Had an epiphany... I may have over saved

[athena53]

Don't forget the scary scenario of one spouse in LTC and the other in the home. My mother died 4 years ago but Dad is in LTC and it's costing $9,000/month in SC. He has the resources, thank God.

I overshot, too, especially since I'm widowed at this point with no plans to remarry. While I'm stashing money in the grandkids' 529 accounts and giving more to charity these days because I'm not spending it on travel, my net worth has gone up over 3%/year AFTER withdrawals since my retirement in 2014 and I'd like to keep it growing. DS is my only child and he and DDIL live modestly and would probably donate a lot of the money if I started gifting to them. I gave them $10K when they bought a bigger house, at DS' request, but that's the only time they ever asked. He'd done a good job of running the number sand figured that amount would make the total monthly payment about the same as it was in the smaller house. (Property taxes were lower in the new location.)

I see way too many retirement-related posts on FB with responses from seniors who are struggling and can't afford dental care or ended up with hefty penalties on Medicare B because they tried to save money by not enrolling when eligible, or widows dealing with the shock of the 1/3 decrease in household SS income after DH died. Three months ago my car died after "only" 134,000 miles and I grumbled and bought a 2020 model-something I never thought I'd do. I wrote a check for it and I'm still under my target withdrawal for the year.

Better to be conservative.

 

[finnski1]

Same story here....I only have one big thing I would change. I wish we had done one extravagant vacation trip when my kids were young. We always went on a fun summer trip, but they were very modest and in hindsight we could have splurged a bit.

It's easy to look back on decisions like that.
I believe that most people on this site have had similar feelings but I like to believe that most of us are just naturally savers and wired that way.
Much better to wish you had spent a little more than the other way around like most of the US population.
Even when the DW and I were just starting out we were probably saving 25% of our gross income and by the time we retired it was more like 70%.
We never felt like we wanted for anything more and still don't. We have a nice house, bought many new but practical vehicles, take trips we enjoy etc but have grown accustomed to our lifestyle and our extremely content.
My idea of a good day this time of year(in the foliage of New England) is to get up early make a pot of coffee, put on the classical music station and just stare at the mountain and foliage out our windows with no neighbors in sight. Oh and of course to ramble on here
Oh and of course you can still enjoy your kids and grand kids if you have any. You can still take them on that extravagant vacation someday. Don't overlook that as my wife and I were never able to have kids and don't have that gift.

 

[Toocold]

Understandable. Even the 4% rule is conservative by nature.

In my situation, I cover my annual expenses 4x over "just in case" 1x through real estate, 1x through investment portfolio, 1x through deferred compensation. Finally I have a small pension and "retirement accounts". I'm fairly certain I am over-saving.

Perhaps when I hit my 50s, I'll buy a lambo.... probably not.

 

[HadEnuff]

Congrats OP! Better too much than not enough, eh? I think I have more than I'll need, but I'll know better in about 5 years I guess. But I'm 67, so my time horizon is shorter, although I am still in denial about some aspects of that.

 

[Closet_Gamer]

Yep, I did the same thing while "working" and saving, just plugged everything into a conservative forecast, assuming SS would not be there, assuming my fat spend would grow until I croak, assuming I pay income taxes on 100% my withdrawals. While I am still earning income, I started looking/modeling my investments/assets "as if" I was fully retired at the end of last year...

LOL. You just described me perfectly.

 

[gerntz]

It's easy to not spend much in the current state of the country.

 

[athena53]

It's easy to look back on decisions like that.
I believe that most people on this site have had similar feelings but I like to believe that most of us are just naturally savers and wired that way.
Much better to wish you had spent a little more than the other way around like most of the US population.

I agree. Dad once said he wished he'd sent us to Ivy League schools (assuming we could get in!) instead of just telling us they'd pay for state universities. We all did very well with state universities. I'm glad Dad has the resources now to get the care he needs.

 

[Christine]

Congrats, DawgMan - not the worst problem to have.

For me things have grown much more than I expected after retirement. So a similar situation to be in.

DW and I have started to have discussions about being strategic in gifting to kids at certain times/reasons, but want to avoid the kids "expecting" any annual gifts... natural tendency could lead to entitlement.

This is what I've been thinking about too. I have no kids but my siblings have. And the kids are different. Some already save and invest what they have and others always end up using more than they have.

I want to be fair in that they should all get the same from me. But how to avoid to be expected to give? And possible disappointments/resentments from that?

And I definitely want to avoid gifts from me making some kids blowing in all on holidays instead of gong to school.

Don't have all the answers yet for sure.

 

[splitwdw]

We are still working at jobs we enjoy and plan to work a few more years. We hit our number this year for both of us to retire. I don't have a crystal ball so don't know what the future holds so I can't say we over saved. Do you know if you will need long term care, will a child or family member need financial aid. What is wrong with leaving a legacy to your family or a charity?

 

[Badger]

How will most people know without an accurate crystal ball until just before they "kick the bucket"?
What may appear to be a safe bet with both suspenders and a belt holding up your financial pants may not be how it works out as things change in the future.
I think I have it covered unless the all the Wall Street computers crash, banks fold, cash goes the way of Confederate money, and SS, Medicare, and Tricare implode but you never know. You can only give it your best bet. Hope for the best and prepare for the worst.



Cheers!

 

[RetMD21]

We were eager to achieve fire and avoided most lifestyle creep. I liked some aspects of the work and it was hard to turn down the money so I stayed on for 2 decades post lean fire. This resulted in having the "problem" that many of you have. Also my perspective has changed now that my chance of survival at 30 years is clearly much less than the chance of portfolio survival for that duration. We have simple testes and our plans to spend on travel have been frustrated by the pandemic. We could but a second house but I find upkeep to be a headache even if hiring someone to do it.

 

[music-and-ski]

Congrats on your success, as you say, not a bad problem to have.

That said, it's nothing a winter estate in Hawaii and summer hobby ranch in Montana can't fix. I'm only half joking.... why not deploy the excess capital into assets you can enjoy, which ideally keep up with inflation, but always sell if you needed to raise more capital for retirement?

I'm in a similar position, and I'm probably going to go the 2nd home route. I can always downsize to a single home if I ever need the extra cash.

Can confirm a second home is a big way to suck away any extra. In my case, I already have the second home, not yet ER, but am running scenarios that involve selling the second home if markets don't do well. I could do a 10% WR for a few years, dropping to 8% when the SS kicks in, and then drop to 3% after selling the second home.

 

[H2ODude]

Yeah, multiple safety factors layered on top of themselves can lead to some serious overshot on the resources available. I was schooled in economics by my depression era father, both of us engineers. He never borrowed money other than mortgage, said you can never count on a pension so you need to build your own, and SS was questionable. We saved for kids' college and they got scholarships; didn't adjust our plans though. Inherited not insignificant estates from both sets of parents, did not adjust what was going into 457/IRA. When in last government job didn't realize until about 50 yo that I could buy years and bail at 60; kept on with the deductions. With Covid killing our travel, we are now ADDING to our portfolio each month from leftover SS and pension. Even pre Covid we couldn't find enough worthwhile things to spend the safe withdrawal. But eh, that's OK.

Some of us just have this sense of what a dollar is worth, and spending dollars just because you don't really need them doesn't make sense (to us). We give a good bit to charity, but I find that perplexing in that there are unlimited opportunities to help folks/causes in need. We'll probably help a lot with the college of 6 grandchildren. I was talking with good friend yesterday who's transitioning to retirement. Engineers who worked together for 15 years. I pointed out to him that it was no wonder younger generations resent us boomers; our spendable income now well exceeds what our younger counterparts in positions equal to our former ones make. And we were both able to do all this with spouses that worked part time if at all, spending most time raising the kids. But we did do things like build our own houses, bank 15-20% of income. And now we have more than we need (and he still frets he has enough!) And I'm incorrigible. 69 yo and have 6 windows coming in next week that I'll install myself. But I SWEAR I am going to pay someone else to paint the house.

 

[Ready]

I like the idea of dying as I spend my last dollar but I haven’t figured out how to do that just yet. We have no kids so whatever is left will go to various charities. We also over saved though and I find myself worrying that we are not spending enough money now and will regret this later in life.

But as others have said, living with COVID has taken away so many of our favorite activities that it’s hard to find much to spend money on right now.

 

[tmm99]

We were all savers before our retirement, so even after our retirement, I think we still enjoy seeing our numbers grow. Hard to break the habit.

 

[RunningBum]

I like the idea of dying as I spend my last dollar but I haven’t figured out how to do that just yet.

Use all of your money to buy annuities. I don't recommend that, but it's how you would do that, without worrying about living . In seriousness, you could put a significant chunk toward SPIAs, probably with inflation protection, but I'd still want some extra money to handle emergencies or large irregular expenditures like cars. I haven't taken a hard look at SPIAs yet myself, but you'd want to make sure the insurer is very sound.

 

[Gumby]

It is very likely that our ending portfolio balance will be far higher than our starting balance, and we have no children to leave it to. But I'd much rather leave money on the table than run out. And, looking back, there is nothing else that I needed or wanted to spend it on.

 

[pacergal]

We likely oversaved, too, but you never know what could happen, so it is not something I worry about. If I need/want something, and have the money to buy it, thats a good thing to me. I am not going to stress over the fact that I may have saved too much!!
I feel blessed, and have the ability to help my kids and give to charities.

 

[The Cosmic Avenger]

If you're not quite feeling ready for a vacation/second home, might I suggest you start out draining off your excess funds with a horse or a boat? They both also have the "advantage" of increasing your healthcare spending!

 

[jollystomper]

I am not going to assume we over saved until we reach our deathbed.

This was my intent. One of my principles in life is "do not be a burden to others". I wanted to have more than enough to never be financially dependent on anyone else. The LBYM and frugality results, for us, are worth it. We do not spend now because I am afraid of leaving "too much"; We spend now - and not just on ourselves - enjoy it.

 

[travelover]

I am not going to assume we over saved until we reach our deathbed.

This was my intent. One of my principles in life is "do not be a burden to others". I wanted to have more than enough to never be financially dependent on anyone else. ...........

My philosophy, too. I don't know how it will end for DW and I, but I want to have the very best care for both of us to the last. If that means we don't leave a dime, so be it.

 

[gauss]

Perhaps the cost of planning such that the chances are extremely small that you will need to eat cat food in retirement is that that, in all likelihood, you will end of with a big excess in the end.

First world problem, but it helps me sleep soundly at night.

-gauss

 

[cyber888]

Wow. Congrats. You can retire now ! Don't wait too long. When I hit my number, I'm out.

 

[audreyh1]

We avoid this in case they change the estate exception rules again such that there isn’t enough estate left to pay the taxes, and have the IRS come after the kids after we are gone. We helped out kids with their down payment on their home by working with them to get the needed gift in their hands over two tax years, but in reality only a couple weeks apart from gift to gift. We will be doing the same for the other child if they ever decide to settle in one place long enough to buy a home.

For some reason we are not concerned about this scenario.....

Even better: The IRS recently issued a ruling that it wouldn’t “claw back” those large gifts should the estate tax exemption revert back to the old threshold after 2025, giving taxpayers assurance that any planning they do today will hold up. However, if you don’t use up the full exemption amount and the threshold does get reduced in the future, you won’t be able to do so retroactively.

https://www.cnbc.com/2020/02/18/cre...w-to-take-advantage-of-big-tax-exemption.html

 

[trumpeting_angel]

I retired 16 months ago, and when the pandemic hit I got quite anxious. I had been living on my after tax money and still had plenty (sold some non performing real estate and had the rest in cash), but the big drop in the market was scary so soon after retiring. I got unemployment through a bit of a fluke, and got used to a pretty comfortable check. Now it’s a small check, and I had to return to the calculators to allay my anxiety.

They did. Like pretty much everybody here, the months since March have been awfully good to my NW. when I hit my number I began working part time, and continued to age 66. Did I oversave? Depends. If I need LTC in the later years I’ll be fine, but if it happens soon it could be tight. If the pandemic does serious long/term damage to the economy, I think I will have saved enough, but possibly not too much.