What about Living ABOVE Your Means After FIRE???

[FinanceDude]

What do I mean? Well, I got to thinking about this last week. Pretty much all of us does the LBYM thing on here, so we can FIRE............a no-brainer, right?

Well, for an example, just because I can LIVE on $40,000 doesn't mean I SHOULD HAVE TO when I am FIRED, right?

I mean, if I delay gratification for 30 years so I can save and invest a bunch of money, should I not want to position myself so I can SPEND MORE after FIRE??

What if I want to spend $80,000 a year in retirement, or whatever? I guess I am confused..........a LOT of my clients find when they retire their costs GO UP, because now they have the TIME to do stuff like travel.............

 

[Nords]

I mean, if I delay gratification for 30 years so I can save and invest a bunch of money, should I not want to position myself so I can SPEND MORE after FIRE??

I think that philosophy has a hard time prevailing against the daily grind of commuting & working, plus the mental stress & physical-health impacts. Oh, yeah, and balancing work against family priorities too.

Four years ago I was offered a job after retiring. Yesterday the guy who made that offer reminded me that I could go to work for him whenever I was ready. GS-11 pay scale with Hawaii's 25% cost-of-living supplement means that I've already "wasted" about $300K by not going back to work.

I don't think it's about having enough to live in opulence, it's about affording independence. And that's priceless.

But, Dude, don't let me stop you-- you're the one who has to set the alarm clock!

 

[Telly]

..........a LOT of my clients find when they retire their costs GO UP, because now they have the TIME to do stuff like travel.............

That is interesting... Do you think that many of your clients are LBYM types?

 

[MasterBlaster]

I mean, if I delay gratification for 30 years so I can save and invest a bunch of money, should I not want to position myself so I can SPEND MORE after FIRE??

That's what investment is all about - Delay consumption now so that at some time in the future I can have more.

Only you can find the right mix of work/savings/current versus future consumption.

The question(s) you need to ask yourself is(are)...

Is more consumption down the road worth working more now
Is more consumption down the road worth consuming less now

 

[mickeyd]

What if I want to spend $80,000 a year in retirement, or whatever?

Sure you can. It's your stash. Go for it.

Just don't live too long.

 

[Telly]

I don't think it's about having enough to live in opulence, it's about affording independence. And that's priceless.

Yup!

And the times I think about it the most are on the many many beautiful days when working people think "I wish I could just take off work today and enjoy it".

We are those kind of people out enjoying it!

Full Disclosure: I do not have a Media Room or home theater, nor Plasma TV, 5kW stereo, lawn service, maid, newer cars, expensive club memberships, have not been out of the USA since ER'ing, we have to push our kitchen drawers all the way closed ourselves (they won't auto-close), the only stainless steel in the kitchen is utensils, and I have a nasty but mostly contained habit of scoffing at a lot of the flashy consumer must-haves that our society today thinks they are impoverished without.

 

[Sam]

Well, for an example, just because I can LIVE on $40,000 doesn't mean I SHOULD HAVE TO when I am FIRED, right?
...
What if I want to spend $80,000 a year in retirement, ...

Sounds good to me as long as you are planning 80K expense in retirement as opposed to 40K. How long does it take for one nest egg to double? That's also how much longer you have to work. Funny, heh? Can't have it both ways.

 

[justin]

I think each of us has a different approach. Personally, I get by now on something like $35k/yr for a family of 4. In retirement, still with the family of 4, I expect I'll be needing around $53000ish to live like I want (more traveling, paying our own health insurance, a little more on hobbies/entertainment). A big part of that is the health insurance benefit we get from work that will be paid out of pocket in ER. Also ~$12000 for fun/travel expenses. So we'll be (relatively speaking) living it up in retirement I guess.

For the LBYM types earning $80k take home and living on $40k during accumulation years, it's easier to ramp the spending up to $60k in retirement than it is for a regular joe who spends $75k of their take home and saves the other $5k. The latter guy will have to work WAY longer to be able to increase their spending by 50% up to ~$112.5k.

I think what you are getting at makes sense though. Why should you have to pinch every penny when you retire? Just save enough so you can live how you want. My problem now with full time work and kids is finding time/energy to do anything fun that requires money. An hour of peace and quiet to catch up on some tv or read a book is priceless at this point. If I were to ER today and suddenly have 50+ extra hours of "free time" each week, I might spend more money on fun stuff (Playstation 3, a boat, hours on the go-cart track, plundering some remote Mexican beach of all their corona one ice cold bottle at a time, etc).

 

[tryan]

That's also how much longer you have to work. Funny, heh? Can't have it both ways.

Wellll, it depends more on how your investments have done. If I find that 20 years from now (when SS and pension kick in) my wad has TRIPLED or Quadrupled ... yeah, I'll spend more. But never ABOVE my means ... my means will have improved.

I don't plan on leaving much behind.

 

[Rich_by_the_Bay]

Some of these comments hit home with me. Bottom line: it's always better to delay FIRE if you are looking at the money/lifestyle/security angle. And in that context, the converse is that it's always better to live cheaper, too. So, work forever, then starve to death. Naah.

DW and I are not as wealthy as many here, but could downsize tomorrow to a still-decent townhome and retire the next day. Maybe eat out once a week. Wouldn't have to exactly watch our pennies, but would definitely need to plan and moderate major expenses like vacations, cars, etc. All in all, it doesn't feel too bad to me...

But I think we'd be happier feeling more free to travel, having a slightly nicer home to enjoy and entertain from. Play golf a little more. Not talking lap of luxury, but the type of "rewards" we'd appreciate for our hard work and saving. Maybe worry less about economic trends, help the kids a bit more. Have some margin for bad times. So, I still work hard, make and save money.

My tipping point: mild lilly-gilding (I think I just invented a verb). Then out. I think I'll know it when it's there. Liking my work makes it easy to wait.

 

[Khan]

I can't think of many things I want.

 

[Sam]

I can't think of many things I want.

Need any help?

 

[HFWR]

I can't think of many things I want.

Atleast if I have to pay for them. Now give me a genie in a bottle...

 

[kaudrey]

For me, I just plan on swapping expenses. Right now I have a mortgage but only pay a little for health insurance, and travel a few times a year.

When I FIRE, the mortgage will be paid off, so I'll use that money for more travel and to pay for healthcare (my mortgage is about $22K a year).

 

[Bikerdude]

I don't think it's about having enough to live in opulence, it's about affording independence. And that's priceless.

But, Dude, don't let me stop you-- you're the one who has to set the alarm clock!

I agree! My favorite thing to do in the winter in CT when it's snowing is having my coffee and breakfast and listening to the traffic report.

 

[Sam]

If I find that 20 years from now (when SS and pension kick in) my wad has TRIPLED or Quadrupled ... yeah, I'll spend more.

What if you can wave a wand, and see your wad double, triple right now? No trick, no illusion. The idea is to find a place where your money is worth more. There are several members on this board who are very knowledged and experienced in this field. But that's another thread.

 

[Sheryl]

Well, for an example, just because I can LIVE on $40,000 doesn't mean I SHOULD HAVE TO when I am FIRED, right?

I mean, if I delay gratification for 30 years so I can save and invest a bunch of money, should I not want to position myself so I can SPEND MORE after FIRE??

This makes sense to me, Dude. Right now I'm too busy working to really spend money in a way that would make me happy (travel, entertainment, etc.). So I LBYM almost by default. The whole goal of FIRE for me is to have time to do more, and I know I will need/want more $ for those things, plus the blasted health insurance of course so I've always assumed that I'd be spending MORE after RE.

Just balance it out - don't push so long and so hard that by the time you finally FIRE you don't care about any of those things you thought you would...

 

[bbuzzard]

Currently, I could fire with a 3.5% SWR equal to 1x my current expenses. After careful consideration, DW and I decided to postpone retirement for 5.5 years (when DS starts college) or we reach a 4% SWR of 2x our current expenses, whichever comes first. I expect they will occur roughly the same time (I am not relying solely on market returns as we save about 50% of our income).

We made this decision as we lead a relatively frugal lifestyle at the present time, are young (42), and want to travel and play expensively in retirement. This means we are going to spend more when we retire. We carefully developed a proposed retirement budget and our predicted expense are 2x our current expenses. OTOH, this a definitely a gold-plated budget (3 months travel per year, class A RV, boat, ORV, more expense house, etc), so we could do on a lot less if so desired. No worries about a market downturn.

 

[Sam]

Personally, I get by now on something like $35k/yr for a family of 4.

I know you're in NC. But still, that is impressively low, especially since you're living in a house and carrying a mortgage. Good job, Justin, however you do it.

 

[FinanceDude]

That is interesting... Do you think that many of your clients are LBYM types?

Almost all of them............

 

[FinanceDude]

Sure you can. It's your stash. Go for it.

Just don't live too long.

So if I acquire $2.5 million in real investment assets at FIRE, I can't withdraw $80K a year, or is my understanding of Firecalc too rudimentary??

That has always been the goal..........although I was thinking 6% @ $2million in the late 90's...........

 

[Nords]

I can't think of many things I want.

Yep, that's what I'm after-- more crap valuable possessions to care for...

 

[Cut-Throat]

Yep, that's what I'm after-- more crap valuable possessions to care for...

Don't buy anything that Flies, Floats or needs Feeding (there was another F, but it slipped my mind ) -

Rent it!

 

[Nords]

Don't buy anything that Flies, Floats or needs Feeding (there was another F, but it slipped my mind ) -

Geez, now I find out. That could've accelerated my ER by over a decade!

Say, is there a book or a piece of special equipment I could buy to implement that system at our house? I'll probably need two or three so that we don't have to share or in case one stops working...

 

[2B]

If you want to spend more now and look for a lower rate of expenditure later, use Bernicke or Guyton. If I had the guts to do it, I'd be gone now. I'm still driving for the 4% SWR. It's close but not quite there.