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Old 04-09-2017, 08:45 AM   #41
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Haven't started paying for business class international flights yet - some might consider that depriving ourselves.
,

I find myself upgrading to Economy Plus (or whatever the airline calls it) on flights over 4 hours. But, I am tall and the ever decreasing seat pitch is really hard to deal with. A few months ago I bought a 'regular' seat on a 2 hour flight. It would have been OK, but the guy next to me did not fit into his seat very sell so he spread his legs into my area. Then he wanted to move the arm rest up. At that point I politely said 'no'.

FWIW, I use the cash rewards from various credit cards to pay for upgrades in flight and in hotels. I have a separate bank account with Simple Bank where I stash the cash awards. When I travel I use the money to upgrade if possible and I feel the need. I find that works better than trying to use miles/points. Less hassle and they can't devalue my dollars quite as easily as they can miles and points.

Back on topic, I do not save anymore in the sense of having a monthly savings plan as I did when I was working. OTOH, I don't go out of my way to spend money for the sake of spending it. And, I do try to get the best deal I can without going to extremese. For example, I like to get a cheaper airfare, but I won't turn a 8 hour non stop flight into a 20+ hour flight just to save $100.
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Old 04-09-2017, 08:47 AM   #42
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Sort of unrelated, but....

After a certain age (63+), your time left here, even assuming a long life span (90), is reduced each year, in percentage terms, by more than 3% inflation. So you could use a fixed, nominal amount after that.
Using your method, you'd still need to keep track of inflation to be sure it (by chance) happened to be close to your expected longevity. Sometimes inflation exceeds 12%, which only works for someone who is a lot older than 63.

We could set our withdrawal rate every year as the last digit of the barometric pressure at Greenwich at midnight Dec 31st, and that might work out, too. But, likely it would not, just like using the inflation rate.
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Old 04-09-2017, 09:45 AM   #43
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+1. As well as providing cushion against market corrections; if using SWR approach, you can't eat more of your corn just because recent harvests have been plentiful.
I disagree! You will hoard your excess returns and then you will be too infirm to enjoy them.
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This is just a variable withdrawal rate. If 3% of $4M will cover your retirement expenses go ahead and spend any amounts above that if you want.
Exactly. VPW
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+1, us too. We hope to spend less than WR in some/many years first 15 years or so, but actual "savings" were never in our plan.
Our WR has decreased steadily as other income kicked in and the portfolio grew, reaching 1.8% last year with another decrease (God and the S&P willing!) this year.
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We're under-spending our planned withdrawal, so I guess that means we're still saving - retired over 16 years. I let funds accumulate in short-term accounts - it's there to use whenever we want.

We set a budget above our spending level. It's what I call our "generous" budget - but that's mainly for planning purposes. We don't deprive ourselves.

Haven't started paying for business class international flights yet - some might consider that depriving ourselves.
We will not fly to Europe without fully-reclining bed seats. And it will probably get worse if we get arthritis. When we go out to dine, we will not get the cheapest wine but the nicest wine for the price. We no longer "go without" because of the costs.

Life is good and we are enjoying it to the fullest. My Dad lived to be 95 but he had no desire to travel in his last 10 years, even when we invited him. He wanted the comforts of home. Same with MIL who lasted until 93. In the end she would not even let me drive her to our place for Christmas so we had to have a drop-in one on the 26th.
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Old 04-09-2017, 09:52 AM   #44
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My in laws won't travel after 70ish. Live your life while you can.
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Old 04-09-2017, 11:52 AM   #45
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Old 04-09-2017, 01:02 PM   #46
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Originally Posted by walkinwood View Post
Sort of unrelated, but....

After a certain age (63+), your time left here, even assuming a long life span (90), is reduced each year, in percentage terms, by more than 3% inflation. So you could use a fixed, nominal amount after that.


Good observation
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Old 04-09-2017, 01:35 PM   #47
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We Have ben retired 15+ years now, but still find that we are not spending all that our income feeds into our checking account monthly. Rarely a month goes by when I do not hack off a bunch of cash from the checking account and send it to our Ally online savings act. We're looking at a future expense of moving into a CCRC, so that front-end entrance fee will make a pretty good dent in our short-term assets, but that is over a year away. So, we just continue to save the excess cash.
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Old 04-09-2017, 01:52 PM   #48
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The downside of that plan, to me, would be a long retirement period would result in that set number being worth a lot less 30 years from now due to inflation. Allowing it to grow in really good years is part of what lets it cover inflation in the later years.
Agreed. Doing this each and every year is risky IMO.

I think it's ok to splurge once in a while if you see a comfortable cushion building. But to do it on an annual basis blindly seems to be ignoring the inflation/bad market end of things.

We splurge big time on things (two new luxury cars this year and a new kitchen) but only when we can predict future balances getting way out of whack on the positive side.
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Old 04-09-2017, 01:59 PM   #49
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Sort of unrelated, but....

After a certain age (63+), your time left here, even assuming a long life span (90), is reduced each year, in percentage terms, by more than 3% inflation. So you could use a fixed, nominal amount after that.
This is an interesting take but I'm not sure I get the math behind it. (a question not a challenge)

Care to spell it out? Are you saying that due to the short(er) time left ahead inflation doesn't make any difference?
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Old 04-09-2017, 02:20 PM   #50
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+1. As well as providing cushion against market corrections; if using SWR approach, you can't eat more of your corn just because recent harvests have been plentiful
.I disagree! You will hoard your excess returns and then you will be too infirm to enjoy them.
....
I think we actually agree. We will not be using an SWR approach for the reason you cite. BUT, if one needs/wants the stability of SWR, not removing extra in high portfolio years is part of the construct for a reason.
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Old 04-10-2017, 02:07 AM   #51
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Have a similar plan.

Just started a gig that likely will pay the bills and then some. I'm explicitly allocating at least half of excess earnings to 'frivolous' things.

Stuff like: getting a PPL, more travel, silly gadgets, more expensive car, new phone, fun trip with the nieces, attending conferences, ..

All of those are optional, only get done once the money is in the bank account, and reversible. Lifestyle creep is looming ..
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Old 04-10-2017, 02:13 AM   #52
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This is an interesting take but I'm not sure I get the math behind it. (a question not a challenge)

Care to spell it out? Are you saying that due to the short(er) time left ahead inflation doesn't make any difference?
What I believe is meant:
  • 90 years - 63 years = 27 years to go.
  • First year is 1/27th = 3.7% of remaining life
  • Second year is 1/26th = 3.8% of remaining life
  • etc ...
From that perspective you don't need to (fully) keep up with (moderate) inflation, you'll be long dead before it becomes an issue.


Extreme case: at 110 years old you can safely spend >10% and probably more >20% of remaining assets. Unless you are planning on becoming a world record holder. 3% inflation is the least of your worries at that point.


Remembering what year it is probably more so.
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Old 04-10-2017, 04:47 AM   #53
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What I believe is meant:
  • 90 years - 63 years = 27 years to go.
  • First year is 1/27th = 3.7% of remaining life
  • Second year is 1/26th = 3.8% of remaining life
  • etc ...
From that perspective you don't need to (fully) keep up with (moderate) inflation, you'll be long dead before it becomes an issue.


Extreme case: at 110 years old you can safely spend >10% and probably more >20% of remaining assets. Unless you are planning on becoming a world record holder. 3% inflation is the least of your worries at that point.


Remembering what year it is probably more so.
Oh! Got it. Thanks
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Old 04-10-2017, 07:09 AM   #54
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Oh! Got it. Thanks
That's how I read it too - clever and powerfully simple perspective.
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Old 04-10-2017, 07:49 AM   #55
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When I retired in May 2009 at the age of 51, I struggled with what my budget should be. At that time (if you remember) the market had been collapsing. I have a pension plus savings. So I did the following:
1. Bare bones budget: This was based on my pension income, and was one of the factors I used when deciding to FIRE. With it, I determined that I could have a budget that allowed for necessities, but required me to watch my pennies -or- reduce my ongoing costs (I had three vehicles, 2800+ sq ft house, high tax state, ...) But, by having the pension and having done these semi-worse case scenarios, it allowed me to sleep at night even without the J*B income AND allowed me to be moderately aggressive (e.g. 70% equities) and increase my equity % and holdings during the downtown. I also thought I could get by without the pension IF my net worth was about the same as when I retired (i.e. assume a 4% SWR on it based on the date of retirement).
2. I also calculated various other values. For instance, using 4% SWR without counting the pension (i.e. as time goes on the pension would be like an increasing asset base) and also Pension + 2% SWR re-calculated monthly as sort of an upper bound on spending.

Eventually I started working part time and now full time, and those calculations are out the window In addition, Mr market has done quite nicely since 2009 and my net worth has moved up considerably even without that old high paying job. My current philosophy is to try to save (tax deferred) my limit on my teaching job and that every thing else (plus the pension) gets spent.
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Old 04-10-2017, 08:41 AM   #56
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My portfolio has almost doubled since tetirement 10 years ago. Am I still saving? Don't look at it this way but will try to spend/gift more to slow the growth of the portfolio down. Will probably need a fairly large/long correction to actually accomplish this. Good problem to have.
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Old 04-10-2017, 12:19 PM   #57
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I think we actually agree. We will not be using an SWR approach for the reason you cite. BUT, if one needs/wants the stability of SWR, not removing extra in high portfolio years is part of the construct for a reason.
OK you are right. I guess I am arguing for VPW. Instead of one number, how about a higher number for 10 years and then stepping down to match the SWR profile, e.g. Firecalc says 4% so you do 6% for 5 years, 5% for 5 years and then 2% for the remainder. Obviously this gets impacted positvely by SS and Medicare kicking in at later years.
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