Join Early Retirement Today
View Poll Results: As a retiree, how do you plan for big ticket expenses?
Don't buy them. 10 11.36%
Buy only when my portfolio is booming 8 9.09%
Save up for them by setting aside a portion of my withdrawals 71 80.68%
Multiple Choice Poll. Voters: 88. You may not vote on this poll

Reply
 
Thread Tools Search this Thread Display Modes
Old 08-05-2019, 11:43 AM   #61
Moderator
Aerides's Avatar
 
Join Date: Nov 2015
Posts: 6,408
Quote:
Originally Posted by tophermiller View Post
...For those who said "I just buy something when I need it", my reply is that maybe the better way of asking my question would be "How do you decide if you need to say 'no' to something you want"? You can't always say yes.
There is a point for everyone where "what I can afford" and "what I am willing to spend" will no longer diverge. Then there's always "yes but I'd never pay THAT for one of those even if I can afford it." For example, I don't think I'd ever buy a domestic first class ticket for a flight under 3 hours, unless it was a really spectacular deal, even though it would probably not dent my annual budget to do so once or twice a year.

As mentioned throughout the thread, budgets with plenty of wiggle room allow for normal flexibility - even for a Big Want. Beyond that is a matter of trade offs and choices. Very few decision on big ticket non-necessary things are going to be made in a vacuum.
Aerides is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-05-2019, 12:04 PM   #62
Recycles dryer sheets
 
Join Date: Nov 2010
Location: Henderson
Posts: 87
C. Set aside a certain amount of your SWR to "save up" for them. Just bought a fine new Cadillac for cash. I have more cash than I planned. First, an irresistible offer came for part of the family farm. Then, a few years later, I sold one of my stocks when an acquisition gave me no real choice. My two houses have no mortgages -- paid cash in the first place for one in 2000 and the other a few years ago. My new young husband is much more a spender than I am, but it's a pleasure to indulge him. We can afford his tastes. Now, living and happy, I get to see what he might do with the money when he inherits from me. He is a generation younger than I am, and I'm nearly 80.
Ted_Shepherd is offline   Reply With Quote
Old 08-05-2019, 12:42 PM   #63
Thinks s/he gets paid by the post
GravitySucks's Avatar
 
Join Date: Feb 2014
Location: Syracuse
Posts: 2,743
Quote:
Originally Posted by tophermiller View Post
Thanks for all the replies. I'm glad most of the votes were for "C" and missing option "D" because those are what make sense to me. For those who said "I just buy something when I need it", my reply is that maybe the better way of asking my question would be "How do you decide if you need to say 'no' to something you want"? You can't always say yes.
I have very few wants, quite a few needs this year. Needs get bought when they happen. Don't put off that new roof when the time comes, it will cost you more. Don't wait on having that dead tree fell, it will cost more when it hits the house.
I'm thinking of buying a toy car or truck. That is a straight want, not a need. It will just come out of the unspent travel budget if I do. I trade off for most every want from the travel budget as that's my largest discretionary budget category. So that's what I look at, buy this toy now and cut back on traveling for a few months. I can afford either, but not both.
GravitySucks is online now   Reply With Quote
No Plans
Old 08-09-2019, 04:01 PM   #64
Recycles dryer sheets
 
Join Date: Nov 2010
Location: Crossville
Posts: 144
No Plans

Since we are currently spending only about 2.5% of our assets (if that) I never am concerned about big ticket items. Although we have a truck, an SUV, and two motorcycles, we buy new and try to hold onto vehicles and toys forever. Otherwise we just travel through our timeshare points (4+ months out of the year - we paid them off in cash awhile ago) and we are now also into cruising (cruise lines, that is).

Bottom line - no interest in buying big ticket items. We prefer experiences nowadays over things.
ychuck46 is offline   Reply With Quote
Old 08-09-2019, 04:19 PM   #65
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
imoldernu's Avatar
 
Join Date: Jul 2012
Location: Peru
Posts: 6,337
House and furniture in 2004.

Since then... 1 42" TV, and an Echo Show.

Today, a pkg. of baby back ribs @ Aldi's.
__________________
If you want others to be happy, practice compassion. If you want to be happy, practice compassion.
--Dalai Lama XIV
imoldernu is offline   Reply With Quote
Old 08-09-2019, 04:52 PM   #66
Recycles dryer sheets
 
Join Date: Aug 2013
Location: Pebble Beach & Cocoa Beach
Posts: 179
If the house needs to be fixed, it gets fixed - with the best materials. If the car needs to be replaced, it gets replaces - with a quality new car. If you have the $ to do it that way, it is easy. If you don't have the $ to do it that way, then the questions you ask come into play.
gooddog is online now   Reply With Quote
Big item purchases
Old 08-09-2019, 05:24 PM   #67
Recycles dryer sheets
 
Join Date: Nov 2012
Posts: 101
Big item purchases

D for us. In addition to my annual budget, which shows monthly totals for routine living expenses, I have a 20 year ďbig expendituresĒ budget which sows yearly expenditures for such items as new cars, replacement RV, daughterís wedding, home renovation, major home repairs (roof, replace, air conditioner, etc). I update the big expenditure plan when I develop my annual budget. So far this has worked well.
NC 57 is offline   Reply With Quote
Old 08-09-2019, 05:33 PM   #68
Recycles dryer sheets
 
Join Date: Jul 2018
Location: Carrollton
Posts: 57
I don't have many Wants I can't afford. Most big expenses are needs. Replacement windows, sinks, a/c or other home or auto maintenance, so like $5k-$15k. That's when I look for a 0% interest option that let's me make payments without interest. $20-$50k. I would finance and take small distributions from retirement funds to pay off. To take that much at one time and pay in full would incur high Fed Income Tax for the year.
Elizrogers is offline   Reply With Quote
Old 08-09-2019, 06:22 PM   #69
Thinks s/he gets paid by the post
HI Bill's Avatar
 
Join Date: Dec 2017
Posts: 2,050
Quote:
Originally Posted by sengsational View Post
I'd be seriously considering such a toy now if it weren't for the smack-down I'd get from the tax collector.
I watched a Vanguard broadcast that was talking about people not wanting to pay taxes on capital gains while rebalancing. VG said that you shouldn't mind that...it's the cost of achieving the gains (or something to that effect).

That said, I have a really hard time deciding to pull out $ and pay a large amount of taxes. While I COULD buy a house right after retirement, I've decided to wait a few years (3-5), so that I can harvest LTCGs without paying any taxes from a brokerage account. Pulling out something like $700K over 5 years (30% are LTGSs), and paying no federal taxes....sweet!
__________________
Balance in everything.
HI Bill is offline   Reply With Quote
Old 08-10-2019, 10:35 AM   #70
Thinks s/he gets paid by the post
 
Join Date: Apr 2010
Posts: 3,343
Just took $30K out of the cash balance in our investment accounts.

Not for a large capital purchase. Rather, four or five smaller items, including income tax installments in a short time frame that added up to $30K plus. They can all add up quickly. I think I am sending our dentist to Hawaii this winter.

Back to normal after that....hopefully until the new year.
brett is offline   Reply With Quote
Old 08-15-2019, 11:55 AM   #71
Dryer sheet wannabe
 
Join Date: Jun 2019
Posts: 12
I feel like the decision making process should go something like this:

1. Make some assumptions about future unknowns. e.g. life expectancy, ROI, market volatility, etc.
2. Feed those assumptions into a function that computes probability of success, where success is defined as dying before the money runs out.
3. Never spend a dime if it causes your probability to go below some number you are comfortable with (say, 80%?).

I guess I just defined SWR. I just wish there was a tool that was centered around the Big Ticket spending decision process using this approach. Some "magic 8 ball" that you could ask that would give you the answer in this format. Actually, I've built my own in Excel, but can't say that I trust my own math.
tophermiller is offline   Reply With Quote
Old 08-15-2019, 12:29 PM   #72
Thinks s/he gets paid by the post
HI Bill's Avatar
 
Join Date: Dec 2017
Posts: 2,050
Quote:
Originally Posted by tophermiller View Post
I just wish there was a tool that was centered around the Big Ticket spending decision process using this approach. Some "magic 8 ball" that you could ask that would give you the answer in this format. Actually, I've built my own in Excel, but can't say that I trust my own math.
While not centered around big ticket spending, just re-run FIRECALC with your investments value after the purchase. You have to assume the life expectancy and ROI (or just input your AA), but it will account for market volatility based on past numbers, as well as inflation, and SORs. You can run it for 80% success. It's a bit cumbersome if you want to make multiple large purchases over a number of years, but your starting value after each major purchase will change due to market volatility and withdrawals over years (or now, days), presumably. While there's no tool that is that versatile that I know of, running FIRECALC each time should give you a pretty good idea whether the purchase is likely to bankrupt you.

I have this same dilemma, as I plan to sell a condo, rent for a number of years, purchase another condo, then by age 68 or 69, take a large chunk out to buy a really good house if the market appreciates at the right time. Hope to get a good 10 years or so in the house before selling and downsizing to a condo in an urban core.
__________________
Balance in everything.
HI Bill is offline   Reply With Quote
Old 08-15-2019, 01:58 PM   #73
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 9,800
Quote:
Originally Posted by HNL Bill View Post
While not centered around big ticket spending, just re-run FIRECALC with your investments value after the purchase. You have to assume the life expectancy and ROI (or just input your AA), but it will account for market volatility based on past numbers, as well as inflation, and SORs. You can run it for 80% success. ...
That seems like playing Russian roulette. If you keep running at 80%, eventually you might hit one of those failure scenarios. That's not a plan I'd follow.
RunningBum is offline   Reply With Quote
Old 08-15-2019, 02:13 PM   #74
Thinks s/he gets paid by the post
HI Bill's Avatar
 
Join Date: Dec 2017
Posts: 2,050
Quote:
Originally Posted by RunningBum View Post
That seems like playing Russian roulette. If you keep running at 80%, eventually you might hit one of those failure scenarios. That's not a plan I'd follow.
That's not a plan I'd follow either. I'd use 100%.
__________________
Balance in everything.
HI Bill is offline   Reply With Quote
Old 08-15-2019, 05:42 PM   #75
Recycles dryer sheets
bolt's Avatar
 
Join Date: Jun 2008
Posts: 285
Quote:
Originally Posted by tophermiller View Post
I'm wondering how FIRE folks (those who are retired) think about "big ticket" expenses like new cars, home improvements, and perhaps new RV's (if you're into that lifestyle). i.e. things that cost upwards of $50K and come every 5-10 years. Do you...

A. Deprive yourself of these things for the rest of your life, or
B. Allow them only if your portfolio is beating expectations, or
C. Set aside a certain amount of your SWR to "save up" for them

Putting it another way, is retirement living a constant struggle to stay within budget and say no to anything that doesn't fit?
50k'ish is one not shopping enough for any of your examples.

Besides a SWR should be changed to a VariableWR.
There must be yrs when you need nothing other than your established floor rate of expenses.
IMHO. Good luck!
__________________
It ainít what you donít know that gets you into trouble. Itís what you know for sure that just ainít so.
bolt is offline   Reply With Quote
Old 08-16-2019, 06:59 AM   #76
Full time employment: Posting here.
 
Join Date: Nov 2006
Posts: 969
Buy as needed.

Don't really see a reason to withdraw and then save some of the withdrawal. Unless of course we're talking unspent RMDs. I've got another 10 years until RMD time and even then I imagine I'll spend it all.
PatrickA5 is offline   Reply With Quote
Old 08-16-2019, 07:06 AM   #77
Thinks s/he gets paid by the post
Car-Guy's Avatar
 
Join Date: Aug 2013
Location: Citizen of Texas
Posts: 4,492
Can't vote since none of the options fit. I buy bigger ticket items (e.g. cars) whenever I want and just pay cash, regardless of other considerations. Life is to short (and getting shorter) to wait anymore.
Car-Guy is online now   Reply With Quote
Old 08-16-2019, 07:10 AM   #78
Thinks s/he gets paid by the post
jollystomper's Avatar
 
Join Date: Apr 2012
Posts: 2,973
Quote:
Originally Posted by MichaelB View Post
D. Include this extra spending in the pre-retirement finances calculation.
+1

I estimated (as best as possible) the big ticket items and factored that into my planning.

Also, in the few years before I retired, I spent money on as many big tickets as possible (e.g. new roof) to minimize having to deal with them during retirement.
__________________
FIREd date: June 26, 2018 - wwwwwwhat a rush!
jollystomper is offline   Reply With Quote
Old 08-16-2019, 07:42 AM   #79
Full time employment: Posting here.
 
Join Date: Jun 2014
Posts: 947
D. None of the above, when we bought the new house, I came up with $120k for a down payment and I'll just figure out how to make it up so we don't run out of easily accessed money before 59 1/2. We are still young and have so many options that denying ourselves something at this point seems silly.

My honey will likely take another 6 month consulting gig, a decent reduction in maintenance costs for the next several years as its new construction, and a slight reduction in splurge spending should cover it.

Or I could stop doing the ROTH conversions and the savings with the ACA credit and lower taxes would make up a good portion of it too.

Lots of ways to slice the pie once you are truly FI and the budget already accounts for your needs and wants. I figure 50% needs, 50% wants. Unless there is something catastrophic, not really sure what else I would be spending north of $50k on.

and of course that $120k is already made up in the last 6 months of market gains (well up until this last month).. but easy come/easy go, whether stock market or spending, $50k up/down is so easy to vary in a single month.
karen1972 is offline   Reply With Quote
Old 08-16-2019, 07:57 AM   #80
Thinks s/he gets paid by the post
skipro33's Avatar
 
Join Date: Sep 2011
Location: Placerville
Posts: 1,293
I do not deny myself or DW what ever it is that we desire. The discipline to not desire what we can not afford was developed over a life time of saving and managing a household budget. I don't buy an exotic car, for example, because I do not desire an exotic car. I suppose I could afford one if I did though.

When I do find myself wanting something, I do my homework and find what is the best deal at the time or may wait for a good deal. Right now, I want to upgrade my TV and I want a BIG screen. At minimum 75". I'm eyeing the new LG OLED 77". The technology is very pricey but I really don't care. I do, though, enjoy finding the bargains and rewarding a business that works to get my business by enticing me through pricing, customer service or other means.
skipro33 is offline   Reply With Quote
Reply

Tags
big ticket, spending, swr


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
The big ticket wedding... rayinpenn FIRE and Money 78 10-09-2015 12:19 PM
Negotiating big ticket purchases without creating an enemy Midpack Other topics 11 01-12-2015 02:47 PM
Big Ticket Item after Retiring??? reubenray FIRE and Money 3 01-26-2013 07:58 AM
Big-Spending Boomers RonBoyd FIRE and Money 47 11-18-2010 10:43 PM
2008 Actual Spending and 2009 Budgeted Spending dex FIRE and Money 122 03-17-2009 02:49 PM

» Quick Links

 
All times are GMT -6. The time now is 04:33 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.