Spending after Retirement

[Lstansbury]

Hi COCheesehead -- great question and I've modeled out all kinds of scenarios. To your point, I'm not doing Roth conversions to avoid RMDs kicking me into a higher bracket. I'm doing the Roth conversions because I do believe we are headed for big tax jumps in all tax bracket when the Secure Act sunsets in 3 years.

But I'll see how it goes living with those spending levels next year, I might not be able to pay the taxes out of my cash accounts safely for more than a year or two.

I'll be on Medicare by next October, so no reason to try to keep income below the ACA limits. (If I jump out of my current retiree plan to get into an ACA plan, I can't get back in to the current plan ever, and they provide great coverage in the Medicare Part B arena). So I'm just sucking it up for now.

 

[COcheesehead]

Hi COCheesehead -- great question and I've modeled out all kinds of scenarios. To your point, I'm not doing Roth conversions to avoid RMDs kicking me into a higher bracket. I'm doing the Roth conversions because I do believe we are headed for big tax jumps in all tax bracket when the Secure Act sunsets in 3 years.

But I'll see how it goes living with those spending levels next year, I might not be able to pay the taxes out of my cash accounts safely for more than a year or two.

I'll be on Medicare by next October, so no reason to try to keep income below the ACA limits. (If I jump out of my current retiree plan to get into an ACA plan, I can't get back in to the current plan ever, and they provide great coverage in the Medicare Part B arena). So I'm just sucking it up for now.

IRMMA comes into play too. Conversions could increase your Medicare costs.

 

[teetee]

This year I have bought a laptop, had the transmission fluid in my car changed, and got a oil radiator space heater. These are my big ticket items.

There is still a month to go but I can see my expense will be under $9k, which is about a grand more than the avg expense for other previous years.

I imagine when the time comes to replace the water heater and the furnace (one is over 20yrs old and the other is more than 35yrs old), my expense will shoot up.

 

[Koolau]

When I (we) were working we never even made 6 figures. And we saved (of course)

I've been spending about 150 grand a year now for 7 years straight.

Got more dough than I started with. Not worried -

Yep, I too never made 100K but seem to be able to spend $140K or so each year. The "bad news" is that my 401(k) is still growing, meaning my RMDs (already "bloated" by my advancing age) will be even BIGGER! Whats a fella to do? Ah yes, Blow That Dough! YMMV

 

[Gumby]

We retired in 2019. Due to COVID, we've spent much less than we planned on travel and restaurant meals over these past two years. On the other hand, we spent much more than we planned on veterinary care. Everything else has been almost exactly as predicted. We are able to cover our spending from our current income (pensions + SS), so our withdrawal rate is actually slightly negative. That will probably change once we can freely travel.

 

[RobbieB]

Yep, I too never made 100K but seem to be able to spend $140K or so each year. The "bad news" is that my 401(k) is still growing, meaning my RMDs (already "bloated" by my advancing age) will be even BIGGER! Whats a fella to do? Ah yes, Blow That Dough! YMMV

It sure looks (and feels) better sitting there in the slip at the marina or out on the river than some numbers that look like just the other numbers there on the financial statement -

 

[NW-Bound]

When still working, with 2 kids in college I spent a 6-figure number every year. But now?

Even with 2 homes, with no mortgage and car purchases, no international travel due to Covid, what do I spend money on?

I guess it would help if I keep doing remodeling on the homes, but why would one want to do that? To live in the Winchester widow's house?

I looked up the depreciation of cars. An Audi depreciates 26% after 2 years. So, a $100K car each for a couple, and traded in every 2 years will blow only $26k per year. Again, why would a guy who does not care about cars do that? My wife does not even care to drive.

RVs will blow money even faster than luxury cars. Maybe a $200K motorhome to blow $50K the 1st year by depreciation?

Man, it looks like too much work to blow money.

 

[RobbieB]

Get a used diesel pusher and tow your Prius behind it -

 

[COcheesehead]

Go out to eat more. Buy good wine. Fly first class. Give, give, give.

 

[Dtail]

Go out to eat more. Buy good wine. Fly first class. Give, give, give.

The usual lament by lifelong LBYMers who just can't get used to spending. All good.

 

[COcheesehead]

I agree. It’s easy to accumulate - you just don’t spend. It’s hard to deaccumulate, you need to flip a 180. Once you realize life is short, you actually have an imagination and you can be happy spending vs saving, it changes.

 

[NW-Bound]

Just as a billionaire can enjoy making money with no possibility of ever spending it all, is it possible that a person can enjoy [-]blowing[/-] burning money just for the act of doing it?

On 23 August 1994, an art duo consisting of Bill Drummond and Jimmy Cauty burned cash in the amount of one million pounds sterling in a disused boathouse on the Ardfin Estate on the Scottish island of Jura...

The money took well over an hour to burn as Drummond and Cauty fed £50 notes into the fire...

 

[Major Tom]

Just as a billionaire can enjoy making money with no possibility of ever spending it all, is it possible that a person can enjoy [-]blowing[/-] burning money just for the act of doing it?

Aaah yes, that was a famed publicity stunt for the KLF. They became well known for that little escapade.

As reported in the British paper, The Sunday Mail, on July 25th 2004 -

Infamy followed when, on 23 August 1994, the K Foundation burnt what remained of The KLF's earnings, one million pounds, at a boathouse on the Scottish island of Jura. A film of the event – Watch the K Foundation Burn a Million Quid – was taken on tour, with Drummond and Cauty discussing the incineration with members of the public after each screening. In 2004 Drummond admitted to the BBC that he now regretted burning the money. "It's a hard one to explain to your kids and it doesn't get any easier. I wish I could explain why I did it so people would understand."

Here's a 43 minute BBC documentary about the whole affair -

https://youtu.be/L9SzDFGbsFI

 

[COcheesehead]

Just as a billionaire can enjoy making money with no possibility of ever spending it all, is it possible that a person can enjoy [-]blowing[/-] burning money just for the act of doing it?

That’s a bit of a leap from buying a nice meal for you and you love every once in awhile.

 

[NW-Bound]

Get a used diesel pusher and tow your Prius behind it -

If the idea is to blow dough, a new diesel MH would work much better than a used one.

 

[NW-Bound]

That’s a bit of a leap from buying a nice meal for you and you love every once in awhile.

That's not blowing dough. That's just dining.

 

[NW-Bound]

Speaking of a diesel motorhome, I have been entertaining the idea of getting one. However, I have never owned a diesel vehicle, and don't know what I need to know.

Recently, I changed my mind after hearing the story from a neighbor who had so much trouble with his diesel truck with a camper on it. The problem was with the DPF (diesel particulate filter), and it left him stranded on a recent trip in a town for 1 week, while waiting for it to get fixed. When he got home, the DPF failed several times more. He said it was serviced 5 times in one month.

He said he was seriously considering going to a gasoline truck to avoid the hassle. Getting stranded for 1 week in a small town out of nowhere can ruin the love of travel for you pretty quick.

See what I said about spending money to buy trouble?

 

[NW-Bound]

Go out to eat more. Buy good wine. Fly first class. Give, give, give.

Recently, I looked up Quicken to see my expenses ever since I started to track them in 2012. I found that I spent a bit more on donations and gifts than I spent on travel.

With no travel due to Covid, I guess I could donate more, hoping my money will do some good. That's not always the case, from what I have read.

PS. My kids don't need more of my money. How much should you spoil your children? And they do well on their own. My son recently shared that he got a 29% raise.

 

[skyking1]

Speaking of a diesel motorhome, I have been entertaining the idea of getting one. However, I have never owned a diesel vehicle, and don't know what I need to know.

Recently, I changed my mind after hearing the story from a neighbor who had so much trouble with his diesel truck with a camper on it. The problem was with the DPF (diesel particulate filter), and it left him stranded on a recent trip in a town for 1 week, while waiting for it to get fixed. When he got home, the DPF failed several times more. He said it was serviced 5 times in one month.

He said he was seriously considering going to a gasoline truck to avoid the hassle. Getting stranded for 1 week in a small town out of nowhere can ruin the love of travel for you pretty quick.

See what I said about spending money to buy trouble?

That is why, even though it bloweth less dough, used RV's are the way to go.
1)First owner got to take it to the shop for every little thing that should not make it out the factory door. They don't pay you for that trouble and travel time lost.
2) Any bad quirks or problems with that model will be out there on the 'net for you to find.
Get a great used rig and blow some dough elsewhere to make up for it

 

[Music Lover]

Go out to eat more. Buy good wine. Fly first class. Give, give, give.

I'm planning on buying a pizza oven but that will reduce going out to eat. And I just bought new heat shields for my barbeque, too. It's hard to spend

 

[jollystomper]

Aaah yes, that was a famed publicity stunt for the KLF. They became well known for that little escapade.

As reported in the British paper, The Sunday Mail, on July 25th 2004 -

Infamy followed when, on 23 August 1994, the K Foundation burnt what remained of The KLF's earnings, one million pounds, at a boathouse on the Scottish island of Jura. A film of the event – Watch the K Foundation Burn a Million Quid – was taken on tour, with Drummond and Cauty discussing the incineration with members of the public after each screening. In 2004 Drummond admitted to the BBC that he now regretted burning the money. "It's a hard one to explain to your kids and it doesn't get any easier. I wish I could explain why I did it so people would understand."

Here's a 43 minute BBC documentary about the whole affair -

https://youtu.be/L9SzDFGbsFI

I wonder if they started burning the notes at 3AM .

 

[RobbieB]

I was thinking more along the lines of "Madden Style"

You know truck strong. Greyhound strong. Commercial grade. Million mile stuff -

 

[Major Tom]

I wonder if they started burning the notes at 3AM .

Good one!

 

[NW-Bound]

I have been thinking about what "blowing dough" means to me. It sounds like something extravagant that you would not normally spend money on. It has to be something out of the ordinary.

I don't think I have made any post on the "blowing dough" thread. Not when I bought a new vehicle, or a new phone. They are just ordinary things that I buy when I need them, and they are not fancy. The same with when I paid for a Hawaii trip with my adult children and a son-in-law. Or when I gave $2K to my wife's niece who needed money for a serious illness.

I guess "blowing dough" is when you buy something that you don't normally do, or something a lot more expensive than you usually have. For example, a car that's at least 2x more expensive than what you usually drive. A $2000 bottle of Cognac instead of the usual bottle of Remy Martin XO.

The question is whether I actually enjoy what I buy, instead of just spending money. If I spend a lot more money just for the sake of spending, then it is not unlike those guys who burnt cash in a bonfire.


PS. Because "blowing dough" implies going beyond what you usually spend, do you have to go to more than 4% WR to qualify? Then, it would be hard for me to qualify, because my WR has been only 1%.

PPS. Perhaps "blowing dough" means something purchased a bit imprudently, on a whim? I don't do that too often though. Usually, I think about what I do with it once I have it. Does it just sit there collecting dust? Will I actually enjoy it? I don't find too many toys interesting.

 

[COcheesehead]

I am trying really, really hard to get over a 2.3% withdrawal rate. I am going to get there. Just need to empower my imagination.