Opposite of Spendthrift--Not Knowing SWR

[Throwdownmyaceinthehole]

Or he could be like me. After being frugal for so long, we have the funds to spend. I just booked a trip where I thought we would be camping. Hub said no to that and wanted me to book higher end lodging. I just booked a few places at $275-$350 a night. I then had to go lay down with a pillow over my head. Spending gives me anxiety attacks. I am a money hoarder....

 

[gayl]

Yes, Sunset, going from a saver to a spender is hard. Baby steps (Ukraine next spring, Japan next week, only saving $1000 this month -- getting better )

My decision to NOT go on a river cruise came from them trying to convince me that all shore excursions are covered and all 180+ do it all together (limited options). Of course I could view it like just lodging but then I'd have a hard time justifying the $12k vs $2k, says this money hoarder

OTOH: if OP just discussing how people are unaware of what SWR actually is then he has a point.

 

[kcowan]

On our European trip, we have been consciously spending more, like ordering the most expensive wine by the glass and staying more upscale (like The Imperial Palace in Annecy).

I must admit that it is not natural but we are liking the results so far. OTOH we decided that the cost of laundry in the hotel was more than we could handle. And we have enough clothes to get to our apartment in Nice.

 

[Sunset]

Or he could be like me. After being frugal for so long, we have the funds to spend. I just booked a trip where I thought we would be camping. Hub said no to that and wanted me to book higher end lodging. I just booked a few places at $275-$350 a night. I then had to go lay down with a pillow over my head. Spending gives me anxiety attacks. I am a money hoarder....

Wow, what a jump from camping... When faced with hotel costs that were not even this high, I checked out Airbnb and found you can easily find renting an entire apt/house for $100/night.
Just like looking at a hotel, one has to read all the reviews, and pick the best place (lots of 4.8 stars or higher, and lots of reviews (~ 60+).

So I guess I'm a money hoarder as well

 

[Teacher Terry]

If you really feel your friend does not understand he could withdraw 3% and still have a ton of $ no problem explaining it but then I would drop the subject. We are spending more in retirement on eating out, entertainment, travel etc because now we have the time and energy. Also with losing 3 friends from 59-67 we are going to do what we want while we can. Time is finite and we want to have fun.

 

[kcowan]

A day or so ago we were over at DW's daughter's......an electrical sensor/component on their stove packed it in.....replacement cost for the part $500 Cdn.

I doubt that our basic, bought on sale a couple years ago, stove cost $500, and yet it does everything we require it to do and is far less likely to break down.

Spend more? Why?

I think stoves have become the biggest "hanger queens" in many modern homes. Electronic gadget filled oven to reheat pizza! Yet all the young-uns seem to demand them. Maybe to impress their peers?

 

[braumeister]

I think stoves have become the biggest "hanger queens" in many modern homes. Electronic gadget filled oven to reheat pizza! Yet all the young-uns seem to demand them. Maybe to impress their peers?

For many people, the kitchen is the central focus of the house, and all the other rooms are merely ancillary additions.

Think about it: whenever you go to a casual party at someone's home, where does everyone tend to congregate?

 

[pb4uski]

Exactly... I usually have to prompt people to " let's go sit on the deck" or "let's go sit in the living area" to get them out of standing around the kithen island.

 

[Luck_Club]

All his spending money is with his pensions and SS.

I think that he feels his nest egg is there for security, and it's best for it to remain untouched. But by him knowing SWR, he could easily take out 3% of that egg and it would still last him most likely infinitum and still grow.

Could your hang up be that he isn't spending as much as you are, or does he appear cheap for his assets?

Many in my family have a hard time spending, and live on less than their pensions and social security. It is funny to watch these relatives who have plenty of money wear tattered clothes, when they have brand new ones un-opened in the drawer, they are saving.

It must be genetic because my own retirement budget forecast, that takes me from present day to 2032, I have a net positive number which is growing as new cash flows come on line, and obligations go off line.

 

[daylatedollarshort]

Our planned WR is .5%, once SS kicks in combined with pensions and a little hobby income, less if we downsize. We can live pretty well on that so why spend more. I find it kind of fun to try to figure out how to live high on the hog without spending a lot of money.

 

[pb4uski]

....Many in my family have a hard time spending, and live on less than their pensions and social security. It is funny to watch these relatives who have plenty of money wear tattered clothes, when they have brand new ones un-opened in the drawer, they are saving....

Is that you cousin Joe?

My grandmother was like that a very small pension and SS and still saved.... when she went into a nursing home and we took down her apartment we found all sorts of very nice new clothes that had never been used... ended up giving them away. Her daughter (my aunt) is not far behind... despite a multi-million portfolio... lives in jeans and t-shirts (which by concidence is what I am wearing as I type this but I am just hanging around the house... will change into nicer clothes to go out to dinner tonight).

 

[JDARNELL]

Could your hang up be that he isn't spending as much as you are, or does he appear cheap for his assets?

Many in my family have a hard time spending, and live on less than their pensions and social security. It is funny to watch these relatives who have plenty of money wear tattered clothes, when they have brand new ones un-opened in the drawer, they are saving.

It must be genetic because my own retirement budget forecast, that takes me from present day to 2032, I have a net positive number which is growing as new cash flows come on line, and obligations go off line.

What is the first reinforcements in 1/20 in your tag line?

 

[Luck_Club]

First Reinforcement

What is the first reinforcements in 1/20 in your tag line?

Short Story:
I have an annuity that starts paying out a fixed monthly amount for 5 years.

Long Story:
I had a company steal commissions from me over a 10 year period and this is the settlement payment.

 

[Luck_Club]

Is that you cousin Joe?

.

missing the reference

This guy?
https://vimeo.com/90602317

 

[Elbata]

I don't know this but I would guess that he worked hard in order to accumulate $3MM. Sounds to me like he has earned the right to spend it or not, as HE wishes. Not as YOU wish.

Is it some sort of sin or crime to spend less than the absolute maximum possible one can spend without running out of money? Is that what our consumerist culture has decreed? Yikes.

OP here: Honestly, and I mean this sincerely and want to make perfectly clear: I don't consider my friend a sinner for not delving into his nest egg. And, heaven forbid, I don't think this makes him a criminal.

I'm very sorry if this is what I implied to you via my post.

It could be simple like Occam's razor, in that nothing is being implied, and as Gayl sums it up:

OTOH: if OP just discussing how people are unaware of what SWR actually is then he has a point.

 

[Sunset]

Exactly... I usually have to prompt people to " let's go sit on the deck" or "let's go sit in the living area" to get them out of standing around the kithen island.

Just hand out dish towels and they will scatter

 

[Sunset]

....
Many in my family have a hard time spending, and live on less than their pensions and social security. It is funny to watch these relatives who have plenty of money wear tattered clothes, when they have brand new ones un-opened in the drawer, they are saving.

....

hmmm, have you been looking in my sock drawer ?
I have a few dozen unopened socks in packages, waiting for when my current old socks get 2 holes in them (top and bottom) .

DW bugs me about it, especially as if we visit someone and I take off my shoes

I also have 30 year old t-shirts that I wear.

You are making me think I should be more harsh and throw out the shirt when they get holes, or the collar wears out from rubbing on my neck.

I guess "Waste not Want not" was really drilled into me.

 

[Nemo2]

I also have 30 year old t-shirts that I wear.

Mine aren't quite that old, but I've likely got 15-20 that I've never worn......put the same ones on time after time, and regularly say about the new ones "I really should start wearing some of these".

 

[ERD50]

OP here: Honestly, and I mean this sincerely and want to make perfectly clear: I don't consider my friend a sinner for not delving into his nest egg. And, heaven forbid, I don't think this makes him a criminal.

I'm very sorry if this is what I implied to you via my post.

It could be simple like Occam's razor, in that nothing is being implied, and as Gayl sums it up:

OTOH: if OP just discussing how people are unaware of what SWR actually is then he has a point.

But if he is happy living off his pensions/SS, why should he concern himself with WR/SWR?

I would not assume he is clueless in this regard, he just has no reason to actively think about it. Maybe he figures it is a back up plan, or to leave to heirs or charity, or maybe fund comfortable care in old age.

It's a little bit like if I have a full tank of gas, and am making some short errands, I don't concern myself with thinking about where the gas stations are. It doesn't mean I don't understand the concept of needing to fill the tank, I just don't need to concern myself with it at this time.

-ERD50

 

[Luck_Club]

Toss the old stuff

hmmm, have you been looking in my sock drawer ?
I have a few dozen unopened socks in packages, waiting for when my current old socks get 2 holes in them (top and bottom) .

DW bugs me about it, especially as if we visit someone and I take off my shoes

I also have 30 year old t-shirts that I wear.

You are making me think I should be more harsh and throw out the shirt when they get holes, or the collar wears out from rubbing on my neck.

I guess "Waste not Want not" was really drilled into me.

Seriously, use the new ones.

My Uncle had a massive stroke, and I'm the designated care coordinator (responsible one). Anyways while getting clothes to take him in the rehab center, I came across dozens of unopened clothes. T shirts, Underwear, Socks. The reality is he will never be able to use any of them again, which is sad but true.

So march into your sock drawer and throw out all those old socks 1 one hole and failed elastic and wear the new ones, you've earned it and you never know.

 

[DrRoy]

My pension is very modest, and I'm too young for SS, so we are spending from the investments. However, even though we are spending more than we did when I was working, we are only at a 1.4% WR. I am working on ramping up the spending beyond my former comfort zone for better travel and other things. We are going to replace a car, and I agreed for DW to get $1300 worth of extra goodies that I really did not think we needed, but she wanted. Today she said she wants us to get a new computer for Christmas to ourselves. Again, I do not think we need it, but with the market hitting record highs, it is hard to argue that we can't afford it.

 

[gayl]

I know I'm a money hoarder who also saves peace & Morgan dollars. But this thread brings up a really important topic. Many people don't know what an SWR is. 2 prong problem: (1) recognizing that the max SWR is (IMHO) between 3-3.5% (2) a mind set shift from a saver to a Spender

 

[Car-Guy]

I know I'm a money hoarder who also saves peace & Morgan dollars.

I remember back in the early 60's as a young boy, I could still get silver dollars at the bank for a paper dollar bills. (hey, paper money were actually silver certificates back then) Pretty sure all I could get in those days was Peace dollars but I may have got a few Morgans. I can also remember getting some Franklin and Walking Liberty half's, Mercury dimes and an occasional Buffalo nickel in regular change back in those days too. That actually started my interest in coin collecting that has turned into a lifelong hobby.

 

[Yarnstormer]

What is currently considered a "safe" withdrawal rate? Is there a formula?

 

[pb4uski]

Yes... live on 4% of your beginning of year balance and you are guaranteed to never run out of money.