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Had an epiphany... I may have over saved
Old 10-23-2020, 06:55 PM   #1
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Had an epiphany... I may have over saved

I can't be all alone here. Like most on this site (I would assume), long time big % saver, always LBYMs, "relative" frugality in my genes, worked the plan with an designed exit at 55 (when kid 4 was out of the nest/independent). I moved the goal posts many times as I dialed in my desired retirement spend (FatFire growing by inflation annually), ran (what now appears to be ridiculously) conservative assumptions (i.e. no SS, all my withdrawals taxable as income despites having 50% in after tax accounts). Fast forward to today, I'm 56, decided on a phase out (still earning income mainly because my biz is still very lucrative even on a very part time/Covid world basis and I need to fill some idle time). None the less, I have started running real calculators that take into account a "real" withdrawal strategy, which includes plugging in my basis on my after tax accounts, tax implications based on our current known taxes, a conservative 75% of SS at age 70, a 6% annual return on a 60/40 AA, and all the models say I will easily double my NW by age 94! Yes, 1st world problems that can be solved thru charity and gifting to kids. None the less, funny how we play Jedi mind tricks on ourselves to motivate us to "get to the number" and then you get there and wonder why you worked like a dog to hit some magical number that was overkill. Anyone else wakeup to this?
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Old 10-23-2020, 07:02 PM   #2
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Similar dilemma here... unless the world goes to hell in a handbasket it is likely that our heirs and charities will end up well when we are "below the grass". But on the other hand, if $100k fell out of the sky into my lap only if I spent it I think I would have a hard time doing so as we are not wanting for anything. OTOH, I think DW could do it fairly easily.

Who ever thought that it would be a bigger challenge to spend so you don't leave a huge legacy than to save for retirement?
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Old 10-23-2020, 07:05 PM   #3
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I wouldn't say we woke up to this; rather, I planned for worst case scenario and, so far, haven't experienced it. I'm not, however, worrying about doubling net worth by time of death in real terms. DW, who made most of our money, has proven adept at spending it on travel--even in 2020.

Bottom line, in our situation, far better to have worked an extra year or two (at jobs we truly liked), than to have cut it too close.
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Old 10-23-2020, 07:11 PM   #4
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Yeah, I overshot, but my job was ridiculously easy the last few years with not much infringement on my time. But did I really overshoot? Depending how long my mother lasts in memory care, I could be blowing some dough there. Yes, we know about Medicaid, but right now that looks to be a much worse option than where she is at now. So now I'm glad I worked OMY for a few extra years.

So, you may find that money useful after all. If not, more to your heirs or charities. I'm fine with both of those as well.
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Old 10-23-2020, 07:12 PM   #5
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Similar dilemma here... unless the world goes to hell in a handbasket it is likely that our heirs and charities will end up well when we are "below the grass". But on the other hand, if $100k fell out of the sky into my lap only if I spent it I think I would have a hard time doing so as we are not wanting for anything. OTOH, I think DW could do it fairly easily.

Who ever thought that it would be a bigger challenge to spend so you don't leave a huge legacy than to save for retirement?
Great segway to the 2nd half of my pickle... legacy concerns. My plan was always to spend it all (spend it/enjoy it while on this side of the sod) enjoying it with family/friends/experiences and perhaps a few things, but now that I am starting to do real-time math, I see I may have options. 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. Also started thinking about taking a "mini-Buffet" approach and setting a limit on what we gift each kid whne we hit the dirt nap, giving the rest away to a charity. Work in progress.
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Old 10-23-2020, 07:21 PM   #6
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Yeah, I overshot, but my job was ridiculously easy the last few years with not much infringement on my time.
This and not quite comfortable with what I am going to do with all my free time has kept me playing...
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Old 10-23-2020, 07:27 PM   #7
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... I planned for worst case scenario and, so far, haven't experienced it...DW, ...has proven adept at spending it on travel--even in 2020.
Yes, planned for the worst, but I am realizing possibly to a fault!

Likewise, DW has a knack for the good stuff. Me, a few vices like nice cars, good wine, a little technology, ... otherwise, give me a T-shirt and jeans.
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Old 10-23-2020, 07:33 PM   #8
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I wouldn't say we woke up to this; rather, I planned for worst case scenario and, so far, haven't experienced it. I'm not, however, worrying about doubling net worth by time of death in real terms.
This. Planned for worst case and the vast majority of the lines in firecalc are more than double net worth at the end.

I had a different experience than OP... Planned to retire at 55, worked the plan, saved the money, revised the plan... and hit the "done" point well ahead of age 55... so I retired at age 52. Since I had kids later than most - I still have kids under roof, even though I've been retired for 6 years.
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Old 10-23-2020, 07:34 PM   #9
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Recognized that some years ago! The DW and I started gifting the annual no tax maximums to the DD a few years ago.... Other than that, I've been practicing blowing that dough on an accelerated schedule.
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Old 10-23-2020, 07:39 PM   #10
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This. Planned for worst case and the vast majority of the lines in firecalc are more than double net worth at the end.

I had a different experience than OP... Planned to retire at 55, worked the plan, saved the money, revised the plan... and hit the "done" point well ahead of age 55... so I retired at age 52. Since I had kids later than most - I still have kids under roof, even though I've been retired for 6 years.
Nothing wrong with this! My conservative nature just made me a chicken to do anything until I knew I launched #4!

Oh, forgot to mention, I have grandkid 1 and 2 & 3 are due 1st quarter so we now have a new way to spend $$!
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Old 10-23-2020, 07:45 PM   #11
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Nothing wrong with this! My conservative nature just made me a chicken to do anything until I knew I launched #4!

Oh, forgot to mention, I have grandkid 1 and 2 & 3 are due 1st quarter so we now have a new way to spend $$!
Congrats on the grandkid(s). Definitely a great way to blow the dough!
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Old 10-23-2020, 07:48 PM   #12
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We are in the same boat. Retired in 2016 @ 60. Hind sight says I could have gone earlier, BUT: the "Great Recession" put a wrinkle in the plan. While the market was going up, retiring in 2012-2015 just looked too risky.

Now we sit, at age 65, with 38% more than retirement day.

No complaints. If my biggest retirement worry is trying to minimize taxes for us and our heir (DS), I guess I have won the game.

DS doesn't know it, but it looks like his retirement is also pre-funded.
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Old 10-23-2020, 07:54 PM   #13
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Mine is way more than double, but I don't want to increase my spending until SS starts in 4 years. I want to be cautious. I can always spend more when/if it grows substantially. I just feel blessed that my NW is higher now than when I retired 5 years ago, even considering inflation.
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Old 10-23-2020, 08:09 PM   #14
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Mine is way more than double, but I don't want to increase my spending until SS starts in 4 years. I want to be cautious. I can always spend more when/if it grows substantially. I just feel blessed that my NW is higher now than when I retired 5 years ago, even considering inflation.
One more Segway... I planned for a pretty big annual spend that grows annually by inflation (3%), but generally believe the real pattern will be go go years, slow go years, no go years. The spend should worst case look like a smile (if we hit heavy med needs later in life). Best case, it will trend down. This is spend is before any charity. Case and point, 1 more reason i (many of us) have oversaved
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Old 10-23-2020, 08:13 PM   #15
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Congrats on the grandkids. We have two (3 year old and 1 year old), so we're blowing the dough by making a yearly contribution to their college funds.
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Old 10-23-2020, 08:16 PM   #16
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Recognized that some years ago! The DW and I started gifting the annual no tax maximums to the DD a few years ago.... Other than that, I've been practicing blowing that dough on an accelerated schedule.
You can gift even more and pay no tax. You just have to file form 709 in years that you gift more than the annual exclusion so that the excess is taken off your estate exemption.
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Old 10-23-2020, 08:18 PM   #17
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I didn't think we oversaved when I semi-retired 5 years ago at 57, since the 9 years to SS full withdrawal age seemed a looooonnnnnggg time.

But the portfolio kept going up gradually to the point that DW fully retired 2 years ago while I kept working 1/2 time online for half pay (gig ended in May).

Now the 4 years to SS full retirement doesn't seem very long and the portfolio is up about 35%. When I/DW start drawing SS we will really have oversaved; I'm trying to loosen the strings next year in hopes that international travel will be safer, particularly next fall.

I'd like to trade in the Silverado for a Rivian or cybertruck in a few years, now that I have solar panels.
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Old 10-23-2020, 08:24 PM   #18
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You can gift even more and pay no tax. You just have to file form 709 in years that you gift more than the annual exclusion so that the excess is taken off your estate exemption.
Yep, I have considered that but I don't want to overly spoil her.
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Old 10-23-2020, 10:03 PM   #19
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I retired in 2016 at age 46, so I'm a relative newbie.

Four things happened that have put me into the position of worrying more about a runaway portfolio than a cat food situation:

1. I hit 4% in 2014 and kept working for two more years because the job wasn't that bad. Since I had the house paid off and had a high income but low expectations, I was saving a lot and just shoveling it into the market.

2. My kids' college has cost less out of pocket than I projected. A combination of scholarships, their choice to attend public in state schools (well, two out of the three), and some financial aid.

3. In my planning I assumed zero non-portfolio income. I have a lot of little random income throughout the year, and it actually adds up to about 2/3 of my expenses.

4. Planning for the worst case includes planning for high inflation and strongly negative market returns. Personally I have low to no inflation and the market has been good.

Overall, most of us plan for the worst on each variable, and the worst on each variable individually rarely happens. The worst on all variables simultaneously at the same time that we choose to retire is almost guaranteed (knock wood) not to happen.
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Old 10-23-2020, 10:13 PM   #20
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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.
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