Planning to spend more in the go go years?

[DawgMan]

I caught this Kiplinger article this am on my news feed, https://www.kiplinger.com/article/r...s-go-ahead-and-spend-more-in-go-go-years.html. Intellectually, I subscribe to this philosophy, however, I wonder as a practical matter if I would have the kahunas to really implement a strategy accordingly. It seems as though most here implement a much more more conservative strategy by targeting a WR in the 3% - 4% range based on initial projected expenses as opposed to say a planned more aggressive WR of 5% for the "go go years" and then say 3% for the "slow go years" and then perhaps 2% for the "won't go years" (i.e. only). Understandably, potential medical/long term care costs could make the "won't go years" more expensive, but in my experience from taking care of parents when they were ill prior to passing, just about all the other costs are negated if they fall into this high medical needs state. Anyways, I am just curious if any of you have intentionally planned a WR strategy this way. I suspect my conservative nature may take over and I will default to what most of you all do, but it does beg the question are we perhaps A) leaving too much money on the table, or B) is our conservative nature perhaps holding us back from spending on some bucket list items in the go go years in fear of the future unknowns? Just something to kick around.

 

[USGrant1962]

Yes, at least that is my plan.

In my FIRECalc model I have an "off chart spending reduction" of ~12.5% at age 75 and another ~12.5% at 85. This is with a ~4% withdrawal to start, though I am well over 100% success so those reductions are not absolutely necessary. I'm not jacking up my go go spending to 5% or 6%, though per FIRECalc I could go to 4.5% at 100% historical success.

 

[bingybear]

That was our plan. However, we are now caring for an aging parent with Parkinson's and Alzheimer's. That has taken much of our time. So our go-go years are more like living in the groundhog day movie. We actually spend less than the normal plan. Hope we can go go when the time comes.

 

[footenote]

We (61/68 yo) will likely spend about 5% / yr for the next five years and about 2% / yr thereafter. This is not a "go-go years" choice, but a smoothing of spending pre- and post FRA SS for me at 66.5.

(5% WR is 1% less than every calculator generates as a safe initial withdrawal percent. And, yes, even with 99% historical success and "Leave $200k in the portfolio at all times," it makes me a bit nervous!)

 

[marko]

With the exception of those who simply hated their jobs, isn't that the point of ER? To have time to do stuff before we get too old?

We're at about 5% WR now with an expectation of it ramping down to ~3% in about 5-8 years.

I'll repeat something I've posted here a few times: An older man I met once told me: "You're 60? Just remember that even if you live to be 90, you only have 15 good years left--18 at best before you get sick, frail or just don't want to do all that good stuff anymore. Then you just want to stay home and read a book or watch TV" I'm 67 now. In 8 years I'll be 75 and happy to just still be here.

 

[joeea]

Anyways, I am just curious if any of you have intentionally planned a WR strategy this way. I suspect my conservative nature may take over and I will default to what most of you all do, but it does beg the question are we perhaps A) leaving too much money on the table, or B) is our conservative nature perhaps holding us back from spending on some bucket list items in the go go years in fear of the future unknowns?

I'm just planning to spend what we feel supports our lifestyle.

I'm not trying to spend more now just because we have more to spend. And I'm not worried about theoretical go-go and no-go ages.

When I was a lot younger I imagined being old and decrepit once I was in my 60s. Now that I'm in my 60s, I think I'm wiser and not trying to predict an age when decrepitude theoretically kicks in.

Perhaps it helps when I see the folks in their 70s, 80s, and even a few 90s around us doing wonderful non-decrepit things like travel, volunteering, hiking, surfing, golfing, etc.

I'm also not at all worried about "leaving too much money on the table". I believe in enjoying life at every age - young and old. And we spend what it takes to provide that enjoyment. If that means we have a lot left over when we pass, it won't be sad at all. We'll have lived a wonderful life.

 

[RunningBum]

I don't, because I don't feel like I'm depriving myself of anything. I don't want to blow dough on frivolous stuff and then be worried about my utility bills when I'm 90 and have to wrap myself in blankets to stay warm.

If there were extra things I wanted to do now, I might spend extra and play the odds that my expenses will be lower when I'm older. I guess I'd look closer at my spending budget and toss out vacation expenses and see where that gets me spending that money earlier. I have friends still going on nice trips in their 80s though. And they tend to spend more on guided trips, whereas right now I travel on my own. So I'm not at all convinced that at 75 my vacations are over.

I'm also wondering if I might rather have live-in help or at least someone coming by daily to help with things rather than moving into assisted living. Totally undecided, but that could mean expenses don't drop after all.

 

[bobandsherry]

We (61/68 yo) will likely spend about 5% / yr for the next five years and about 2% / yr thereafter. This is not a "go-go years" choice, but a smoothing of spending pre- and post FRA SS for me at 66.5.

I took a similar approach with very similar WR as I moved all in to ER. FireCalc and other calculater tools all pointed to 100% success.

I though stick to WR rate that was based on my original balances as I went into ER. Now in 4th year of ER and liquid investments more than 25% higher than my pre-ER balances. So my liquid assets are higher and as a result my WR is actually lower than planned. I'll be paying for daughter's wedding this year so WR taking a 1%+ hit this year, but this expense has long been planned and money set aside for this purpose.

 

[marko]

Last year I did a "personal deflation" count to see how our withdrawals would change in the next 10 years. It turns out to be about a 30% reduction from what we are withdrawing now.

It included DW's SS, DW going on Medicare (together a $40K reduction from withdrawals), an increase of income via an inheritance and downsizing our boat situation.

 

[athena53]

If there were extra things I wanted to do now, I might spend extra and play the odds that my expenses will be lower when I'm older. I guess I'd look closer at my spending budget and toss out vacation expenses and see where that gets me spending that money earlier. I have friends still going on nice trips in their 80s though. And they tend to spend more on guided trips, whereas right now I travel on my own. So I'm not at all convinced that at 75 my vacations are over.

This is my philosophy, too. I do NOT want to be old and poor; money can mean the difference between a comfortable Assisted Living or LTC facility and being at the mercy of whatever the taxpayers provide, or burning out family members trying to care for me.

I'm keeping my W/D rate consistent at around 3.5% and it's enough to fund some serious travel and support charities important to me in addition to paying basic expenses. That withdrawal rate could go down at age 70 when I change to collecting SS on my own record (currently getting Survivor benefits). It depends on the tax situation with RMDs at that point.

 

[Dtail]

We (61/68 yo) will likely spend about 5% / yr for the next five years and about 2% / yr thereafter. This is not a "go-go years" choice, but a smoothing of spending pre- and post FRA SS for me at 66.5.

(5% WR is 1% less than every calculator generates as a safe initial withdrawal percent. And, yes, even with 99% historical success and "Leave $200k in the portfolio at all times," it makes me a bit nervous!)

Bolded by me Conceptually this is similar for us. I would love to go to 4%+ now, but at 3% now then in 2 years go close to 5% (but only due to a drop in other income, not due to spending more) for around 8 years then drop to ~2.25% at 70 y.o.
That's the plan for now.

 

[Bir48die]

I will say we have pushed our WR to high 4's the last couple of years. This is mainly due to a couple home projects and traveling (plus a son needing a loan). This year I felt I was getting it down a bit and then a call comes from my sister to meet in Scotland and the travel budget just blew up.

Being the paranoid individual that I am I hate getting out of my spending parameters. This was to me once in a lifetime and my DW agrees that this is the time to enjoy the fruits of our labor. At nearly 64 years old I still have SS waiting in the wings. We both agree that as the market makes it's corrections we will adjust our spending and either travel to warm U.S. locations or hang in Mexico where it's just too cheap to pass up.

 

[Teacher Terry]

In the past 6 years we have traveled more trying to take advantage of our good years.

 

[Bamaman]

We've seen so many people work to full retirement age only to retire and come up with some terminal disease or debilitating condition where mobility and lifestyle is limited.

We long ago prepared for our ER, and lived frugally enough--other than extensive travel.

You've got to grab all the gusto while the gettin's good because none of us know how long we have on this earth.

 

[marko]

All these posts so far point to the Bernicke model as being worthy of consideration.

I do know my 90 y.o. mom, while very alert and physically able for her age doesn't spend half of what she used to spend. For her a good day is spending the day alternately reading and napping followed by dinner out with a martini (but now only two, not three as she can't handle them like she used to)

 

[Corporateburnout]

We're averaging a little over 5% WR since I retired 5 years ago. We've been traveling and enjoying our go go years as we planned. In a couple of years we will drop to around 3.5% when SS for both of us comes online. We expect the WR to go even lower when we slow down and get tired of traveling.

I agree that there's no need to spend more if you can support your lifestyle with a lower WR.

 

[kgtest]

Yepp, I sort of take it "decade by decade" in our SWR plan. Of course each decade yields new income streams, so in reality, SWR naturally climbs later into our 70s but on paper looks like it stays the same.

50s to 60s, GREAT QoL 5% SWR (Taxable + Cash)
60s to 70s GOOD QoL 4% SWR (Pension + 401k)
70s to 80s ~4% SWR QoL same as prior decade (SS and pension are in full effect.) with potential xxMM inheritance.

Large expenses will be....College for kids, Wedding help for kids, down payment or home help for kids...LTC for us as we age.

Not much left for LTC by the time we get through the kids ... but $1mil ought to cover it. Prob most than most in there 80s.

I don't need to plan much beyond 80, but likely in 70s we inherit millions. Not planning on it but if that is the case, we will have both an income and tax problem.

All of this planning assumes we need to spend equivalent of current COL adjusted for inflation. In reality, without having to pay Mortgage, daycare, FICA taxes, and lower tax bracket...leaves room for some roth conversions and unplanned expense.

3 legged stool calls for Taxable+Cash+RentalIncome, possible Early withdraw of 401k at 55 if plan still allows.


After years of studying advice of this forum, I am confident my biggest risk is from age 50 to 56 years old (SORR), followed by the risk of death which we all eventually face. That concludes that between 50 and 75 should be the best quarter of my life financially assuming I am so lucky/unlucky to live to 100.

 

[ckelly78z]

I may not be planning that way, but in reality, I will spend more per year in my 65-75 year old range, than I will from my 75-85 year old range, with no guarantees of exceeding that age with my current health issues.

We like to camp/hike/bike, and cannot foresee us doing this much past 75, and on top of that, we are the only beneficiaries to our parents estates, so that should help at some point.

 

[kcowan]

An older man I met once told me: "You're 60? Just remember that even if you live to be 90, you only have 15 good years left--18 at best before you get sick, frail or just don't want to do all that good stuff anymore.

In my case, I can no longer tolerate economy flights. I have to pay for business class. I don't rent fourth floor walkups in Europe anymore. If it is more than one floor up, it needs an elevator. I can no longer tolerate the cheapest rental cars. need the space and comfort of an intermediate. Our last substantial biking trip was a bike and barge on the Moselle.

Luckily for us, the markets have cooperated in the 17 years since 60, so we are still LBYM. I know some older people and some have slowed, primarily because of health-related issues like hips and knees.

 

[Dtail]

All these posts so far point to the Bernicke model as being worthy of consideration.

I do know my 90 y.o. mom, while very alert and physically able for her age doesn't spend half of what she used to spend. For her a good day is spending the day alternately reading and napping followed by dinner out with a martini (but now only two, not three as she can't handle them like she used to)

The Bernicke model is theoretically interesting, but would anyone retiring at 60+ y.o. actually consider spending even the 100% success WR% Bernicke model calculated by Firecalc?
Additionally, the big caveat could be the potential LTC costs later on.

 

[Teacher Terry]

My friends that died in mid 60’s said they were glad they traveled during their younger years.

 

[enjoyinglife102]

I'm firmly in the camp of taking advantage of the good health years (early 60's now). Hopefully that's a long time but since so much of what's discussed here is based on probabilities and best estimates, the odds are not in one's favor as the years pass by. It's not in my DNA to spend frivolously but I'll definitely stretch the budget at this stage of my life for something I value.

 

[Moemg]

I am so glad I traveled a lot in my 40,50 and 60's . At some point travel losses it's luster so do it while you can or want to .

 

[DawgMan]

Ok, since I sparked this dialog, I will ratchet it up a little and ask where your indulgences are, more specifically where you know there was no way in hell you would have indulged yourself before due to that frugal gene we all have. It will be relative and could be as simple as flying first class. I will start with a recent experience... I have always been a "buy a 2 - 3 yr old used car guy" to minimize the depreciation hit. None the less, I like cars and have justified buying some nicer cars accordingly (currently own a 2015 BMW 650 Grand Coupe I bought 3+ yrs ago... love it!). Nice cars are probably my biggest vice, yet I live significantly below my means. So fast forward to this past 7 days... I am in the BMW dealership shopping for a car for my wife (new X5) with plans to indulge myself in this $80K car. My frugal nature says "don't do it dumb ass!" but my "hey, you deserve this and can easily afford this" side say just do it if you really want it. I will ratchet it up 1 more level... saw the new M850 Coup on the showroom... absolutely beautiful. $125K... I actually thought about it for a minute...

Ok, so where are you just saying WTF, let;'s do it/buy it?!

 

[RunningBum]

http://www.early-retirement.org/forums/f29/blow-that-dough-2018-a-90646.html
http://www.early-retirement.org/forums/f29/blow-that-dough-2019-a-95591.html