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flintnational 12-04-2017 04:39 PM

Has the wealth effect changed your spending?
 
From Wikipedia, "The wealth effect is the change in spending that accompanies a change in perceived wealth"

Has the rising stock market changed your spending? We have not altered our basic budget, but we set up a Donor Advised Fund for charitable giving and will gift the DS and DD money for their Roth IRAs. Okay, I also bought a few nice bottles of wine and the whole Serrano ham mentioned in the Costco thread. :angel:

How about you?

HFWR 12-04-2017 04:45 PM

The market giveth, the market taketh away...

Danmar 12-04-2017 04:46 PM

Yes, I have recently decided that we should up our spending somewhat because the portfolio has increased so much since I retired 11 years ago. I include giving as a type of spending.

Danmar 12-04-2017 04:46 PM

Quote:

Originally Posted by HFWR (Post 1974353)
The market giveth, the market taketh away...

Sure, but mostly it giveth.

Big_Hitter 12-04-2017 04:49 PM

no

flintnational 12-04-2017 04:50 PM

Quote:

Originally Posted by HFWR (Post 1974353)
The market giveth, the market taketh away...

HFWR, I think Wikipedia captured your sentiment well when they used the words, "perceived wealth". :)

GrayHare 12-04-2017 04:52 PM

Yep, stock prices plus "...one day you find ten years have got behind you."

Walt34 12-04-2017 04:53 PM

We've not changed anything. Our main income is a pension, SS, and some dividends, and we save a good chunk of that for "lumpy" expenses like a replacement car, new roof, property taxes, etc.

There's a fair bit in my IRA, but if I croak before DW turns 66 she's going to take a huge hit on income (SS goes away, pension drops 30%) so the IRA will more than tide her over until then. So until she's 66 we won't touch that. Since we're not much for travel or other expensive stuff the grandnephews and grandnieces will probably start getting more expensive gifts when I have to take RMDs. Or we might just reinvest the RMDs in taxable accounts, we'll decide then.

In the meantime the IRA and a few other accounts are doing better than I thought they would!:dance:

joeea 12-04-2017 04:54 PM

Apparently, any "wealth effect" has no effect on me.

We've always lived below our means. And we've just saved that much more as our means increased.

flintnational 12-04-2017 04:55 PM

Quote:

Originally Posted by GrayHare (Post 1974361)
Yep, stock prices plus "...one day you find ten years have got behind you."

.....Every year is getting shorter, never seem to find the time.......

aja8888 12-04-2017 05:11 PM

Quote:

Originally Posted by flintnational (Post 1974349)
From Wikipedia, "The wealth effect is the change in spending that accompanies a change in perceived wealth"

Has the rising stock market changed your spending?

How about you?

The rising stock market has only made my TIRA a larger amount.

I have spent ~$45 K OOP in dental expenses so far this year that I had only planned $10 K for though. :(

athena53 12-04-2017 05:11 PM

Heck, no. Like most people here I've had years of negative returns. I kept my withdrawal rate at 3% this year so I don't have to cut back in bad years.

Lsbcal 12-04-2017 05:42 PM

One of my hobbies is figuring out what is safe to spend. Our safe spending limit has definitely gone up.

Soon we'll be remodeling the kitchen. That will take a chunk.

It's not so easy to spend a lot as we research and shop around before we commit. Still want to do the due diligence. That goes for large vacation tabs too.

Islandtraveler 12-04-2017 05:55 PM

Taking out an additional 1% for the year and putting into the cash bucket. Trying to smooth out the inevitable bumps in the road.

W2R 12-04-2017 05:57 PM

Has the wealth effect changed your spending?
 
Not really. Well, I'm trying to spend more (because you can't take it with you) but seems like I've about topped out. In 2017 I've had major dental work, bought a new laptop and new iPad, and a new Dyson vacuum. Despite all this, my projected 2017 spending is ~$1030 less than my 2016 spending was.

Taking the bull by the horns, I decided to get a new car which I don't actually need. Just for fun, y'know, why not? and it should increase my spending this year. But, F wants to buy my Venza from me when I do that, and his timeline is delaying the new car purchase for a little while, maybe until next year.

Oh well, I'm happy with life so who cares. Besides, the bigger my portfolio becomes, the better prepared I will be for the inevitable market crash.

scrabbler1 12-04-2017 06:01 PM

I derive my income from dividends, mainly from a big bond fund (monthly dividends and a stock fund (quarterly dividends). The value of the stock fund plays very little role in my income and spending. Only reinvested cap gain distributions from the stock fund have any impact on my share holding, although later this month I will add enough new shares to generate about $40 a month in dividends going forward (after paying some income taxes and seeing a loss of ACA subsidy this year to cancel out said benefit.


I won't be going on any spending spree from the rising markets.

street 12-04-2017 06:08 PM

I still think old school and lived frugal and saved all my life so NO. My spending won't increase for now. If I were in my middle 70's I might think about it different but not at 60.

Souschef 12-04-2017 06:22 PM

I have made it a point to distribute my RMD. In the past few years, my IRA balance has increased even after taking my RMD.
This year there will be an increase will be in charitable giving, plus a small amount for our grandchildren. The two oldest will get cash, the other 3 will have it deposited in their 529 accounts.
There will be a balance left over that is for me. It will pay for my Angel Flight missions.

Winemaker 12-04-2017 06:22 PM

For the past 3 years I used a 1.8% SWD, but next year I am increasing it to 2.7% of my original portfolio of 2014. While our health insurance went from $18,600 to $21,400, and DW's dental and cataract surgery cost and additional $6,000, we barely made this years budget. Wealth, although it has increased nicely, has not changed my spending, medical costs have.

DW and I are still able to eat and drink the world's finest, and travel to the ends of the US.

flintnational 12-04-2017 06:29 PM

Quote:

Originally Posted by W2R (Post 1974410)
Taking the bull by the horns, I decided to get a new car which I don't actually need. Just for fun, y'know, why not?

You have your dream home. Will this be your dream car? I bought my dream car when I was 45. Something about a midlife crisis or who knows what? But we still have it 12 years later. So, it has turned out to be cost effective transportation, almost LBYM style. :greetings10:

foxfirev5 12-04-2017 06:37 PM

No increase. The higher the market goes the more nervous I get.

audreyh1 12-04-2017 06:39 PM

Quote:

Originally Posted by flintnational (Post 1974349)
From Wikipedia, "The wealth effect is the change in spending that accompanies a change in perceived wealth"

Has the rising stock market changed your spending? We have not altered our basic budget, but we set up a Donor Advised Fund for charitable giving and will gift the DS and DD money for their Roth IRAs. Okay, I also bought a few nice bottles of wine and the whole Serrano ham mentioned in the Costco thread. :angel:

How about you?

Yes, because we take a set % of our portfolio every year, our income has grown in a big way the last few years. We don't spend all of it, but we are definitely spending and gifting more than we used to.

W2R 12-04-2017 06:43 PM

Quote:

Originally Posted by flintnational (Post 1974428)
You have your dream home. Will this be your dream car? I bought my dream car when I was 45. Something about a midlife crisis or who knows what? But we still have it 12 years later. So, it has turned out to be cost effective transportation, almost LBYM style. :greetings10:

I don't really have a dream car right now; just haven't "fallen in love" with one lately. Maybe I should search online more while I am waiting for things to coalesce. So far, my thinking has not gone beyond the idea that something shiny and new would be fun. :laugh:

I had a model in mind, but Consumer Reports said that it had good, not great, reliability. :(

hesperus 12-04-2017 06:46 PM

Almost, maybe...? We reached eight figures NW recently, and the only thing I can say is that we are feeling somewhat flush, with a bit less attention paid to previous spending inhibitions. Still holding about 3+ years of spending in cash, so that helps buffer the worry about near term corrections in the market.

Ask me again when we go through a 25% correction :laugh:

RobbieB 12-04-2017 06:49 PM

I am spending more dough now than I've ever spent before. And loving it - :)

Porches, decks, concrete, hot tubs, diamonds for my lady.

And I haven't even started on the inside of the house. That ought to be 3X the cost of the outside.

jollystomper 12-04-2017 06:50 PM

Our spending has gone up primarily because we are happy with our "string of singles" market returns and do not feel the need to increase our investment amounts. For example, in the past when I received bonuses we would probably have fun with 10-20% of the amount and save/invest the rest. This year the bonus amounts surprisingly more than doubled from 2105, so we are having fun (spending and giving) with about a third of the amount and putting the rest into cash savings for more spending fun next year, without having to be dependent on near-term market returns.

W2R 12-04-2017 06:55 PM

Quote:

Originally Posted by RobbieB (Post 1974438)
I am spending more dough now than I've ever spent before. And loving it - :)

Porches, decks, concrete, hot tubs, diamonds for my lady.

And I haven't even started on the inside of the house. That ought to be 3X the cost of the outside.

One of these days your house will be perfect and exactly what you always wanted. Then what? Oh well, you could always throw parties for 300 people serving that fabulous king crab you got a while back, and lots of expensive champagne.

NW-Bound 12-04-2017 06:56 PM

Quote:

Originally Posted by HFWR (Post 1974353)
The market giveth, the market taketh away...

It sure does, or did today. A 5-figure sum, equivalent to 3 months of living expenses, just got deducted from my Quicken total.

Quote:

Originally Posted by athena53 (Post 1974374)
Heck, no. Like most people here I've had years of negative returns. I kept my withdrawal rate at 3% this year so I don't have to cut back in bad years.

Some people have short memory. Not me. Don't I always brag about having a "superior memory"? I still remember 2008-2009 as yesterday. Even the tech melt-down in 2000-2001.

I have no "dream" anything, car, house, or vacation. If I can maintain the status quo, it's already plenty good for me. In order for me to spend significantly more, I need to see my stash doubled. Fat chance of that in the years ahead.

Freedom56 12-04-2017 07:01 PM

I live on fixed income investments. I own bonds and notes in S&P 500 companies (industrial, telecom, financial). I am content with a 7% annual return, although I have been doing much better than that over the last four years. I am more interested in preservation of capital. However, even though I'm in my 50's and my wife in her late 40's, we have calculated that with our spending habits, we will never draw down our funds. We are in the third year of our retirement, and we continue to save significant a significant amount of money. So we made the following changes that impact spending:

1- We do not fly coach traveling from coast to coast but I do look for deals on first/business class fares and will never pay full price. We highly recommend JetBlue Mint business class.

2- Overseas flights are exclusively on business or first class but I never pay full price and buy non-refundable business/first class fares.

- Traveling in comfort will mitigate back problems and in the end save medical bills. Plus you can't take your money with you so enjoy it.

3- No eating at dives at home or when on travel

- No reason to get sick and pay additional medical bills.

4- Won't shop at Walmart, Target, K-Mart, JC Penny, but Safeway, Publix, Costco and Home Depot are okay.

- Just kidding, I let my wife go to Walmart, Target, JC Penny

As far as "wealth effect", from June 2000 to now, the vast majority of stocks have under-performed cash stuffed in a mattress. The Dow Jones 30 back in 2000 are the the same as today. Remember the "blue chip" Dow components Eastman Kodak or Sears. Where are they now? Financial and technology stocks look good over the last few years but just go back 9 years and see why the term "Zombie Banks" applies to many financial stocks. Citibank is a $75 stock after a 10 for 1 reverse split and has to go up to $680 for people to break even after 10 years. Intel was a $74 dollar stock in 2000 and its $44 today. GE was a $48 stock and its is $17 and change today. This is after 17 1/2 years. Other have fared much worse.

I will say that the vast majority of our wealth was created slowly through real estate investments, fixed income investments, living 100% debt free, and disciplined spending habits. I don't own common stocks, mutual funds, or ETFs.

flintnational 12-04-2017 07:01 PM

Quote:

Originally Posted by hesperus (Post 1974436)
Almost, maybe...? We reached eight figures NW recently

If you didn't start spending, all the young dreamers would leave the forum. It's your duty. :)

Meadbh 12-04-2017 07:06 PM

No.

rodi 12-04-2017 07:08 PM

The gain this year has been beyond what I could have expected... And, yes, I feel wealthier, because I am.

That said, I can't expand my spending too much... or I run into issues with ACA tax credits and hurt my FAFSA EFC... Oldest son is a junior - so this year counts towards the FAFSA thing.

About half of our spending is covered by DH's SS, my micro pensions and rental income... the other half is withdrawn from the nest egg... We live pretty darn comfortable on a <3% withdrawal rate. Perhaps I'll bump it all the way up to 3% of our starting portfolio value.... heck, maybe I'll even figure out what the inflation adjustments should be, also... Either way I could give us a raise... But I don't see myself pulling out extra unless there is a need/want to justify it. I'm only a few years in and SOR risk is still on my brain.

W2R 12-04-2017 07:08 PM

Quote:

Originally Posted by NW-Bound (Post 1974443)
I have no "dream" anything, car, house, or vacation. If I can maintain the status quo, it's already plenty good for me. In order for me to spend significantly more, I need to see my stash doubled. Fat chance of that in the years ahead.

You never know what life may bring to you. It could happen. :)

USGrant1962 12-04-2017 07:13 PM

Quote:

Originally Posted by flintnational (Post 1974349)
From Wikipedia, "The wealth effect is the change in spending that accompanies a change in perceived wealth"

Has the rising stock market changed your spending?

No but it has made me a lot more comfortable with my WR. When I decided to pull the plug last year I was over 100% in FIRECalc. Now I'm well over 100% ;D.

flintnational 12-04-2017 07:23 PM

Darn, this thread is being out paced by the Colonoscopy thread! I feel so inadequate. :rofl::rofl:

FIREd 12-04-2017 07:28 PM

Spending is still what it was in the mid 2000’s (not even adjusted for inflation). Net worth is up 15x since then. So no...

Car-Guy 12-04-2017 07:30 PM

Quote:

Originally Posted by flintnational (Post 1974349)
Has the rising stock market changed your spending?

How about you?

Absolutely not. About a year after I retired, (five + years ago) I realized that we had more than enough. These days we just buy what we want, go where we want and do what we want regardless of what the market does. (no jets or yachts) The money I have in the market is strictly gambling money that I don't really expect I'll ever need.

NW-Bound 12-04-2017 07:34 PM

Quote:

Originally Posted by NW-Bound (Post 1974443)
... In order for me to spend significantly more, I need to see my stash doubled. Fat chance of that in the years ahead.

Quote:

Originally Posted by W2R (Post 1974452)
You never know what life may bring to you. It could happen. :)

I do not mind getting pleasantly surprised. But until that happens, I do not spend time thinking how I will up my spending.

Quote:

Originally Posted by flintnational (Post 1974459)
Darn, this thread is being out paced by the Colonoscopy thread! I feel so inadequate. :rofl::rofl:

See how geezers worry mostly about their health than about their money?

Health first, money second. I'd rather have good health and be living in an RV under the open sky of NM, than being bedridden with beaucoup money. Of course we want to have both, but have neither under our total control.

Nature Lover 12-04-2017 07:52 PM

I'm with the majority here. Only retired 2 years, now 57, so the recent gains are a good buffer against sequence of returns risk....but they haven't resulted in an increase in spending.

2017ish 12-04-2017 07:53 PM

Quote:

Originally Posted by audreyh1 (Post 1974433)
Yes, because we take a set % of our portfolio every year ....

+1. But, we are only 5 months into retirement and our spending changes/increases were of the type and magnitude that we long planned. So take my response with an extra few grains of salt.

Scuba 12-04-2017 07:55 PM

Quote:

Originally Posted by RobbieB (Post 1974438)
I am spending more dough now than I've ever spent before. And loving it - :)



Porches, decks, concrete, hot tubs, diamonds for my lady.



And I haven't even started on the inside of the house. That ought to be 3X the cost of the outside.



If you need some ideas to "blow that dough" inside your house, feel free to pm me. We spent a small fortune before we retired remodeling our condo. Put in a lot of unusual finishes, art, furniture, and other items that we love. Would be happy to share ideas.

Scuba 12-04-2017 07:57 PM

Quote:

Originally Posted by W2R (Post 1974441)
One of these days your house will be perfect and exactly what you always wanted. Then what? Oh well, you could always throw parties for 300 people serving that fabulous king crab you got a while back, and lots of expensive champagne.



Great idea, and you could invite your ER friends! [emoji12]

RobbieB 12-04-2017 08:00 PM

That crab was so good I've re-ordered twice. The last batch with some lobster tails, sea scallops, halibut and shrimp. Just under a grand!

Blow that dough - :)

NW-Bound 12-04-2017 08:02 PM

Quote:

Originally Posted by W2R (Post 1974441)
One of these days your house will be perfect and exactly what you always wanted. Then what? Oh well, you could always throw parties for 300 people serving that fabulous king crab you got a while back, and lots of expensive champagne.

Hope I will be invited. I do not eat caviar, but can help with the XO Cognac that Robbie will get a few cases of. And who says Dom Perignon has to go with caviar? I will drink it with Robbie's grilled lobster.

Oh wait, he will be serving Louis XIII, not the pedestrian XO that I drink.

RenoJay 12-04-2017 08:04 PM

I've done a lot more discretionary spending on travel, meals out, and other things that would be easy to cut if/when the bear strikes.

Canoesmith 12-04-2017 08:13 PM

A Dyson vacuum?
 
...my god. If I ever have to worry about buying an iPad or a vacuum when Iím retired, Iím not ever going to retire.

Scuba 12-04-2017 08:14 PM

Quote:

Originally Posted by 2017ish (Post 1974477)
+1. But, we are only 5 months into retirement and our spending changes/increases were of the type and magnitude that we long planned. So take my response with an extra few grains of salt.



+1
We are 13 months in. We have not adjusted our lifestyle other than a few planned things like increased travel post-ER. Once we've been retired longer, I'm sure we'll have no problem bumping up spending if portfolio value will support it. Healthcare costs are a big uncertainty as is sequence of returns.

One thing we are considering is paying off or paying down our HELOC with some of this year's windfall. It's not due until 2024 and we have plenty of funds to pay it off anytime. It's at 3.99% now but that will likely gradually increase in 2018. Not sure about paying off 4% debt but if it gets up to 5-6%, we'll definitely pay it off.

Ronstar 12-04-2017 08:15 PM

Iím not spending more in this bull market, but Iíll spend less when the bear market hits.

robnplunder 12-04-2017 08:17 PM

Not much change for me. I remember the down markets. When stock goes up, I consider it a temporary event. Ditto when it goes down.

NW-Bound 12-04-2017 08:39 PM

Forgot to add, my expenses this year are the lowest since I started to keep track closely, back from 2010 or so. No more college tuition, no recent major home repairs or updates, no major medical, dental bills, major purchases, no daughter wedding. This year's expenses are about 65% of the past highest year.

I think I am sliding down Bernicke's curve.

sheldon cornped 12-04-2017 08:55 PM

As a recently transplanted fellow Georgian, I'll help you in your quest to keep pace with the Colonoscopy thread.
No change in spending with the bump in portfolio. For me, it's just a feel good exercise to look at the FIDO planner and see how much more we'll theoretically have (underperforming market) when the lights go out. It's always good to have ample wiggle room.

GrayHare 12-04-2017 09:20 PM

New car, caviar, four fish day dream,
Think I'll buy me a colonoscopy team?

Been running below SWR so if I can't blow more dough during a Roaring 20Ks Market, when can I?

Dog 12-04-2017 09:55 PM

Just updated monthly budget and net worth spreadsheets today. We are under budget, but feel like we are spending when and where we want to. LBYM is a very hard habit to break. The stock market seems too good to be true and I have fresh memories of dot.com bubble and real estate collapse, so proceeding with caution. But, it is fun to watch our net worth grow without any effort on our part [emoji854]

ejman 12-04-2017 10:10 PM

Hum, add this thread to the Dťjŗ vu feeling the party is about to end...

audreyh1 12-04-2017 10:24 PM

Quote:

Originally Posted by Ronstar (Post 1974494)
Iím not spending more in this bull market, but Iíll spend less when the bear market hits.

Thatís depressing.

Cayman 12-04-2017 10:35 PM

Not spending more 'cause we have a comfortable budget and enjoy LBYM. We're 50, and will loosen up the purse strings a bit in a decade or so if things look good.

Danmar 12-05-2017 04:14 AM

If people don’t spend more when times are good, and certainly won’t spend more when the bear hits, why be in equities at all? Why not just annuitize? Why take the risk for no reward?

6miths 12-05-2017 04:22 AM

No

DrRoy 12-05-2017 05:37 AM

The rise in value and a tiny increase in my low WR has me spending about $10K more this year.

flintnational 12-05-2017 05:48 AM

Quote:

Originally Posted by NW-Bound (Post 1974508)
Forgot to add, my expenses this year are the lowest since I started to keep track closely, back from 2010 or so. No more college tuition, no recent major home repairs or updates, no major medical, dental bills, major purchases, no daughter wedding. This year's expenses are about 65% of the past highest year.

I think I am sliding down Bernicke's curve.

We were hit with a lot of car repairs and needed replacement appliances. But, travel was way down this year. So the overall budget was flat compared to past years expect for the DAF and Roth contributions mentioned in the opening post.

flintnational 12-05-2017 05:53 AM

Quote:

Originally Posted by GrayHare (Post 1974521)
New car, caviar, four fish day dream,
Think I'll buy me a colonoscopy team?

Nice :laugh:

flintnational 12-05-2017 06:01 AM

Quote:

Originally Posted by ejman (Post 1974545)
Hum, add this thread to the Dťjŗ vu feeling the party is about to end...

By inference, are you implying bitcoin will not continue to double weekly? Man, there are going to be a lot of disappointed first time investors. :coolsmiley:

DEC-1982 12-05-2017 06:26 AM

Quote:

Originally Posted by NW-Bound (Post 1974443)
If I can maintain the status quo, it's already plenty good for me. In order for me to spend significantly more, I need to see my stash doubled. Fat chance of that in the years ahead.

+1

marko 12-05-2017 06:37 AM

A few things have changed for us.

First of all, my brother's devastating stroke was the 2X4 across the head that we should live life while we can.
The growing realization that in 14.5 short years I'll be 80 years old. (if I'm lucky)
Increases to my trust fund benefits (via death of other heirs) also pushed us ahead a bit.
The market has performed admirably of late.
Disappointments in a few of our future heirs makes us less inclined to leave them a nice chunk.

Another Reader 12-05-2017 07:01 AM

The only thing I'm spending significantly more money on is capital improvements to the rentals. Enriching the roofing and flooring companies and the big box appliance departments, plus keeping the handy people employed. Cashflowing what I can, pulling from cash savings here and there to do roofs.

The mortgages are being paid down/off, but that's through cash flow and that early Social Security check exclusively.

Along with a drop in the paper asset markets, I expect a drop in rents and an increase in vacancy when the party ends. Lean times ahead at some point.

bclover 12-05-2017 07:06 AM

Quote:

Originally Posted by HFWR (Post 1974353)
The market giveth, the market taketh away...

ding ding ding.

bclover 12-05-2017 07:09 AM

Actually I'm thinking about taking a few extra trips next year.

I've been wanting to take my sons to London for a few years, they are getting older and starting first careers so I think soon the days of family travels maybe over......

Then of course my youngest son does something supremely stupid and the feeling goes away... ;)

donheff 12-05-2017 07:21 AM

Our spending is actually way down because we sold our weekend house cutting out substantial expenses and adding the capital to our portfolio. We have noted that if something comes up that we want we can go for it but our habits haven't changed. That said, we have never been tight fisted. We live quite well.

sanfanciscotreat 12-05-2017 08:01 AM

NEXT year will be the peak.
One month in FL; summer vacation in AK; add a four season sun room.
Recent financial review says we are in good shape even with a repeat of 09 mess.

kcowan 12-05-2017 08:05 AM

It is part of an ongoing evolution. In 2002, our first year of retirement, we put together a plan that would take us out to age 100. It required close management of our equities and a measure of trading efficiency.

By 2007, we were doing well enough to purchase a snowbird property and that turned out to reduce our burn rate substantially, making the downturn in equities fully contained. Then when the markets recovered, we increased our annual transfer to the kids by 30% and increased our charitable giving. We also upgraded our quality of wine and liquor. We added a vehicle.

Our VPW is still under 2% so we are nowhere near having to cut back in a market correction. DW does not like seafood nor cognac, so the wine is for her. And she got the newer car. She is due for another one NOTB next year.

NW-Bound 12-05-2017 08:24 AM

Quote:

Originally Posted by Danmar (Post 1974594)
If people don’t spend more when times are good, and certainly won’t spend more when the bear hits, why be in equities at all? Why not just annuitize? Why take the risk for no reward?

I took the reward early. :) I spent on more things in the last few years, and so have less need to spend now. If I feel like a new car, I will get one. But cars do not turn us on, and we can only travel so much. And I can only eat and drink so much.

Can't see myself upgrading to bigger houses. A lot of work!

I could give my children more money, but they already feel bad receiving so much from us. My son told me "Dad, you should get a decent car", because he felt bad driving his Audi S4 (bought with his money) while we still have clunkers. :laugh:

My older sister and her husband have more than we do. They do not care about cars either. And she enjoys her work so much, she has not quit her job. And they have traveled plenty too.

Amethyst 12-05-2017 08:30 AM

I see it differently. I'd rather spend now, than wait till I'm older and not able to enjoy it as much.

Quote:

Originally Posted by street (Post 1974416)
I still think old school and lived frugal and saved all my life so NO. My spending won't increase for now. If I were in my middle 70's I might think about it different but not at 60.


street 12-05-2017 08:37 AM

Quote:

Originally Posted by Amethyst (Post 1974653)
I see it differently. I'd rather spend now, than wait till I'm older and not able to enjoy it as much.

Yes I see it your way also and actually makes more sense. My thinking is I need a little more confidence being a newly retire I need to get down the road a little more before I spend more. You have made a great point though.

flintnational 12-05-2017 08:40 AM

Quote:

Originally Posted by kcowan (Post 1974641)
It is part of an ongoing evolution. In 2002, our first year of retirement, we put together a plan that would take us out to age 100. It required close management of our equities and a measure of trading efficiency.

By 2007, we were doing well enough to purchase a snowbird property and that turned out to reduce our burn rate substantially, making the downturn in equities fully contained. Then when the markets recovered, we increased our annual transfer to the kids by 30% and increased our charitable giving. We also upgraded our quality of wine and liquor. We added a vehicle.

Our VPW is still under 2% so we are nowhere near having to cut back in a market correction. DW does not like seafood nor cognac, so the wine is for her. And she got the newer car. She is due for another one NOTB next year.

With our 3rd rebalance a few days ago, we are up to about 9 - 10 years cash/short term. At that point, SS and pensions will kick in and we will loosen our giving/kids transfer. We already spend about what we want. Hard to drop those LBYM tendencies. :)

pb4uski 12-05-2017 08:44 AM

Quote:

Originally Posted by flintnational (Post 1974349)
From Wikipedia, "The wealth effect is the change in spending that accompanies a change in perceived wealth"

Has the rising stock market changed your spending? We have not altered our basic budget, but we set up a Donor Advised Fund for charitable giving and will gift the DS and DD money for their Roth IRAs. Okay, I also bought a few nice bottles of wine and the whole Serrano ham mentioned in the Costco thread. :angel:

How about you?

Yes. Since we have retired 6 years ago, our retirement portfolio is 25% higher despite buying a winter condo, a new truck and building a 2 car garage... all for cash. Our targeted spending is about 25% higher as well. But we still like the thrill of finding a good deal.

Some of the increase is due to more confidence with the increase in our nestegg and some is due to more comfort with living off of our savings... I think in the first couple years of retirement that I was unduly conservative due to fear of the unknown.

That said, if the SHTF there is a lot of leeway to adjust... we have a fair amount of discretionary spending that could be belt tightened... we could apply for SS.... etc. but even now our WR is only about 3% so I'm sleeping well.

I actually fear "depriving" ourselves of good experiences now while we are young and can do things, travel, etc and end up dying rich and leaving large inheritances to our kids and charities than I fear running out of money.

(and I do now buy prosciutto rather than ham and sopresetta rather than salami.... so I'm trying :>)

Lsbcal 12-05-2017 08:45 AM

Quote:

Originally Posted by Danmar (Post 1974594)
If people donít spend more when times are good, and certainly wonít spend more when the bear hits, why be in equities at all? Why not just annuitize? Why take the risk for no reward?

Risk for no reward ... nice way to put it.

audreyh1 12-05-2017 08:47 AM

Quote:

Originally Posted by Danmar (Post 1974594)
If people donít spend more when times are good, and certainly wonít spend more when the bear hits, why be in equities at all? Why not just annuitize? Why take the risk for no reward?

Yeah!

Or havenít increased their spending during these good times but still think they are going to spend less when the bear hits???

NW-Bound 12-05-2017 08:56 AM

Quote:

Originally Posted by pb4uski (Post 1974666)
(and I do now buy prosciutto rather than ham and sopresetta rather than salami.... so I'm trying :>)

Thanks for reminding me to look for Jamůn Ibťrico on the Web. Been 10 years since we were in Spain, and I forget how it tasted.

Danmar 12-05-2017 09:11 AM

Quote:

Originally Posted by NW-Bound (Post 1974652)
I took the reward early. :) I spent on more things in the last few years, and so have less need to spend now. If I feel like a new car, I will get one. But cars do not turn us on, and we can only travel so much. And I can only eat and drink so much.

Can't see myself upgrading to bigger houses. A lot of work!

I could give my children more money, but they already feel bad receiving so much from us. My son told me "Dad, you should get a decent car", because he felt bad driving his Audi S4 (bought with his money) while we still have clunkers. :laugh:

My older sister and her husband have more than we do. They do not care about cars either. And she enjoys her work so much, she has not quit her job. And they have traveled plenty too.

So looks like you are left with giving it away to charity?

NW-Bound 12-05-2017 09:17 AM

I have been giving to charity, but it was not that much (one year, it amounted to 0.5% of WR or something like that).

No, I will leave the bulk of it to my children. They don't know really how much I have, hence my son's comment about me getting myself a "decent car". :)

Danmar 12-05-2017 09:18 AM

Quote:

Originally Posted by pb4uski (Post 1974666)
Yes. Since we have retired 6 years ago, our retirement portfolio is 25% higher despite buying a winter condo, a new truck and building a 2 car garage... all for cash. Our targeted spending is about 25% higher as well. But we still like the thrill of finding a good deal.

Some of the increase is due to more confidence with the increase in our nestegg and some is due to more comfort with living off of our savings... I think in the first couple years of retirement that I was unduly conservative due to fear of the unknown.

That said, if the SHTF there is a lot of leeway to adjust... we have a fair amount of discretionary spending that could be belt tightened... we could apply for SS.... etc. but even now our WR is only about 3% so I'm sleeping well.

I actually fear "depriving" ourselves of good experiences now while we are young and can do things, travel, etc and end up dying rich and leaving large inheritances to our kids and charities than I fear running out of money.

(and I do now buy prosciutto rather than ham and sopresetta rather than salami.... so I'm trying :>)

This reflects my attitude as well. Retired 11 years, portfolio up a lot, base spending quite high but can easily up the spending/gifting. Can easily go back to only spending divs and pension if necessary. Life is really good.

2017ish 12-05-2017 09:19 AM

Quote:

Originally Posted by pb4uski (Post 1974666)
...

That said, if the SHTF there is a lot of leeway to adjust... we have a fair amount of discretionary spending that could be belt tightened... we could apply for SS.... etc. but even now our WR is only about 3% so I'm sleeping well.

I actually fear "depriving" ourselves of good experiences now while we are young and can do things, travel, etc and end up dying rich and leaving large inheritances to our kids and charities [more] than I fear running out of money.

...

+1. I would say that we fear the two equally (but we are just getting started on this retirement thing). Like you, we can easily slice the majority of our spending if SHTF; thus, our fixed percentage withdrawal rate appears to be sound.

flintnational 12-05-2017 09:21 AM

1 Attachment(s)
Quote:

Originally Posted by pb4uski (Post 1974666)
(and I do now buy prosciutto rather than ham and sopresetta rather than salami.... so I'm trying :>)

Costco still has the whole boneless Serrano ham on sale for $150. Ours came last week. It is marvelousssssss. :dance:

Scuba 12-05-2017 09:28 AM

Quote:

Originally Posted by street (Post 1974661)
Yes I see it your way also and actually makes more sense. My thinking is I need a little more confidence being a newly retire I need to get down the road a little more before I spend more. You have made a great point though.



+1

Meadbh 12-05-2017 09:29 AM

Quote:

Originally Posted by Danmar (Post 1974594)
If people don’t spend more when times are good, and certainly won’t spend more when the bear hits, why be in equities at all? Why not just annuitize? Why take the risk for no reward?

Because some of us do not have pensions, so our retirement sustainability is at the mercy of the markets. And because we take a long term view.

Moemg 12-05-2017 09:35 AM

I had already decided that 2017 I would spend more since I had accumulated a large cushion.Between a few expensive trips , a few expensive house projects ,lots of gift giving and a new car I put a dent in that excess and the market just made it easier . All that spending did make me uncomfortable so next year back to my regular spending.

Danmar 12-05-2017 09:36 AM

Quote:

Originally Posted by Meadbh (Post 1974697)
Because some of us do not have pensions, so our retirement sustainability is at the mercy of the markets. And because we take a long term view.

I understand, but if you donít spend a little more when times are good, when? I take a long term view too. If I donít start spending more, our legacy will be too high. Sounds like you should annuitize some of your wealth? Might reduce some anxiety?

Meadbh 12-05-2017 09:39 AM

Quote:

Originally Posted by Danmar (Post 1974704)
I understand, but if you donít spend a little more when times are good, when? I take a long term view too. If I donít start spending more, our legacy will be too high. Sounds like you should annuitize some of your wealth? Might reduce some anxiety?

What anxiety?

My annuity will be CPP, which I plan to take at 65. Itís index linked, secure and has no fees.

NW-Bound 12-05-2017 09:41 AM

During the melt-down of 2008-2009, many posters here bragged about scoring good deals on merchandise and travel.

Perhaps, subconsciously people still remember that, and want to save the splurging for later, when a dollar buys more.

That would also be beneficial to society in helping out various industry workers when the next recession hits. :)

Another Reader 12-05-2017 09:54 AM

I do expect to spend more when the economy tanks. I hope to buy more assets on sale at deep discounts, get a really good deal on a nice car if I happen to need one then, and enjoy cheap travel to less crowded places. I will also give more to groups that help abandoned cats and dogs, as pets are usually one of the first "luxuries" to be discarded when the income disappears.

audreyh1 12-05-2017 09:58 AM

Quote:

Originally Posted by Meadbh (Post 1974697)
Because some of us do not have pensions, so our retirement sustainability is at the mercy of the markets. And because we take a long term view.

We have no pensions, SS, and live off investments only. We’re spending more now partly because we might have to spend less later. Unspent excess is going into the rainy day fund too.

I do remember big travel bargains in the last recession.

Danmar 12-05-2017 09:58 AM

Quote:

Originally Posted by Meadbh (Post 1974705)
What anxiety?
.

You sounded a little defensive about “not having a pension” and seemed worried about having to rely solely on your portfolio? I guess you must have been referring to others, not yourself?

gayl 12-05-2017 09:59 AM

Wealth definitely changed my spending and I'm not even mid7s rich. I used to be on another site where no one got why I would gift so much. Like I've given:
  • 50k to DS for downpayment (mini farm)
  • 10k to DD SO for their mfg house downpayment
  • 10k car for each kid
  • French horn to a kid for college
  • multiple family vacations (there's 15 of us)
  • their Roths
Mom used to have a saying: it's my money I can burn it if I want ;)

happy8 12-05-2017 10:28 AM

Yes, compared to five years ago I now:

-No longer sweat the "small stuff", i.e. I don't argue with merchants over stuff less than $50, even when I think they are eggregiously wrong or unreasonable. This has been a wonderful change, as the psychological and probably physical toll of getting worked up over a few dollars is a cost far more than the dollars saved, at least for me. Wish I knew that many years ago.

-Eat whatever and wherever I want. Don't pay much attention to menu prices. Fortunately, I don't drink wine!

-Take great pleasure in giving very generous tips, to those who I think deserve it.

-Fly business class on long haul flights (still fly economy on domestic but pay for premium economy, and paying for privileges of choosing seat, priority boarding, priority security if available)

-When on vacation, will pay high $$ for private guides/tours. This has made vacations so much more enjoyable, interesting, safe, and time efficient for me.

I have read many studies that say over about $75k/year, there is not much correlation between extra money and happiness. For me, that is not true!

Meadbh 12-05-2017 10:35 AM

Quote:

Originally Posted by Danmar (Post 1974721)
You sounded a little defensive about ďnot having a pensionĒ and seemed worried about having to rely solely on your portfolio? I guess you must have been referring to others, not yourself?

Not having a pension is a fact. I have incorporated all the relevant facts into my retirement planning. I happen to be a very analytic INTJ. If I were worried about having to depend on my portfolio, I would not have retired early.

ExFlyBoy5 12-05-2017 11:40 AM

I can't say that our spending has increase much than before I retired. I pulled up my VG account (first time in about 2 months) and was surprised at how much it's grown over the last couple of years. On one hand, I feel like we could spend 50% more than we do now and not really have any anxiety doing so, but on the other hand we don't really want for anything more than what we have now. I do expect that we will take a trip late next year (New Zealand, and we will not be flying in the cattle car section, so those plane tickets will NOT be cheap) that will come with a pretty high price tag, so that will burn some cash. :)

Danmar 12-05-2017 11:47 AM

Quote:

Originally Posted by Meadbh (Post 1974752)
Not having a pension is a fact. I have incorporated all the relevant facts into my retirement planning. I happen to be a very analytic INTJ. If I were worried about having to depend on my portfolio, I would not have retired early.

Ok excuse me, but now we know you do have a pension, and rental income I believe. So you are just being conservative. Cheers.

gcgang 12-05-2017 12:15 PM

I've got less years to live, more financial assets to spend. Of course I'm spending more.

flintnational 12-05-2017 01:31 PM

Quote:

Originally Posted by gcgang (Post 1974818)
I've got less years to live, more financial assets to spend. Of course I'm spending more.

Yes, the math works in our favor. I think? :nonono: If I could choose, I would rather have more years and less money. :)

Meadbh 12-05-2017 01:31 PM

Quote:

Originally Posted by Danmar (Post 1974811)
Ok excuse me, but now we know you do have a pension, and rental income I believe. So you are just being conservative. Cheers.

I guess CPP is a pension. I expect it to start about $620 per month in today’s dollars, in 2022. I do not have an pension from an employer, like your generous one. You, I believe, will also be entitled to CPP, no? I have seen your previous posts in which you write of CPP as immaterial. To me, $620 per month is material.

After 5 years of ER, my annual spending has been pretty stable despite market increases. I have not been miserly with myself; that’s just my comfort level. I am happy to have enjoyed a favourable sequence of returns so far. As I get further from ER, the risk of portfolio failure lessens. I plan to give myself a modest increase in 2018 and in fact have mulled over the idea of buying a nicer home. Now if only I could find one that keeps all my favourite features of my present one....


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