What do you consider safe?

[palomalou]

We have been spending the last month in Italy and have another month. Loving it so much we want to do it twice a year. (We had been thinking a couple of years ago of just moving permanently, but think at the moment that it is not necessary and probably not a good idea.) This just sounds crazy, but...actually, it isn't as expensive as one might think, with modest airbnb and airline tickets with points. Some things are cheaper--dentist, wow! And even eating out more we are still within our food budget from prior to this idea.
We would spend 78% of what Firecalc says is 100% safe.
What percentage of that figure do you consider safe for you? I am just interested, and want to compare thoughts.
FWIW, I am all but 68 and spouse is all but 65.

 

[youbet]

How close is your actual FIRE portfolio to the investments you inputted into FireCalc? Most of us don't actually live our financial lives the exact way we model our retirement calculators and that means we're likely asking the wrong question.

For me, if your actual portfolio looks very much like the portfolio you are historically testing and FireCalc says there were zero failures historically, I'd be comfortable that my situation is safe. If you're spending 78% of what you inputted, even more so.

Don't expect these calculators to be more precise than they are.

 

[COcheesehead]

Keep in mind FireCalc considers a result that ends in $0 as a success and is based on multiple paths backtested. We, however, only have a shot at one path going forward. So do you feel lucky?
I am at 68% of what FireCalc says I can spend. I am not sure how I can spend more (I’ll try and BTD) and look at the difference as a cushion for the unexpected.

 

[Jerry1]

I look at my budget and consider that safe. For example, say my budget is $100K per year. I’ve tested that using FireCalc and other calculators. I’ve also given myself plenty of cushion in my estimates. Therefore, unless there is some very significant financial episode, I feel safe in my planning. It wouldn’t matter if I spent that money in Italy or the U.S.

 

[Sunset]

I would say at 78% spending per year, you are safe.

Mainly because at any time you can stop doing it and are not committed to spending money, like you would if you bought an ocean side Italian home, and then couldn't go there anymore.

 

[djsander]

I would say enjoy. You can stop if something unexpected happens and you need to alter course and spend less. You are in a good position.

 

[W2R]

I am nearly 75 and my average spending is 58% of what FIRECalc says I can spend. But right now I badly need a new roof! The roofer is coming to give me an estimate sometime this week. From what I have heard, new roofs in my area are insanely costly this year.

Also, it seems like every other unexpected big expense possible has arisen recently, and then there's inflation. Thank goodness I have been squirreling away a little of the extra each year. I want to have enough left in case I need to pay a caregiver when I grow older, and also to leave my heirs something when I croak because they deserve it.

I think 78% is fine if you don't have a run of unexpected big expenses all on the same year like I have had lately.

 

[Major Tom]

What W2R said. Whether I felt safe at 78% would depend on the likely so-called lumpy expenses that might be in my future. I'm at 60%, including future SS, which could come in as early as 3 years, if I really need it to. Am feeling fairly secure because of that. I may not be terribly wealthy, but I'm going to be OK, and that's a good feeling.

 

[rodi]

As someone mentioned - you can always stop these trips and tighten your belt back up if financially things change.

I look at your ages and say go for it. None of us are getting younger - if this is something you enjoy, do it. (DH who's 71, and I'm 61 have pushed some of our planned travel sooner since we are feeling less invincible than we did even 5 years ago as far travel/abilities.) We can spend less later when we are too old to enjoy travel.

 

[Teacher Terry]

With 9 of my friends dying all between the ages of 59-71 I have increased my travel because no one knows how much time is left. I went to Europe last year and have a trip planned for this year and 2024.

 

[MarieIG]

We have been spending the last month in Italy and have another month. Loving it so much we want to do it twice a year. (We had been thinking a couple of years ago of just moving permanently, but think at the moment that it is not necessary and probably not a good idea.) This just sounds crazy, but...actually, it isn't as expensive as one might think, with modest airbnb and airline tickets with points. Some things are cheaper--dentist, wow! And even eating out more we are still within our food budget from prior to this idea.
We would spend 78% of what Firecalc says is 100% safe.
What percentage of that figure do you consider safe for you? I am just interested, and want to compare thoughts.
FWIW, I am all but 68 and spouse is all but 65.

For now, those trips to Italy sound very good. Safe at 65 and 68 is different from safe at 35 and 38. And - this is not a fixed, mandatory expense. You can always dial back (i.e. to one trip a year) if you need to. Enjoy!

(I just finished my first year of ER; and am busy titrating Roth conversions. My first year's withdrawal went over what I had initially planned to spend due to additional conversions triggering additional tax payments, but was within FireCalc 100% safety.) If I don't feel comfortable, I'll cut back.

 

[palomalou]

update

Good to hear! Based on Youbet's advice, I got further details from spouse, our "manager" of money, and it is 68% based on refining the details. We have been retired nine years.

 

[Yasha Hartmann]

The percentage of retirement savings that is considered safe to spend each year depends on many factors, including your age, retirement lifestyle, and investment returns. In general, financial experts recommend a safe withdrawal rate of 4% of your retirement savings per year.
However, it's important to note that this is just a rule of thumb and may not be appropriate for everyone. Factors such as unexpected expenses, market volatility, and longevity risk can all affect your retirement income and spending.
Ultimately, the best approach is to create a personalized retirement plan with a financial advisor or planner who can take into account your individual circumstances and help you create a sustainable retirement income strategy.
It's great that you're enjoying your time in Italy and have found a way to make it financially feasible. Just be sure to consider your long-term financial goals and make a plan that will allow you to continue enjoying your retirement without jeopardizing your financial security.

 

[Eladio]

The percentage of retirement savings that is considered safe to spend each year depends on many factors, including your age, retirement lifestyle, and investment returns. In general, financial experts recommend a safe withdrawal rate of 4% of your retirement savings per year.
However, it's important to note that this is just a rule of thumb and may not be appropriate for everyone. Factors such as unexpected expenses, market volatility, and longevity risk can all affect your retirement income and spending.
Ultimately, the best approach is to create a personalized retirement plan with a financial advisor or planner who can take into account your individual circumstances and help you create a sustainable retirement income strategy.
It's great that you're enjoying your time in Italy and have found a way to make it financially feasible. Just be sure to consider your long-term financial goals and make a plan that will allow you to continue enjoying your retirement without jeopardizing your financial security.

This looks like a CHATGPT response.

 

[DrRoy]

You would not be able to stay in the European Shengen area (including Italy) more than half of any year.

 

[palomalou]

Quite so, DrRoy. I use the eu calculator and another Schengen calculator that tells how many days you have left very clearly. Going for 2 months, back to US for 4, 2 months Italy, 4 months US is very safe, /schengen zone-wise.

 

[RobertTN]

How close is your actual FIRE portfolio to the investments you inputted into FireCalc? Most of us don't actually live our financial lives the exact way we model our retirement calculators and that means we're likely asking the wrong question.

For me, if your actual portfolio looks very much like the portfolio you are historically testing and FireCalc says there were zero failures historically, I'd be comfortable that my situation is safe. If you're spending 78% of what you inputted, even more so.

Don't expect these calculators to be more precise than they are.

Really agree with this^

I would try a few different calculators that are freely available and make sure your exact portfolio is set in the calculators.

 

[palomalou]

i-orp back!

Good advice, Robert. And good news, too! I use one that is from some group the name of which I forget, and had been bemoaning the loss of the i-orp. Well, it's back!
We've been drawing 2%. Will be less when my SS comes in 5 months.

 

[RobertTN]

Good advice, Robert. And good news, too! I use one that is from some group the name of which I forget, and had been bemoaning the loss of the i-orp. Well, it's back!
We've been drawing 2%. Will be less when my SS comes in 5 months.

I haven't tried i-orp before, I will have to check it out - Thanks

 

[Koolau]

I am nearly 75 and my average spending is 58% of what FIRECalc says I can spend. But right now I badly need a new roof! The roofer is coming to give me an estimate sometime this week. From what I have heard, new roofs in my area are insanely costly this year.

Also, it seems like every other unexpected big expense possible has arisen recently, and then there's inflation. Thank goodness I have been squirreling away a little of the extra each year. I want to have enough left in case I need to pay a caregiver when I grow older, and also to leave my heirs something when I croak because they deserve it.

I think 78% is fine if you don't have a run of unexpected big expenses all on the same year like I have had lately.

I can relate. I've mentioned (well, whined) that I've had to spend $10K in the past year, chasing, fixing, cleaning up water leaks. I'm not making a reservation at the poor house just yet, but it's kinda jarring when these "events" happen just when the port is down and inflation is up. Not quite a perfect storm, but definitely a very rainy day.

 

[Music Lover]

With 9 of my friends dying all between the ages of 59-71 I have increased my travel because no one knows how much time is left. I went to Europe last year and have a trip planned for this year and 2024.

We just spent 6 weeks in Mazatlan. We get together with a few different groups semi regularly. Of the dozens of people we've met I've noticed that there are a lot of retirees in their 60's and 70's, but almost none in their 80's.

I'm 60 and hoping for 15 more "good" years of extended trips. If I can go longer that's fine but based on what I've seen the odds are against it.

 

[athena53]

I'll also say go with the travel. I use a 3.5% withdrawal rate and that leaves plenty of padding for travel, charity, my grandchildren's 529s, and lumpy expenses such as car replacement and major home maintenance. Most of my living expenses are modest (minimal restaurant meals and clothing, mortgage is only $700/month, car is paid for) so I don't sweat about how the rest of the budget is allocated.

I'm 70 and have slowed down a bit (no more "boulder-bash" uphill hikes) so I'm well aware that I may as well keep going while I can.

 

[RobbieB]

My blow has always been over 4. Mostly 5 to 7. Last year 8.6 percent (yeah, bought the boat)

Now going on 10 years retired and I've still got more dough than I started with.

Yeah, I read the "safe" 4% stuff and yeah, I was a bit concerned. But it seems like before I just worried too much -

 

[RetiredAt49]

My blow has always been over 4. Mostly 5 to 7. Last year 8.6 percent (yeah, bought the boat)



Now going on 10 years retired and I've still got more dough than I started with.



Yeah, I read the "safe" 4% stuff and yeah, I was a bit concerned. But it seems like before I just worried too much -

Love to hear things like this Robbie… I for one want to “die with zero” but I’m only 50 so it’s a balancing act.

 

[RetiredAt55.5]

Definitely a balancing act.

If me and DW don't [-]blow[/-] enjoy enough of our dough, I'm sure our children [-]can[/-] will do it for us after we're gone.