store though. Our favourite Chardonnay (Rombauer) which we bought last week at Costco in Scottsdale for $29.95 was over $61 in Canmore. Yikes, got something a little cheaper, J Lohr and La Crema.

So you paid for a part of your "free" flu shot. Good for you.

(I took a pass on the shot this year and then heard that its effectiveness is in question.)

 

[Meadbh]

So you paid for a part of your "free" flu shot. Good for you.

(I took a pass on the shot this year and then heard that its effectiveness is in question.)

Its effectiveness is always in question. It’s an educated guess which three strains to include the the vaccine, and sometimes there are gotchas. But I will be travelling over the holidays and long flights are one of the most efficient flu transmission environments. I will be using lots of hand sanitizer too.

 

[kcowan]

But I will be travelling over the holidays and long flights are one of the most efficient flu transmission environments. I will be using lots of hand sanitizer too.

Do you use the forced air at your seat? I often wonder if that spreads the germs quicker.

 

[GravitySucks]

It’s effectiveness is always in question. It’s an educated guess which three strains to include the the vaccine, and sometimes there are gotchas. But I will be travelling over the holidays and long flights are one of the most efficient flu transmission environments. I will be using lots of hand sanitizer too.

Just finished jury duty... Small room with 15 other people.
No flu but a darn good cold.

Planning on bumping spending next year as access to my tIRA becomes available, not due to the wealth effect. But since my fixed expenses also go down next year I'll probably stay near the same.

 

[Meadbh]

Do you use the forced air at your seat? I often wonder if that spreads the germs quicker.

I haven’t seen any evidence to support that, but it seems plausible. I do try to avoid using forced air but there are times when it’s just too hot not to.

 

[Walt34]

Do you use the forced air at your seat? I often wonder if that spreads the germs quicker.

While some of the cabin air is recycled the air from the vents also comes from fresh air from outside (after it's been warmed and compressed by the engines). So the vent air would be somewhat diluted. That might help, but not by much.

 

[NW-Bound]

Hope you found something nice and appealing to you when you were out spending money!

Yes I did, thank you! Groceries $40, wine $15, lunch with friends $25, flu shot.... oh wait, my flu shot was free!

We were just back from a grocery errand to "spend money". Found a good deal on lamb short loin, so bought two. My sister-in-law who happened to drop by came along with us to the market, and she bought four. Now, I will have to learn how to cut them into loin chops.

I am all stocked up now, with a leg of lamb and a full rack still in the freezer. I like to cook and to share, but only my son-in-law and the husband of the neighbor couple up in the boonies home eat lamb, so these will last for a bit.

Food is not expensive in the US compared to whatever else, and I can only eat so much. It is reassuring to know that even if the market went down the tube, I should not have to worry about food cost. I do not need more than this to keep myself content. Life is darn good.