Anyone planning to increase their WR with age?

[hnzw_rui]

My plan is to do the opposite. Get more out in the first two years. Then decrease by half.

+1. I wish to have a lot of discretionary spending the first couple of years while I'm (hopefully) still healthier. I plan on 5-6% SWR first year but will not automatically adjust annual withdrawals for inflation. I'll just let inflation eat up the discretionary budget if the market's not doing too well.

Mind, if everything goes according to plan, I will have a COLA pension that will cover >100% of essential living expenses so pretty much all my retirement savings will be available for discretionary spending (bar a certain amount earmarked for LTC).

 

[Terryjm51]

+1. I wish to have a lot of discretionary spending the first couple of years while I'm (hopefully) still healthier. I plan on 5-6% SWR first year but will not automatically adjust annual withdrawals for inflation. I'll just let inflation eat up the discretionary budget if the market's not doing too well.



Mind, if everything goes according to plan, I will have a COLA pension that will cover >100% of essential living expenses so pretty much all my retirement savings will be available for discretionary spending (bar a certain amount earmarked for LTC).

I agree I am thinking the same thing...
Still 12-18 months away. Could change my mind by then, I was really hoping others before us would give insight how they did it. Or should have done


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[hnzw_rui]

I agree I am thinking the same thing...
Still 12-18 months away. Could change my mind by then, I was really hoping others before us would give insight how they did it. Or should have done

Here's an interesting article regarding "hedonic tilt":

https://assetbuilder.com/knowledge-center/articles/-how-to-spend-more-now-less-later

Also, ******** can model various spending models. I've used that to check portfolio success rates with my desired spend. At this point, I'm still far, far away from retirement and just trying to figure out how large a nest egg I need.

 

[audreyh1]

I can see spending dropping when older, but then again I might opt for a really nice CCRC. And we're self insuring for LTC - so what I don't spend in the earlier elderly years might get used up in the later elderly years.

 

[CoolChange]

It sounds like I am one of the few who is planning to do what the OP was inquiring about, adjust their withdrawal rate upwards as they age, at least for a time.

Initially, if all goes well with life and the portfolio, my WR will be between 1.5% and 2.5%. There are a few reasons for this low WR: I will be RE before 50 and am frankly scared, regardless of what the calculators say, about my funds holding up. I am also currently in good health and still really enjoy very low cost activities.

If all goes well with the portfolio and life in general, I hope to be comfortable with slowly increasing this WR if additional funds are needed to enhance my enjoyment. I do not see any need to spend down my assets for the purpose of spending more now, unless the spending more now enhances my life in some way. (Spending money does not bring me pleasure as it does some people, in fact, quite the opposite.)

 

[523HRR]

Our projections have a somewhat higher WR now and for the next several years while we are still paying for junior's college and then dips when our DB pensions kick in at age 60. In the out years (if we get there), we are expecting a rising WR as inflation takes it toll on healthcare and long-term care expenditures. No single year WR is more than 3%.

 

[David1961]

Depending on how my portfolio does, I may tweek my WR, but probably not until I am in my mid 60s.

 

[DrRoy]

Will if my portfolio keeps increasing.

I am expecting my initial WR to be very low, <2%, as it might need to last 40 years. I would expect to raise it as I get older, especially if asset values rise.

 

[HadEnuff]

what is VPW?

 

[RunningBum]

what is VPW?

See post 18 on page 1

 

[dtbach]

That's my mom right there.

She recently retired at 62 with a full (but modest) pension and my dad is still working. They are set to get $35-40k in social security in another few years. And they have probably $2 million or more in the bank.

Yet she's worried about tiny expenses and trying to cut corners all over. She's driving a 20 year old Honda with 200k+ miles on it. I've suggested she could probably afford to buy a new(er) used car but she says "I'm on a budget".

She's hesitant to spend on fun travel while she still can. "I'm on a budget".

She doesn't have an actual budget and hasn't determined exactly how much she could spend every year without depleting her portfolio later in life. I've suggested they crunch the numbers or meet with their financial advisor (you pay him, why not use him?).

I imagine they will learn from us that it's okay to spend more in retirement as long as you have a plan with some degree of safety. I just hope it's before they are 70+ and/or suffer from some disability.

The good news is my inheritance will probably be rather rotund. The bad news is I don't think they'll ever be able to spend all their funds.

This is pretty much like my parents (although they are now in their 90's). Never spent any money, reinvested all dividends, etc and now they are wealthy but can't really do anything. Sure I'll get a nice inheritance but it would have been nicer if they had done some things. My dad realizes it now (my mother is in hospice and will probably be gone in a month or so) and admits that they should have done a little more travel etc. Well, you can't stop time and you only go around once (unless you are Hindu??) so you can bet I'll be spending some of my stash (and their's when I get the inheritance.

Also, in the next few years I will get a raise just by 1) paying off the mortgage, 2) getting the daughters through college and 3) taking SS at 68. So even though I won't be taking more from my WR, I will be getting a "raise" from expenses that go away and taking SS.

 

[dixonge]

What about a bell-curve sort of WR? Start low, cautious. As you see things working out, adjust upwards. Eventually you'll settle down, both in desire and perhaps in health, and then start lowering spending again. I can see us doing that.

It's tricky to balance our natural miserly, frugal mindset with our fear of missing out on something wonderful because we waited too late...

 

[6miths]

I suspect that our withdrawal rate will fall as we age. RMDs will force some increase but there will be decreasing need to withdraw from other sources. Spending should go down with age and barring some major disaster, portfolio should be getting larger with time.

 

[Danmar]

What about a bell-curve sort of WR? Start low, cautious. As you see things working out, adjust upwards. Eventually you'll settle down, both in desire and perhaps in health, and then start lowering spending again. I can see us doing that.

It's tricky to balance our natural miserly, frugal mindset with our fear of missing out on something wonderful because we waited too late...

Interesting idea. We have been retired 10 years and portfolio has done well. Maybe I should boost spending a bit. I went to a Super Bowl party yesterday and the host had a really nice new sports car. Mmmm

 

[dixonge]

Interesting idea. We have been retired 10 years and portfolio has done well. Maybe I should boost spending a bit. I went to a Super Bowl party yesterday and the host had a really nice new sports car. Mmmm

I hereby disavow any influence I may have inadvertently had on any purchasing splurges!

 

[HadEnuff]

I am hopeful that WR will be allowed to increase. I think I'm going into it more frugally budgeted than absolutely necessary, and after a few years of getting my bearings, I'll be comfortable upping it a bit. Time will tell.

 

[kcowan]

Interesting idea. We have been retired 10 years and portfolio has done well. Maybe I should boost spending a bit. I went to a Super Bowl party yesterday and the host had a really nice new sports car. Mmmm

We have little desire for material things but we expect that when our current cat of 18 years decides to cross the Rainbow Bridge, we will have more flexibility to travel whenever we desire it. This will increase our WR as we pursue more Bucket List items but I expect that to subside in a few years. And we are not counting the days because we love our tuxedo cat. He always greets us when we return home.

We just had house guests and he disappeared for a week but he is now back! Our buddy. There are some things that money cannot buy!

 

[Danmar]

We have little desire for material things but we expect that when our current cat of 18 years decides to cross the Rainbow Bridge, we will have more flexibility to travel whenever we desire it. This will increase our WR as we pursue more Bucket List items but I expect that to subside in a few years. And we are not counting the days because we love our tuxedo cat. He always greets us when we return home.

We just had house guests and he disappeared for a week but he is now back! Our buddy. There are some things that money cannot buy!

Desire for material things tends to decrease with age for sure, but boy that car was nice. Luckily there are quite a few things that money can buy.

 

[kcowan]

My friend retired last December 2014 and has now sold his vintage Alfa and replaced it with the Luxus hardtop convertible. Certainly toys have their place in any retirement.

He is in the process of booking 3 months in PV for next year (2 months this year).

 

[Danmar]

My friend retired last December 2014 and has now sold his vintage Alfa and replaced it with the Luxus hardtop convertible. Certainly toys have their place in any retirement.

He is in the process of booking 3 months in PV for next year (2 months this year).

So if people increase their Withdrawal Rate as they age what would you spend it on other than travel or health care? Certainly could gift more to family and charity. At some point a hot sports car is just ridiculous. Happily I'm not at that stage yet.

 

[audreyh1]

So if people increase their Withdrawal Rate as they age what would you spend it on other than travel or health care? Certainly could gift more to family and charity. At some point a hot sports car is just ridiculous. Happily I'm not at that stage yet.��

Bribe family to travel with you.
Upgrade to a nicer assisted living place.
Give more away....

Oh yeah - there are tons of ways to upgrade travel so that it is more comfortable for someone with less mobility, or needing assistance.

 

[Meadbh]

So if people increase their Withdrawal Rate as they age what would you spend it on other than travel or health care? Certainly could gift more to family and charity. At some point a hot sports car is just ridiculous. Happily I'm not at that stage yet.

I would add personal services. A maid would be nice. When I can't drive any more, a chauffeur. Grocery delivery. A limo for my upcoming trip to Italy, rather than the train. Etc......

 

[Amethyst]

I'm not sure what that "point" is. There is man at our gym who is about as generic-looking a geezer as you could imagine - big belly, few strands of hair, potato face, and an eyepatch - but he drives the hottest bright-yellow sports car imaginable.

And we cheer him on.

At some point a hot sports car is just ridiculous.

 

[MichaelB]

We had a family member who lived in an assisted living home. She relied on her portfolio for about half her total spending and was very thrifty. Even when we urged her to increase her spending a bit for her own comfort she refused, concerned that she might run out of money.

Toward the end, when her health was rapidly declining, she did admit, very privately, that she regretted not having spent more on herself during her final years.

I think these discussions are too theoretical. Our concerns about portfolio survival do not go away gradually and we do not see the slow approach of more funds available to spend. Our financial horizon is indefinite, then very suddenly upon us. We only know we had more money to spend when it is too late to spend it.

 

[NW-Bound]

... I think these discussions are too theoretical. Our concerns about portfolio survival do not go away gradually and we do not see the slow approach of more funds available to spend. Our financial horizon is indefinite, then very suddenly upon us. We only know we had more money to spend when it is too late to spend it.

+1000

I have seen too many people dyeing of cancer, a heart attack, or a stroke in their 60s, or even 50s, to think that it is certain that I do not have that risk.

The above said, I have no desire for a sports car. I must be paid a lot of money, and I mean a lot, to have to drive such a car. And I am not even of early SS age.