Lifestyles BEFORE Retirement

[TheFIREman]

goinfishin makes a point in jtmitch's Here I Am thread. The lifestyle you choose before retirement helps dictate the date at which you can retire, but what life half lived is worth living? Living Below Your Means (LBYM) is, in 99% of cases, the only way to early retirement for most people, but it shouldn't be so low that you feel you are missing out on things. I think that is what sets those who achieve FIRE this way apart from others: they are living comfortable lives and saving money. To me, not having a BMW or Mercedes is not important. I don't feel comfortable in a 5 star hotel (especially with my 3 kids ) and I don't care about the designer of my shirt or the label on my coat and most importantly, neither does DW. Once I retire, I may take up a hobby that costs money, but I doubt it because I have forged skinflint habits in the last 20 years and I just don't see the point of a lot of these expensive "must haves". I like to travel, but I like to get my money's worth. Last year we went to Spain. I had the choice of a package holiday or doing the legwork myself. After some rooting around I found a private villa with a car for the same price as the cheap condo in the package. We had a great holiday but more importantly (or maybe almost as importantly) I felt great in that I got REAL value for my money (just don't mention to DW about the passports and nearly missing the airplane, she is still sore about it ). In my mind that is the key. Getting value for your money. If you value a flashy car and expensive clothes, great. But I think you have a greater chance of surviving on a 10% withdrawal rate for 50 years than retiring earlier than 65 with a lifestyle like that.

I shall be retiring (or semi-retiring, maybe) soon and I doubt my lifestyle, or the habits that got me here, will change much.

Thanks for listening to me.

FIREman

 

[goinfishin]

the key for me as of late is determing where to spend the money.  or spend it on the things that truly make me happy and not the things the media would have me believe make me happy or trying to fit an image of what i am supposed to be.  this can be very hard working in corporate america trying to be a contrarian thinker.

as i said before i am significantly downsizing, that does not mean though not spending any money.  it means spending money where it counts.  i have never been a big place or "stuff" person but fell into a rut for a while there of just buying "stuff"  i'm reminded of fight club when, Ed Norton says, "What kind of Dining Set defines who I am".    it is easy to think this way in today's society.

well for me my money will go into travel and tennis lessons, these are the things that make me happy.  spending on what makes you happy is the key. it took me a while and a few frivelous toys and mistakes to figure it out but i am there.

some LBYM'ers can be a little extreme in my opinion not spending any money on themselves.  too me this is not a good balance as sometimes we know tomorrow does not come and all the money in the bank when you can't spend it does no good either.

 

[TheFIREman]

 i'm reminded of fight club when, Ed Norton says, "What kind of Dining Set defines who I am."

By this, I am Mr Plastic ! I have plastic plates for the kids, with plastic handled utensils! We were once mocked at a dinner party where one of the guests said that we would use paper plates if we held a party. I retorted that there is no way that could happen for two reasons:

1) Paper plates have a bad Return-on-investment and are therefore poor value for money compared to unbreakable, reusable, cheap plastic.

2) They would never be invited to one of my dinner parties.

It is when Mr. Joe Corporate jibes you for not having the latest PDA or for driving a car that is "clearly" inferior to this years model. But then I emphasize the E in FIRE, it somehow feels all the much nicer.

 

[FinallyRetired]

We're slowly easing into retirement one step at a time. Last year we sold our house in the city and downsized to a smaller townhouse with a better lifestyle (on a lake). This year I reduced my hours at work, and find myself busier than ever doing things that I never had time to do when working full time (sailing, reading, fix-up projects). For us, this has eased the fear of changing lifestyles, and helped us to adjust to a lower salary, closer to the income we would expect during retirement. It hasn't relieved all fears, but it really helps to know that if it doesn't work out I can return to full time (though I would hate to, and so far it looks like I won't).

 

[Mr._johngalt]

My lifestyle before retirement was pretty lavish, at least
by most people's standards. I knew it would be hard to
downsize to what was ((in my view) a kind of minimalist
setup. This was the hardest part of the transition for
me. Much harder than I anticipated. In fact, the
adjustment from the spend-and-consume mindset
still continues. However, it is much easier now and as
we go forward I suspect it will get easier still. I am living on less than 25% of what I made when I last worked full time, and like my guru (Paul Terhorst)
my net worth has actually increased since I retired.
This was unexpected and therefore serendipitous.

 

[Mr._johngalt]

Just before I "hung it up for good", we had 2 houses,
2 Cadillacs, and belonged to the country club. Now, I
have one house (about a third the size as in
pre-retirement), drive a 12 year old Jeep, and the country club is a distant memory. Alas, I also had to
trade in my former wife as she wanted to continue down the
conspicuous consumption highway. But, I digress.
I now have no debt, no job, and lots of free time.
For me, this was an easy decision. I can well
understand how others might find it more difficult
(or even impossible) to make this adjustment. It
was hard for me and I was 100% commited to
the program.

 

[RedOscar]

To be honest, my lifestyle BEFORE retirement, wasn't that much different than it is today. Still have the same wife, the same house, cars, etc.

Now I spend the 50+ hours a week that used to be work, playing with my computers, listening to the stereo, tinkering with the cars, visiting friends for lunch or whatever. Now when I mow the lawn, I'm finished by 2PM rather than 9PM. Now I make dinner for the family rather than go out or pick something up.

From a distance, it probably looks very much the same. But up close, it's improved, MUCH improved.

 

[Mr._johngalt]

Hi Red! Now that's very interesting, as my retired life
bears almost no resemblance to my life when I was working, matrimonially, geographically, financially,
socially, daily activity-wise, or otherwise. I had to
reinvent myselff almost completely in order to shift to retirement. Like you I am quite
happen being retired, even though I do miss some aspects of my former life (llike having a lot more money). On the whole though it is no
contest.

 

[John T]

Jack and John, I'm not fully ER'd yet but am semi'd and am enjoying it just fine. Wish though that my wife was more free and we could travel whenever we wanted but all in all it's not a bad trade off. We both like the independence that we are enjoying from being soo dependent on a job. Sure glad I found this site, it's so pleasing to find people that have had the same aspiration of ER as I have and to glean from your experiences while you are fully retired, I'm getting many good insights.

 

[BRENDA L. COTTRILL]

[cI AM NOT VERY ADEPT AT THIS SO BEAR WITH ME. MY HUSBAND OPTED TO TAKE EARLY RETIREMENT LAST YEAR. TEN MONTHS LATER WE DISCOVERED HE HAS CONGESTIVE HEART FAILURE, ALSO OUR PLANS FOR DRAWING MONTHLY PYMTS. FROM OUR 401K PLAN HAS TAKEN A REAL HIT FROM THE MARKET, SO NEEDLESS TO SAY OUR PLANS FOR TRAVEL ETC. IS SORTA ON HOLD---- MY HUSBAND IS ONLY 58 & I STILL WORK PART-TIME AT 56. WE WANT TO ENJOY LIFE AS MUCH AS POSSIBLE UNDER THE CIRCUMSTANCES, ANY IDEAS WILL BE APPRECIATED.

 

[Mr._johngalt]

Hi Brenda! Your situation is very similar to ours, i.e.
I am 58 and fully retired. My wife is 54 and still
working. I have some health issues too, but not as serious as your husband. Anyway, we are sorry to
hear of your problems and wish you the best. This site
is the best (by far) that I have found on early retirement.
I actually semiretired in 1993, but have had to adjust and adjust as circumstances changed. This seems to
be a continual process unless you have a big pile of money, which I assuredly did not. However, I have never had a loss in my "base" since 1993. This is due to
avoiding common stocks. I missed the big party in the
90s, but I avoided the downside more recently. I guess
my advice is to live one day at a time and wring as much
good as you can out of each. I know this is not easy
if either of you doesn't feel well, but it is how I try to live and it works for me.

 

[Ted]

Brenda,

In general, you shouldn't take financial advice from anyone who is (a) trying to sell you a particular investment with the implication that it will deliver a "market beating" return, or (b) is not familiar with your complete financial situation (which you don't want to broadcast over the Internet).

One idea, however, if you are really short on financial assets but have a lot of equity in a house, is to get a reverse mortgage on your house. You can learn about that at this website: http://www.reversemortgage.org/

 

[Mr._johngalt]

I am not wishing for the time between now and age 62
to disappear. However, being able to get social
security and to qualify for a reverse mortgage both seem
quite appealing.

 

[RedOscar]

[cI AM NOT VERY ADEPT AT THIS SO BEAR WITH ME. MY HUSBAND OPTED TO TAKE EARLY RETIREMENT LAST YEAR. TEN MONTHS LATER WE DISCOVERED HE HAS CONGESTIVE HEART FAILURE, ALSO OUR PLANS FOR DRAWING MONTHLY PYMTS. FROM OUR 401K PLAN HAS TAKEN A REAL HIT FROM THE MARKET, SO NEEDLESS TO SAY OUR PLANS FOR TRAVEL ETC. IS SORTA ON HOLD---- MY HUSBAND IS ONLY 58 & I STILL WORK PART-TIME AT 56. WE WANT TO ENJOY LIFE AS MUCH AS POSSIBLE UNDER THE CIRCUMSTANCES, ANY IDEAS WILL BE APPRECIATED.

Brenda,

If you think about your situation, the only thing that has changed is your perception regarding the mortality of you and/or your spouse. But there were no guarantees about how long either of you would be around to enjoy retirement. The situation still needs to be evaluated in the same manner.

You have a certain amount of assets (401k, home equity, other assets) and promises of income (part time job, pension, social security, etc.) that exist today. Either you or your spouse could live for the next 40 years, or be dead tomorrow. The problem is, how to manage your assets for the next 40 years if you die, your husband dies, or you both live for another 10-20-30-40 years.

None of us can tell you how to best manage your finances. Many of us are do-it-yourselfers. Others use paid professionals (fee-only financial planners, insurance salesmen disguised as financial planners, etc.). Anyway you do it requires careful planning and periodic checkups on those plans to make sure you know if you are on-track or way off-course.

In general, this is how I would approach the problem:

1) Identify your assets,
2) Identify your liabilities,
3) Understand your expenses and how to control them,
4) Identify your income under different circumstances,
4) Learn the needed rate of return you require for your assets,
5) Evaluate your risk tolerance,
6) Develop plans under various scenarios to identify the strengths and weaknesses of your financial situation,
7) Manage those plans in a manner that best meets your needs.

I am sure that many here will offer their opinion about how to deal with any issue you direct towards these message boards. But in the end, you and your spouse have to decide how to handle your situation in a manner to which you feel comfortable. We all wish you the best.

Red