Another "die with zero" question (poll)

[Lorenzo]

Even those without pensions. We’ve had a series of long bull markets since 2009 and it’s floating all boats. We still could go through a protracted bear/stagnant market period that wipes out a good chunk of those gains. You never know.

Indeed, "you never know."

 

[steakis4closers]

i was all about die with zero, it made sense to me. as a recent new member i read a simliar thread to this one. and it actually convinced me that it would be better to have money on hand when you get really old in case you needed extra care. money can ameliorate some misery at that age

 

[TheWizard]

i was all about die with zero, it made sense to me. as a recent new member i read a simliar thread to this one. and it actually convinced me that it would be better to have money on hand when you get really old in case you needed extra care. money can ameliorate some misery at that age

The true DWZ types can't likely do that.
When it comes down to crunch time for them, they just have to bite the bullet, or whatever...

 

[big-papa]

A lot of people who use amortization withdrawal methods believe that it's a die with zero method. It can be but it isn't necessarily. It can also be a die-with-targeted-amount left over.

Cheers

 

[street]

In early posts in this thread, I confusingly implied the only way to "die with zero" is to spend on oneself, when what I really meant was depleting one's savings by spending on whatever is meaningful--and that "spending" includes gifting. Someone pointed out that in the book Die With Zero the author suggests giving more money away to loved ones and charities during your lifetime rather than "at the end." I can see the logic. For loved ones, they can use it to their advantage while they are relatively youthful. For charities, you might have the benefit of seeing your largesse at work. I don't believe "die with zero"--that is, depleting or nearly depleting your savings during your lifetime--is inconsistent with a goal of making a difference in the world for others. You'd just do more of it during your lifetime and less of it upon your death.

Yes and be deceiving how things are worded. You made a great point but for me, recipients will get after my last breath. Even my son and his Family.

 

[JohnnyPHX]

i was all about die with zero, it made sense to me. as a recent new member i read a simliar thread to this one. and it actually convinced me that it would be better to have money on hand when you get really old in case you needed extra care. money can ameliorate some misery at that age

You are 100% correct. It is better to at least plan and have some assets set aside in case of old age care.
We were fortunate that my parents did not need any long term care that family around them couldn't assist with before they passed. Our SIL on the other hand has one parent who has come down with a medical condition where they need 24/7 supervised care at a facility that is costing about 20K a month. We have been visiting a step parent at the VA with dementia. It has been eye opening.
Hopefully you wont need it but you will be glad you planned for it if you do. Doesn't need to be an all or nothing situation. You can still share along the way.

 

[Koolau]

i was all about die with zero, it made sense to me. as a recent new member i read a simliar thread to this one. and it actually convinced me that it would be better to have money on hand when you get really old in case you needed extra care. money can ameliorate some misery at that age

Yes. As long as I'm not depriving myself now, I don't see anything wrong with ending up with extra at the end. I'd much prefer high-quality care at home rather than being in a Medicade facility if I go out slowly.

 

[Lorenzo]

Yes. As long as I'm not depriving myself now, I don't see anything wrong with ending up with extra at the end. I'd much prefer high-quality care at home rather than being in a Medicade facility if I go out slowly.

Isn't being able to see with some precision the line between "depriving" and "just enough" the whole key to this, though? In other words, what does "depriving" mean? Do you clearly have a big enough pile to do all the things you want to do in retirement such that there is a high probability you will end up with extra at the end? If so, that's wonderful. But if you're one of those people for whom calculators like FIRECalc show a line that is not so clear--it doesn't show a likelihood of success way above 100%--and so you choose to err on the side of spending conservatively--perhaps foregoing some things you might do in retirement, then on average you will end up with a pile at the end, maybe several millions, and you will not have done those things you wanted to do. So instead you strike some balance, as most of us in the middle of the bell curve do. Also, whether one feels deprived or satisfied or something else may be an individual thing. Some people are easily satisfied, and others are never satisfied. My Depression-era grandparents would have described themselves as satisfied and not at all deprived in their retirement, and yet they never took vacations, were happy just to stay at home, had no hobbies, rarely dined out, did not see food as anything but necessary nourishment, and just generally lived a simple life. Will my choice of how much to do and how much to forgo leave me feeling "deprived" or "satisfied" or "totally indulged" or something else? Who knows. This whole game is about feelings and probabilities. You want to be happy enough without running out of money at the end (including when you may appreciate that expensive high-quality care). Where do you draw the line in your spending to achieve that? The eternal question.

 

[Diogenes]

... if you're one of those people for whom calculators like FIRECalc show a line that is not so clear--it doesn't show a likelihood of success way above 100%--and so you choose to err on the side of spending conservatively--perhaps foregoing some things you might do in retirement, then on average you will end up with a pile at the end, maybe several millions, and you will not have done those things you wanted to do. ...

This whole game is about feelings and probabilities. ...

If FireCalc gave a probability at which I wasn't comfortable, then I'd not retire. Period. If I lost my job and unavoidably retired because professional employment was not forthcoming, I'd drastically lower my spending.

But you're quite right, that ultimately it isn't about math... it's about feelings. If at the final stage of life, you regret the experiences not enjoyed, because of reluctance to spend money, then of course, it behooves you to take the risk, to pursue the enjoyment. If on the contrary your future-self will relish with glee and self-satisfaction the accumulated and unspent stash, then... we have the contrary conclusion.

 

[aja8888]

If FireCalc gave a probability at which I wasn't comfortable, then I'd not retire. Period. If I lost my job and unavoidably retired because professional employment was not forthcoming, I'd drastically lower my spending.

But you're quite right, that ultimately it isn't about math... it's about feelings. If at the final stage of life, you regret the experiences not enjoyed, because of reluctance to spend money, then of course, it behooves you to take the risk, to pursue the enjoyment. If on the contrary your future-self will relish with glee and self-satisfaction the accumulated and unspent stash, then... we have the contrary conclusion.

My experience with people close to me in their final stages of life is that they really just want the pain to stop and they don't want an audience. They also were not regretting any past experiences at that point. And money not spent is the farthest thing from their mind.

 

[Diogenes]

My experience with people close to me in their final stages of life is that they really just want the pain to stop and they don't want an audience. They also were not regretting any past experiences at that point. And money not spent is the farthest thing from their mind.

Of course. But the vapidly common contention, is that persons close to death, reminisce and regret the vacations not taken, the experiences not enjoyed, because they were too frugal. Ergo, don't be so frugal. I find this contention to be superficial and wrong... in part for reasons that you note, in part from my own reason, which is that accumulation of money is a particular pleasure of its own, so that denying that pleasure, is a sacrifice and a source of regret.

 

[jollystomper]

i was all about die with zero, it made sense to me. as a recent new member i read a simliar thread to this one. and it actually convinced me that it would be better to have money on hand when you get really old in case you needed extra care. money can ameliorate some misery at that age

So true. I am watching DW's mother and uncle "dying" with zero. They did not have to. It is not pretty.

 

[Koolau]

So true. I am watching DW's mother and uncle "dying" with zero. They did not have to. It is not pretty.

Very true.

"I never been in no situation where having more money made it worse."

Clinton Jones

 

[TheWizard]

So true. I am watching DW's mother and uncle "dying" with zero. They did not have to. It is not pretty.

Why exactly did "they not have to"?

 

[marko]

FWIW, my brother's sudden and unexpected, severe disability made one thing clear: it's nice to have a lot of money.

He's nowhere near dying, and, at age 70 likely has another 10 or 15 years ahead of him, but he's able to "buy" himself a lot of comfort and support. Extra home help, extra therapies, additional services and equipment, private drivers etc.

As his guardian, I never have to worry about saving him a nickel here and there. He's quite wealthy and being able to afford many things that others in similar circumstances cannot is incredibly helpful to his well-being...and mine.

Were it not for his ability to pay, he'd likely be in a nursing home instead of living semi-independently in his own home.

Had he decided to 'die with zero' before his injury, his life would have been a lot more uncomfortable. Live for today, plan for tomorrow.

 

[jollystomper]

Why exactly did "they not have to"?

Because they were both set up (though MIL's savings, and money and a house DW's other uncles, now deceased, set aside) to have enough to live comfortably on with a cushion. They were both arrogant enough to drive away other family members because they were"better" than them. But the Uncle at age 90 (in in great health, still jogging and ice skating) decided to have an "interesting" relationship with a 30-something woman, ignored the warnings, and was left high and dry. The mother decided enough was not good enough, she looked at others and wanted more, and then as her mobility increasingly failed lashed out at care workers which has driven her care costs up. Long story short, Her Uncle, now 102, is in Medicaid assisted living and has giving his house worth $1 Million over to the government - but is pushing DW and her sister to "do something so I can get back to my house". Her mother is bedridden and has automatic payments for things she refuses to provide details on which leaves her with just enough to live on and pay health care. DW and her sister are scrambling dealing with daily issues from both of them.

The money and assets they could had left we have zero interest in. MIL used money to control all of her kids, but DW escaped that after marrying me, which MIL resented. There will be a fight over whatever she might leave that we will stay out of. Uncle had a daughter when he was 60 but divorced when she was 3, DW recently got them back together. Though it is strained, anything he had should have gone (and if by a miracle anything comes up, will go) to her.

"Dying with nothing" may sound nice, but there can be a hidden cost that others will bear.

 

[TheWizard]

Because they were both set up (though MIL's savings, and money and a house DW's other uncles, now deceased, set aside) to have enough to live comfortably on with a cushion...

Thanks for the follow-up, JS.
Sounds like a few good examples of what not to do in your later years...

 

[Lorenzo]

FWIW, my brother's sudden and unexpected, severe disability made one thing clear: it's nice to have a lot of money.

. . .

Live for today, plan for tomorrow.

You have my deepest sympathies for your brother's misfortune, but the question that dogs all of us who have not accumulated way more than the calculators say we need is how much to plan for low-probability events? To be "quite wealthy" like your brother is not a solution for many of us. Long-term care insurance has been discussed a lot, and I recall people saying there are difficulties with it. Social Security will be a backstop for many of us, but it won't afford us the ability to live in serious comfort.

 

[marko]

You have my deepest sympathies for your brother's misfortune, but the question that dogs all of us who have not accumulated way more than the calculators say we need is how much to plan for low-probability events? To be "quite wealthy" like your brother is not a solution for many of us. Long-term care insurance has been discussed a lot, and I recall people saying there are difficulties with it. Social Security will be a backstop for many of us, but it won't afford us the ability to live in serious comfort.

Sorry. My presumption was that I was addressing the 'financially independent' crowd.

I wasn't offering any solution but merely presenting an observation of the risks involved with attempting to burn down one's portfolio too early (Die With Zero) and not having enough in old-age.

As I've noted many times, if one becomes incapacitated or very old, your spending shifts away from normal daily expenses (expensive travel, cars, boats, nights out) to those for your support without impacting your overall spending. My brother's total spending is the same as he had before his injury...he's just now spending it on different things.

 

[SecondCor521]

As I've noted many times, if one becomes incapacitated, your spending shifts away from normal daily expenses (travel, cars, boats, nights out) to those for your support without impacting your overall spending. My brother's total expenses are the same as he had before his injury...he's just now spending them on different things.

Sorry about your brother.

This has been true of my Dad as well. He used to spend a lot of money on travel and gifts for his girlfriend up until the last few years as his dementia has progressed. Now it's spent on memory care, and the level is basically the same. Actually his taxes dropped as he moved up in care because his memory care fees are a large Schedule A deduction.

 

[Lorenzo]

Sorry. My presumption was that I was addressing the 'financially independent' crowd.

Is there a clear definition? I mentioned one definition of FI I have seen: savings of at least 25 times one's annual expenses. The calculators show that 25x expenses has a good probability of depleting one's savings in about 30 years, which is a typical retirement. With 25x expenses saved, one could say they are FI only if their definition is to probably end up with zero at the end of 30 years. For early retirees, I might guess FI means 30x or more. I'm sure there have been threads on this. But the point is that there is no bright line between FI and not FI.

I wasn't offering any solution but merely presenting an observation of the risks involved with attempting to burn down one's portfolio too early (Die With Zero) and not having enough in old-age.

I understand. I don't see "die with zero" as an active attempt to burn through one's portfolio as much as I see it as an attempt to fund one's desired lifestyle for a certain period of time with some precision, as opposed to grossly over-saving OR over-spending. FIRECalc even lets you input some minimum portfolio value, so that you can model dying with "X" where X is greater than zero. That's a more realistic approach--model a safety buffer. Now, how much should X be? Should it include 10 years at a high-quality long-term care facility when, as has been discussed in various threads, the average recipient of LTC isn't there for more than a few years? Maybe 5 years? It's not so much that I want to die with zero (such precision is virtually impossible) as it is that I want to know what would be a reasonable value of X, given my health, projected longevity, risk tolerance, desired level of long-term care quality, etc. I think this is not an uncommon desire. The reality is it is impossible to nail down X with much precision, so the more risk-averse, more frugal people tend to over-save and/or under-spend in retirement.

As I've noted many times, if one becomes incapacitated or very old, your spending shifts away from normal daily expenses (expensive travel, cars, boats, nights out) to those for your support without impacting your overall spending. My brother's total spending is the same as he had before his injury...he's just now spending it on different things.

I have seen it mentioned that a really high-quality long-term care facility can cost $20k/month. I'm guessing that's considerably above what the average retiree spends in even their peak go-go years of retirement. Good for your brother for having accumulated great wealth, and again, I'm sorry for his misfortune.

 

[TheWizard]

Is there a clear definition? I mentioned one definition of FI I have seen: savings of at least 25 times one's annual expenses. The calculators show that 25x expenses has a good probability of depleting one's savings in about 30 years, which is a typical retirement. With 25x expenses saved, one could say they are FI only if their definition is to probably end up with zero at the end of 30 years. For early retirees, I might guess FI means 30x or more. I'm sure there have been threads on this. But the point is that there is no bright line between FI and not FI.

One can also be FI if pensions+annuities+SS exceed their expenses by a comfortable amount.
Or some combination of the above.

Now, what was the original question?

 

[Lorenzo]

One can also be FI if pensions+annuities+SS exceed their expenses by a comfortable amount.
Or some combination of the above.

Now, what was the original question?

As to the original question, I think I answered my own question in Post #184 above.

You're right that if one has enough annuity-like income the whole concept of a retiree spending down their savings that so many calculators are geared to is sort of moot.

 

[TheWizard]

As to the original question, I think I answered my own question in Post #184 above.

You're right that if one has enough annuity-like income the whole concept of a retiree spending down their savings that so many calculators are geared to is sort of moot.

I'm not sure it's ever moot.
There's almost always a combination of income sources to be considered.
If you have $1M in investments at 65, then that could be $40k per year of potential retirement income.
If you have $60k of other income, then now you have $100k/year of potential retirement income.

But retirement income streams seldom all start on day on of retirement so there's that...

 

[steakis4closers]

You are 100% correct. It is better to at least plan and have some assets set aside in case of old age care.
We were fortunate that my parents did not need any long term care that family around them couldn't assist with before they passed. Our SIL on the other hand has one parent who has come down with a medical condition where they need 24/7 supervised care at a facility that is costing about 20K a month. We have been visiting a step parent at the VA with dementia. It has been eye opening.
Hopefully you wont need it but you will be glad you planned for it if you do. Doesn't need to be an all or nothing situation. You can still share along the way.

Is the VA doing a good job or bad job if I may ask?