Adjust SWR due to financial "sea change" ?

[W2R]

I am still working and will be 61 when I retire in November. I think that my retirement activities at that time will fit within whatever I am capable of doing.

It would be very distressing to long for something that I am no longer capable of doing. I do feel the effects of aging. But for me, there is still a lot left to do in life. Glass half full, and all that.

 

[Bikerdude]

I am still working and will be 61 when I retire in November. I think that my retirement activities at that time will fit within whatever I am capable of doing.

It would be very distressing to long for something that I am no longer capable of doing. I do feel the effects of aging. But for me, there is still a lot left to do in life. Glass half full, and all that.

I don't believe its longing (for something that I am no longer capable of doing) as much as wanting something I had planned to do when I was at an age when I could do it. But now the $$ I had set aside for the "fun" stuff have disappeared and the future is uncertain. So the question is should you go out on a limb and spend $$ that you don't have anymore or wait until you earn them back. However, waiting now at 61 has a time limit on it for some of the more adventurous items. That's the dilemma.

 

[REWahoo]

What he said...

 

[jdw_fire]

I don't believe its longing (for something that I am no longer capable of doing) as much as wanting something I had planned to do when I was at an age when I could do it. But now the $$ I had set aside for the "fun" stuff have disappeared and the future is uncertain. So the question is should you go out on a limb and spend $$ that you don't have anymore or wait until you earn them back. However, waiting now at 61 has a time limit on it for some of the more adventurous items. That's the dilemma.

try bernicke's wd plan

 

[Rich_by_the_Bay]

Let's say that at the start of your retirement, you print out a chart that shows how much you should have at each age if you want to end up with a balance of zero on your presumed death day.

If, at age 70, you've found that you are below that line for the last three years, it might be time to go to plan B. That sounds reasonable, doesn't it?

Yes, that's what I had in mind. It's not like you have $1mm and in year 20 it drops to zero. There is plenty of time to see the clouds on the horizon.

 

[Rich_by_the_Bay]

Don't cancel. It really is a small amount in the scope of things. But of course I say that when I am about to leave on my own two month trip. But the cash is in the bucket.

I think you meant to quote REW on this one, but I agree with your advice whole-heartedly.

 

[TromboneAl]

I too hear a 'do it now while you still can' voice whispering in one ear and a 'you'd better cut spending now' voice in the other.

Well put. I finally started listening more to the 'do it now' voice in 2008, but now the 'cut spending' voice is a little louder. We won't cancel our extended driving/camping trip to St. Louis for DDs graduation, but I'm thinking we'll eat out less along the way.

 

[OhSoClose]

If some of you are like me, your estimates of your personal SWR will be affected by your willingness to invest in stocks after retirement. The recent sharp downturn has left me feeling that, mentally, I can't leave a majority of my assets invested in equities following retirement. For me, its a matter of not wanting to be stressed out winning out over the logical view (i.e., that only stocks beat inflation over time). I can probably keep up to a max of thirty percent of my investments in stocks. But that probably means an SWR of no more than 2.5% of my investment pool.

 

[OAG]

I never heard of the 4% SWR, FIRECALC (and the rational behind it) until I got here a couple of years ago. This site has to be the most financially educational site available. Before I got here I thought you "saved like crazy" and then at some point (before the "wagon wagon" came for you) you spent like crazy. I see now that that may not work too well mainly because I do not know when the wagon comes and that you have to "live for today" too. I have decided, starting this year, I will try to "spend", at or near, 4% - but it is almost the end of February and I have spent about -1%, I really have to get to work on this "spending" thing.

 

[RonBoyd]

Well put. I finally started listening more to the 'do it now' voice in 2008, but now the 'cut spending' voice is a little louder. We won't cancel our extended driving/camping trip to St. Louis for DDs graduation, but I'm thinking we'll eat out less along the way.

And the "do it now" voice is using the "before fuel goes over $4.00 a gallon again" argument. Hard to resist, eh?

 

[OhSoClose]

I never heard of the 4% SWR, FIRECALC (and the rational behind it) until I got here a couple of years ago. This site has to be the most financially educational site available. Before I got here I thought you "saved like crazy" and then at some point (before the "wagon wagon" came for you) you spent like crazy. I see now that that may not work too well mainly because I do not know when the wagon comes and that you have to "live for today" too. I have decided, starting this year, I will try to "spend", at or near, 4% - but it is almost the end of February and I have spent about -1%, I really have to get to work on this "spending" thing.

DW wants to travel when we actually retire. So I have no doubt I will be able to spend up to whatever level we decide to withdraw at! The trick for me will be establishing a reasonable withdrawal rate.

 

[2B]

DW wants to travel when we actually retire. So I have no doubt I will be able to spend up to whatever level we decide to withdraw at! The trick for me will be establishing a reasonable withdrawal rate.

I am wanting to travel extensively now that I have a good paying j*b and lots of paid time off and unpaid time off available. She's the one that's holding back partly because of issues with her kids and father. They'd all do fine if we're gone 2 or 3 weeks. She is aware of the hit to our savings and she also wants to conserve.

The tour business is getting hammered. They are giving great discounts now. We went on a European river cruise last year and loved it. Now there are 2 for 1 specials on some trips. The airline rates to Europe are also having specials. What cost us $8000 last year would cost $6000 today. She doesn't want to do another cruise so soon.

 

[OhSoClose]

I am wanting to travel extensively now that I have a good paying j*b and lots of paid time off and unpaid time off available. She's the one that's holding back partly because of issues with her kids and father. They'd all do fine if we're gone 2 or 3 weeks. She is aware of the hit to our savings and she also wants to conserve.

The tour business is getting hammered. They are giving great discounts now. We went on a European river cruise last year and loved it. Now there are 2 for 1 specials on some trips. The airline rates to Europe are also having specials. What cost us $8000 last year would cost $6000 today. She doesn't want to do another cruise so soon.

I want to do more traveling right now too. As you stated, the travel bargains are everywhere. Unfortunately, FIL lives with us. That situation can't go on forever . . . can it??

 

[ERD50]

I never heard of the 4% SWR, FIRECALC (and the rational behind it) until I got here a couple of years ago. ...

Before I found FireCalc, my "back of the envelope" was always something like this:


1) Hmmm, seems I read an awful lot of sources that say stocks can be expected to do 8-12% of the long run.

2) Bonds, I dunno - 5%?

3) 50-50 EQ/Bond seems right for a retired person.

4) Seems I see 3% for long term inflation mentioned a lot.

So, conservative 9% for stocks, use 5% for bonds = average 7% return. Minus 3% inflation = 4% for me.

What that does not take into account is all the volatility in the stock and bond markets and inflation. But it gets you into that ballpark.

I didn't know about pssssst Wellesley back then either


-ERD50

 

[Allegany]

OOPS Started at 5%

Well I started at 5% of portfolio at 54.5. Now going to be 56 and due to the market I'm at about 6% of portfolio. Since I'm doing a 72t withdrawal I'm locked in to this amount and am waiting for the market to return to hopefully get my withdrawal rate back down closer to the highly touted 4%.

 

[audreyh1]

I too hear a 'do it now while you still can' voice whispering in one ear and a 'you'd better cut spending now' voice in the other. I'm struggling with canceling a planned 6 week RV trip to the northwest this summer - a trip we've been planning for months. Will the $5,000 I save make a significant difference in our quality of life sometime down the road? Or will I kick myself for not taking the opportunity for a wonderful trip when I had the chance?

Ain't life great?

I suspect the latter!

I think there are very good reasons NOT to cancel a trip right now. There might be ways to economize during the trip. Fuel is way down for one thing. But to cancel the trip entirely and just sit around doing nothing? What kind of quality of life is that? What is the point of being retired if you can't do anything you enjoy?

It's a tough tradeoff - future versus present. But as you are aware, there very well may be obstacles to enjoying such a thing down the road.

There must be some kind of balance. For example, maybe if people had 3 trips (that meant using the "extra" padded spending) planned in a given year, they might cut back to the most important 2 trips. But to cut it all out in case of future disasters?

FWIW for everyone on the forum - the "siege" mentality gets to us all, even the very wealthy. A friend of ours has way, way more than us but has decided to suspend traveling until the market recovers to a certain level. We were kind of shocked!

 

[Rich_by_the_Bay]

I too hear a 'do it now while you still can' voice whispering in one ear and a 'you'd better cut spending now' voice in the other. I'm struggling with canceling a planned 6 week RV trip to the northwest this summer - a trip we've been planning for months. Will the $5,000 I save make a significant difference in our quality of life sometime down the road? Or will I kick myself for not taking the opportunity for a wonderful trip when I had the chance?

Let's see: you already own the motorhome, so that's out of the equation for this decisiosn. $5k for 6 weeks.

For $119/day per person you both get to enjoy 6 weeks of clean, luxury surroundings, beautiful vistas and parks, meeting fellow travelers with plenty of socializing, explore sites and cities you may never have a chance to see again, hiking, walking, kicking back and reading or napping, food of your choice, stories to last a lifetime and escaping the heat of summer.

Or you could stay home and fret over the economy for 6 weeks.

 

[Meadbh]

Take the trip. Life is short. If it isn't short enough (and you run out of money) take up bungee jumping.

 

[TromboneAl]

For our California to St. Louis trip, I estimate 6,000 miles, 40 MPG, $3/gallon = $450. Nice.

Recent bungee jumping story (49-year-old jumper, cord breaks).

Despite the scare, Afforde said he would bungee jump again.

"The first jump was just phenomenal, it was an incredible experience. Therefore I wanted to do it again. This was just how it was supposed to play out," he said.

However, KGW also spoke to Afforde's wife, who said this would probably be his last jump, and that his thrill-seeking days were over.

 

[haha]

Recent bungee jumping story (49-year-old jumper, cord breaks).

Despite the scare, Afforde said he would bungee jump again.

"The first jump was just phenomenal, it was an incredible experience. Therefore I wanted to do it again. This was just how it was supposed to play out," he said.

However, KGW also spoke to Afforde's wife, who said this would probably be his last jump, and that his thrill-seeking days were over.

This guy is one cool customer. He is a lunatic, but definitely not emotionally over-reactive.

Ha

 

[2B]

I want to do more traveling right now too. As you stated, the travel bargains are everywhere. Unfortunately, FIL lives with us. That situation can't go on forever . . . can it??

My FIL fortunately doesn't live with us but it became a brief topic of conversation before reality set in with the help of some health care professionals. He's in a memory care unit but DW spends lots of time visiting and dealing with his issues.

As far as going on forever, it sure seems to have been. It started about 5 years ago when his wife fell and broke her hip. She was to be in a nursing home for the rest of her life per the doctor but he kept hatching ways of getting home health care for her. No fact slowed him down and there are vultures in the home heath care business that are more than happy to take your money. We kept her from being moved but it then became obvious he couldn't do many basic living skills - like writing a check by himself or heating something in a microwave. DW went into "mother hen" mode trying to make it easier for him but it never worked. Eventually, we moved him into an assisted living facility. He spent over two years there and he's been in memory care over a year. He's heathy beyond belief for being 87 but can't remember his grandchildren's names or say anything but the most basic platitudes. It seems like its been forever and there's no end in sight.

If your FIL is with you, I hope he's mentally ok. If not, things will just continue to get worse. Make your plans now for the next move unless your goal is to spend a decade caring for his every need. I personally don't believe one person can do it successfully. The one common element that binds all martyrs is that they are all dead. I don't recommend becoming one.

Aren't I cheery?

 

[youbet]

I don't believe its longing (for something that I am no longer capable of doing) as much as wanting something I had planned to do when I was at an age when I could do it. But now the $$ I had set aside for the "fun" stuff have disappeared and the future is uncertain. So the question is should you go out on a limb and spend $$ that you don't have anymore or wait until you earn them back. However, waiting now at 61 has a time limit on it for some of the more adventurous items. That's the dilemma.

My dilemma exactly. I'm sure we'll work out compromises that lead us to still doing some things and not doing others. Life goes on. But this "ticking clock" concept REWahoo, you and I have come to realize is an interesting one..... It's making this market downturn more "interesting" than I'd thought it would be. DW and I aren't experiencing any threats to life's basic requirements. We can still easily afford the house, car, groceries, etc., but deciding what to do about discretionary spending is making us a little edgy.

Here are a few other related thoughts:

A few years into retirement, just "not working" isn't enough anymore.

If having life's basic necessities becomes threatened, then securing those things becomes a rewarding activity and satisfying goal. But if food, clothing, shelter, etc., are securely in place, routine maintenance of these things is a bore and you seek more.

Life activities beyond the basics don't have to require a lot of money, but darn, the free items on my list of things to do don't seem all that interesting!

We're headed to a paddling sport convention called "Canoecopia" in Madison, Wis in mid-March. Lots of seminars and speakers covering various trips from paddling local streams to expensive international destinations. Plus a huge vendor area where I could double the national debt in a few hours loading up on new paddling related goodies. Hows that for putting myself into a "spend or don't spend" decision making scenario!

 

[unclemick]

Well. well well. - while we are posting cheery thought's - how about you have a pretty good time overall from 49-66 (even counting my el cheapo period) and it dawns on you - you are 4 1/2 years from RMD with 70% of your portfolio still in trad IRA - I mean what if the dang market comes roaring back - you get an IRS offer you can't refuse - when in your heart you want to be a cheap SOB until age 80.

No justice - you just can't win. Rats!



heh heh heh - you'd think after 15 yrs, I would get a grip and take this retirement thing serious. I'm practicing eating for my upcoming New Orleans trip.

 

[RonBoyd]

 

[Bikerdude]

My dilemma exactly. I'm sure we'll work out compromises that lead us to still doing some things and not doing others. Life goes on. But this "ticking clock" concept REWahoo, you and I have come to realize is an interesting one..... It's making this market downturn more "interesting" than I'd thought it would be. DW and I aren't experiencing any threats to life's basic requirements. We can still easily afford the house, car, groceries, etc., but deciding what to do about discretionary spending is making us a little edgy.

Amazing we are all in the same situation. Must have something to do with our age. As you are, I'm still living well and take most of my US motorcycle trips and anything else around or under $1,000. But its the $10K (plus the taxes it triggers) motorcycle trip down the Ho Chi Minh trail, the motorcycle safari in south Africa, the trip though the Alps that are on hold right now. I figure I have maybe 4 or 5 years to able to do that physcially maybe less maybe more. But you get the picture.