Switching from saving to spending, how did you do it?

[zangbao]

I knew this could be an issue for me in retirement. So I set myself a generous-to-me budget. Then try to spend up to my budget with no worries. In two years of retirement I’ve only managed to spend up to 80% of my budget despite spending far more than during my working career.

 

[Koolau]

I knew this could be an issue for me in retirement. So I set myself a generous-to-me budget. Then try to spend up to my budget with no worries. In two years of retirement I’ve only managed to spend up to 80% of my budget despite spending far more than during my working career.

Bad as it is to only spend 80% of your budget, it beats spending 120% of your budget!

You'll get there. Give it a little time.

 

[pb4uski]

... In short, you should set yourself up to where you're not spending your savings...you're spending the income generated from those savings. Just shifting one income source for another.

I'm not so sure this is a laudable goal. In order to amass a nest egg where you only spend income you have to save more and work longer that if you're willing to spend principal.

My view is that you saved for retirement so once you are retired it is fine to spend it if you need to.

You saved that money for retirement, what is the matter with spending it in retirement? IMO a dogged refusal to spend it in retirement is just hoarding.

Now all of that said, we have been fortunate enough that we didn't experience SORR once we retired so we have been only spending income... but it wasn't by design.

 

[sengsational]

Good point about SORR. I'm past that now, so kind of forget. But I retired with a stash of maybe 26x spend at 54. And since retirement, the stash as grown, nominally at least. No way am I going to spend it all. The self-selected group here got here because they modeled worst-case scenarios very well. Then every bad thing didn't happen and we're likely to die with a pile that's much bigger than necessary! BTD!

 

[Gumby]

I'm not so sure this is a laudable goal. In order to amass a nest egg where you only spend income you have to save more and work longer that if you're willing to spend principal.

My view is that you saved for retirement so once you are retired it is fine to spend it if you need to.

You saved that money for retirement, what is the matter with spending it in retirement? IMO a dogged refusal to spend it in retirement is just hoarding.

Now all of that said, we have been fortunate enough that we didn't experience SORR once we retired so we have been only spending income... but it wasn't by design.

We haven't been spending even the income. But that is mainly because we can't think of anything to spend it on.

 

[COcheesehead]

I may have posted this before, but I created a financial dashboard during Covid to stop me from freaking out my first year in retirement and having the markets go crazy. The dashboard shows me all kinds of things in real time: years of expenses on hand, month over month, year over year portfolio returns, networth growth, expenses as a percentage of portfolio, monthly and yearly portfolio income, all kinds of things, but then I also stress test the portfolio showing multiple drawdown percentages.
It’s like your dashboard in your car. It tells you things so you know you are on the right track. It updates daily with two inputs.
That dashboard gives us the confidence to know we will never outlive our money and have so much extra. So we buy what we want, when we want it. No stress, no guilt.
I grew up with parents from the depression. Saving was pounded in my head. But now I live by my values and one of them is to enjoy what took me a lifetime to earn.
I have LTC and legacy giving all locked up and by god I will not be the richest person in the graveyard.

 

[Koolau]

I grew up with parents from the depression. Saving was pounded in my head. But now I live by my values and one of them is to enjoy what took me a lifetime to earn.
I have LTC and legacy giving all locked up and by god I will not be the richest person in the graveyard.

My parents too were children of the Depression and emphasized saving. Conversely, they were not fans of investing in equities or even bonds. I'm surprised they trusted the banks! They had both seen runs-on-banks and bank-closings.

 

[COcheesehead]

My parents too were children of the Depression and emphasized saving. Conversely, they were not fans of investing in equities or even bonds. I'm surprised they trusted the banks! They had both seen runs-on-banks and bank-closings.

My dad had cash hidden in an empty pipe in the basement. The depression will do that to you.
He saved, but also did not invest and died with $40,000 to his name. Most of his money wiped away in his final months on earth. All things I learned from.

 

[street]

That habit is a hard one to break but each as I have been in ER (9 years) now it has been easier to spend money. With investments doubling plus in those 9 years and we spend on everything we need plus. So, it has been an easy transition for me.

Once a person see's that money keeps growing no matter how much you spend the paranoia and fear and being so frugal lightens up pretty quick. For me it has and spending way more in ER than the working years.

 

[TickTock]

One thing that's starting to sink in with me is that we LBYM while w*rking to support our retirement and now that we're there the portfolio will very likely support a certain WR and that if really bad times happen then we can cut spending back well below that level. That's giving me the - courage?? - to start saying and believing and feeling to say, "We can afford this." and not worry so much.

 

[Koolau]

One thing that's starting to sink in with me is that we LBYM while w*rking to support our retirement and now that we're there the portfolio will very likely support a certain WR and that if really bad times happen then we can cut spending back well below that level. That's giving me the - courage?? - to start saying and believing and feeling to say, "We can afford this." and not worry so much.

Well said. I've struggled to spend but have always had back ups in case the economy changes. So, slowly, my spending has increased as I realize that we planned for this time of retirement. We did what was needed to become FI. Now, "we've got this!"

 

[TheWizard]

My dad had cash hidden in an empty pipe in the basement. The depression will do that to you.
He saved, but also did not invest and died with $40,000 to his name. Most of his money wiped away in his final months on earth. All things I learned from.

Back then, I'm not sure what I would have done after experiencing the Great Depression.
No mutual funds so I guess the thing to do was to put together a portfolio of a dozen or more blue chip stocks, assuming you the excess income to do so. Many/most didn't...

 

[Chuckanut]

I still find it hard to spend more than I have to, such as flying business class instead regular coach. But, I will spring for “extra leg room” seats in the coach section. And when traveling If I stay in one place for more than two nights, I will pay for a somewhat larger better located room.

RMDs will be a psychological killer. But, I keep this cartoon in mind.

 

[pacergal]

I repeat a quote I read here on the forum, and I wish I knew who to thank for it:
( maybe pb4uski?)

"You are no longer in a savings mode, you are now in a slow spend down mode"

I have it written down on a card on my desk. It is a good reminder for me if I get nervous about pulling money from investments.

 

[COcheesehead]

Back then, I'm not sure what I would have done after experiencing the Great Depression.
No mutual funds so I guess the thing to do was to put together a portfolio of a dozen or more blue chip stocks, assuming you the excess income to do so. Many/most didn't...

He was kid in the depression, so his investing years were the 50’s, 60’s, 70’s and 80’s. Lot of options, but he chose savings accounts and CDs and his assets reflected that at death.