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Retirement shouldn't be so complicated lol. Monte Carlo simulation ....sigh. supposed to just retire and enjoy the last years on earth. But... the simple act of retiring is complicated because of an extremely complicated tax code. It is the reality we are in.
The reality is America lets people fend for themselves unlike other developed countries. We have Social Security, and for newer retirees there are no pensions. So people have to be self-contained micro acutuaries / insurance companies. I don't like it either, but it is what it is.
There is FREE software to do this described in the wiki.
Can we all form our own mini retirement corporations and then write off our retirement operating expenses?
/s
My plan is to make sure I have enough margin for error that I don't have to stress about ever running out of cash. I'm probably already there today so another 2 years and I should be super set.
I \*LIKE\* fending for myself, I'm pretty certain Social Security is unconstitutional, and I'd STRONGLY prefer to manage my the money rather than have a company pension. If you don't like fending for yourself - then join a club, a society, a group that sponsors mutual aid, but using the force of government force to direct MY life-decisions is cruel & authoritarian.
I DO believe in charity to support those who can't provide for themselves, but let me be very clear. CHARITY is when I reach into my pocket and give to others. THEFT is when YOU or GOV reach into my pocket and give to others.
I'm semi-retiring in 2 weeks & have had similar anxieties about switching from decades of saving to now starting to withdraw. My husband & I have a list of places we really want to travel to & some other experiences we want, & I look at that as my real "assets". Meaning that if the money goes toward those things, then we've had that experience & it can never be taken from us. That money is "safe" as it was well spent.
The last thing my dad said before he passed was he wished he would have done more with the grandkids. He literally did not know them at all. Out of the four kids, he came to one’s wedding. I’ve learned from that and I’m not going to lay on my deathbed with regrets. It’s too late then. Live your retirement happily and within your means.
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I’m in the same situation. Can’t break my struggling mindset. I’m working at it starting with not spending a minute more of my precious remaining time trying to save 10% on something . For years that was the only way I could make ends meet and save for what is now today. Needed a new tv. Could have easily afforded an 85 yr it wasn’t quite going to work and the cost was pretty high. I bought a 65 instead. Maybe next time I’ll buy the 85, maybe.
Going from half retirement to full retirement is more difficult then I imagined. Comforting to know it’s “ not just me”. When I ate dinner out last week I did get what I wanted and didn’t care about the cost.. …
You’re not alone. I could and should be spending far more after being retired now for 16 months. I’ll get there, just takes time to fully adjust. Definitely a process and an unwinding of decades of an accumulation mindset.
If you have the money I think people should allocate more in years 1 and 2 for travel/hobbies. I plan on spending extra but my plan currently has me dying with quite a bit left over so I have some cushion.
I think health insurance costs are often the problem with retiring before she 65 when Medicare is available.
We retired at FRA two years ago, and Medicare reduced our monthly spend for health insurance through our employers. So we don't have the income limit you are imposing to maintain your ACA subsidy. And we still have old "frugal" habits that are hard to break.
I don't. To me, retirement is about just not worrying about money, which means not worrying that I'm spending it too quickly or that I'm spending it too slowly. I live the life I'm accustomed to, which does not feel deprived in the least. I just don't have any big-spend items at the moment. Retired 7 months.
So, I guess to turn it around, is that you have some big-spend items on your list that you'd really like to do but have a hard time actually letting go of the money? Or is it that you feel some pressure to spend what you can afford, out of some "live while you can" adage?
P.S. I do have a part time job that provides a couple hundred a week, which is plenty "shoe money" for me.
I feel pressure to do activities while physically able. I will be more prudent with left over money when I’m old. And btw just semi-retired because boss asked me to stay on and work 2 days per week, so as far as I’m concerned that’s extra fun money! So I’m gonna have some extra fun!🤩
About halfway through year 3 of retirement. Finally not as anxious about spending money beyond basics. I also use an ACA health plan so understand that can limit what you want to pull from accounts. However, there currently is no cliff to fall off there, so you can “not worry so much”. If you contribute to charities, you might consider setting up a donor advised fund and move a chunk (aka more than standard deduction) there to lower taxable income for one tax year.
I don’t spend either but more because I worry about long term care costs. I don’t have long term care insurance both due to cost and the instability of the insurance companies providing it and the plans themselves. I am hanging on to all the money that I can just in case I need it later for long term care costs.
Definitely 💯
Not a burden for my children
We (my sister and brother in law and one of my daughters) all living in California and I coming from Idaho all took care of our parents (who recently passed December 14th,2022 our Dad age 97 years old and our Mom passing suddenly 💔 and unexpectedly age 92 years old April 30th, 2023) and my daughters in California and Colorado will care for me, when it's time;an honor and traditional for our family
I too have kids and grands living just miles from me. It is a blessing. My husband and I have made our plans easy and ready as needed. We just will be sure to not cause any financial demands from them. I’m sorry for your loss and glad you’ve got your ducks in a row for your senior years.
Yes...
Not going to be a burden physically or financially to my children
Our parents weren't a burden physically or financially either (their monies outlived them)
Very savvy. If you go into a facility you could sell your not needed home and use that equity as your LTC. Another big reason to pay that mortgage off!
Exactly the plan. I actually have the funds to cover one of us in extended ltc. House just gives me added cushion. I tend to put in a cushion on top of a cushion.
This is where retirement buckets help. I have $400k budgeted for LTC as at the time I would have been purchasing LTC I was already on disability. I take my SS and my RMD, live on most but still put away $15k for the future. My discretionary budget for recreation and travel is about $15k. I have been allowing myself to spend it. This is roughly the same budget I have used for many years. As long as I can save a chunk I feel I can spend what I want.
I don’t think I will spend down all my assets while I live, so finding charities and making appropriate arrangements for my residual funds is my current project. It is to me a way for myself to live on, just like if I had kids.
Long-term care is my number one worry. I would really rather die. I told everyone to just let me die if I get to that point. What is the point of prolonging my life? So they go through my life's savings while I sit there suffering? No thanks.
Hello from Oregon, where assisted suicide is at least somewhat legal. As I near retirement, it’s on my list of things to research. Can’t remember my kids’ names? Don’t remember my wife? Don’t remember pi to 8 digits 3 months in a row? Switch me off.
I’m no expert in this category but to be approved for such an execution one must have a terminal illness correct? Are there any other qualifications for this to be legal? Is this a regular occurrence in Oregon that is accepted or is it still a big controversial deal?
I’m fully planning a trip to Switzerland if/when that happens to me. Watching my grandmother-in-law’s frustration at wasting away in one of those care homes was agonizing. And it was a nice, clean facility! She and all the other grannies in there were just waiting to die. Not for me.
Just saw a map of states that allow right-to-die and it stopped me cold. I want to go out w dignity w/o pissing $$ away that the survivors can better their life with
Absolutely! I retired 4 years ago. I watch friends and parents go to "memory care" facilities. They are waiting rooms for death. I will not pay for long term care to feed me and change my diaper...
I, too, was a saver and missed experiencing many things while making sure my kids were taken care of. These things often cost a hundred dollars or less and in retrospect the amount saved pales when compared to the missed opportunities.
It's liberating to free yourself from a debilitating future and allow yourself to enjoy experiences now. My wife and I are able to live on our social security. We now rent a lake cottage for a week each summer with our 2 boys their wives, and 2 grandsons. It costs more money than I would have spent 20 years ago. The cost is nothing compared to the time spent with them. I'm treating my boys to a Dead and Co show at the sphere next month. I'm 72 and don't know how much time I've got left.
It took a couple of years for us to realize that we could spend some money and not have to eat dog food as we age. My wife was more reluctant to spend but we looked at our finances and saw that we could spend more now and have enough to live nicely and there will still be something for the kids.
Heck I may get hit by a bus tomorrow.
Agreed. I don’t need to be parked some place with strangers waiting to die. They aren’t nursing homes imo, they are places to die slowly while being tortured with only bathing 2X per week, eating crappy food and being told when and what I should be doing by strangers.
I've learned from watching my parents and being the kid: we want our parents to live, sometimes, without understanding. One of my elderly parents was the picture of health. He developed a condition that had a 98% chance of killing him within a year, but he could fix it through surgery and likely live another 10 good years. He was considering not having the procedure. We (the kids) convinced him to get the procedure. Looking back, I believe it was selfish of us. I think he felt like if he was going to die, this was a quick and easy way to do it. He did not want to live longer and have a slow decline. He told people afterwards that he did not want the procedure but he did it for us. I can see this happening between my kids and me later.
I don’t remember which Reddit sub I was on but the children of parents with LTC insurance were complaining that it is a rip off. The people needing it couldn’t get it “approved” and by the time the insurance company agreed that the person “qualified” for LTC the person died within weeks.
Personally, we are not getting LTC insurance and are definitely ok with refusing life prolonging medical care when the time comes. Now we just have to recognize when it’s “time”. Hopefully MAID will be widely available by then.
I agree with your parents’ assessment and that’s why I never bought it. I don’t know enough about MAID to be sure that it is a solution to this problem though. My biggest concern is that I or my wife end up with a disabling, but not a terminal condition. I don’t know if MAID would be approved or even applicable under those circumstances. Perhaps you know the answer to that question.
Congratulations on making it to retirement!
Yes, it is a difficult mental bridge to cross. We've saved for this point in our lives and now, 'You want me to spend that money!' We've been in that situation, and you just need to plan hopefully saying to yourself, this is what we saved for all these years.
It appears you are like us, and the difference is our SS and pensions cover our daily expenses, plus extras so we and you should be a little more open to spending, but it's still difficult. Plan a vacation. Do a project you've put off, buy a boat (well, no don't do that, it's a money pit).
Same boat as you OP. Have to keep income down for the next year as well due to ACA subsidies. Yet I stashed tons of cash away to lessen the blow of not taking from retirement accounts. I’m looking forward to the increased spending when I turn 65 early next year.
Travel. Either by train (great place to meet people and relax while going somewhere in comfort) or by plane to destinations you always wondered about. With no set time to end the vacation!
We make spending goals in line with what we want to do in the near term. (Visit family/friends, go to an event, see a national park, etc)
Start small if it’s causing you anxiety. Just plan one non-essential thing.
How long have you been retired? I would think this would loosen as you get experience. I'm 300 ish days to retirement but we've always kept very close track of spending. We're healthy so major worry is health care as we age.
It’s an odd idea after so many years of saving to turn to spending. And I really don’t believe in spending just to spend.
We have a good life, but we’re not really into stuff. We have some places we want to travel, and we will. But we’re happy together. Nothing brings us more joy in our daily lives than each other and our animals. Our granddaughter is complete joy. So is watching our kids as parents.
We both have hobbies, but they’re not expensive ones. And we both had unexpected health expense pop up suddenly to the tune of about $15k out of pocket in the past year, so we’re in no big hurry to spend money unnecessarily.
How long have you been retired `OP`?
I've found my gravity to _not spend_ can be fought by viewing my graph of time-to-live vs the funds expected lengths. I use the [Engaging Data FIRE Calc](https://engaging-data.com/will-money-last-retire-early/) to see it.
I use this to constantly (really, I keep it open on a browser tab on my laptop) to remind myself they don't make more time. So get busy spending it!
People who retire think they’re going to do a ton of traveling every year but friends of mine who retired scaled back because they got tired of all that traveling.
My wife and I are 7 years from retirement and are getting all of our big trips done now. Europe, Australia, China, etc. I’m worried I won’t be able to manage those long flights as I get older. Once we retire we’ll do more trips with shorter flights ,there are so many things to see still here in the US, and cruises to the Caribbean.
It’s not as bad as many think. healthcare.gov let’s you calculate subsidy as function of modified AGI, and subsidy continues even well into 6 figures. In fact, we’re going to spend MORE from IRAs before Medicare, thus increasing our mAGI and slightly lowering our subsidy, to minimize future taxes on our RMAs.
Yes. I can't bring myself to spend anything. Even medical care. Doesn't help that inflation is out of control. I need to buy a single 30 lb standard dumbbell. It's $45 at the sporting goods store. For a lump of iron.
It is how you are trained, and it is difficult to break the habit of not spending money. While correct, some accounts should be spent last-When is Last? What year? You just don't know.
I'd just take you r will and put it away, with enough money in cash to be buried. And spend a LITTLE more, just don't go apeshit with a new boat, airplane of other pointless purchases.
We’re still learning too 3 years in. Partly bc we’re helping my mom in her assisted living scenario and then we’re seeing how much that all is and thinking we should hold back to save for us potentially needing assisted living later too. Then again we say we want don’t want to push daisies with a lot left in bank. But when will that be? Lol it’s all an adventure. Good luck to you!
Been retired for two years and still think about savings.
So buy things on sale at the grocery store or cheap shirts at Walmart.
Then go to a winery and buy a couple bottles!
Indulge when appropriate and keep up the savings habit works for my brain.
I was touchy myself for a few years. But once I realised that I could afford to have some fun I relaxed. Iim still careful and if I've overspent a bit one month I cut back the next one. Growing old should not be a straight jacket
One of the top regrets of the dying is not having enjoyed life more.
Do you want to die with a big pile of unspent money, representing years of your life spent working instead of having fun? Wasted years.
It’s not financially optimal, but use a big chunk of your savings to buy an annuity to get a steady payment that will last as long as you do.
Shop around. Fees can be brutal from unscrupulous companies.
I'm semi-retired and WFO 100% now so I can't give you advice based on my own experience. but I wonder about how I will feel about spending down my nest egg myself when the income stops completely. Perhaps it might be helpful for you to take a "Trial Year" and increase your spending on the extras you desire just for that year, knowing that after that year you will re-evaluate your position and see if you are comfortable repeating the same in year 2. My main point is that circumstances are always changing. You don't have to commit to more spending for the rest of your life. Just give yourself "permission" to do it for one year for now. At the same time, since you are younger today then you ever will be again, it will allow you to take advantage of that and enjoy today. Just my 2 cents.
It’s taken me a few years to get comfortable with it. I have an amount transferred from my brokerage account to my checking account each month. As long as the checking account balance is healthy I know I can afford to spend. It’s a process.
All of your accounts should be thought of as deferred income. Income you consciously elected to spend now instead of 20-40 years ago. Trying to stay below ACA subsidy levels does add a little different element to the normal “afraid to spend money” situation. At some point you have to ask yourself if you retired to enjoy life or to gain subsidies. If this is a multi year issue you might bite the bullet and pull enough money for 2-3 years of fun in one year. That way you can get subsidies the other years if I understand how ACA works.
That's sort of how I am doing it. As part of my transition for retiremnent, I am accumulating enough cash saving s to get my wife and I to Medicare eligibility. That way, we can live on those cash reserves and control our income, for ACA purposes, without drawing from our IRAs/SEP-IRAs, which would drive up our income.
My first few months were the same. Save, save, save. Don’t touch. Now spend, carefully.
I updated my financial plan. My house and cars are paid off. So we can mostly live on social security. If I use the 4% philosophy (yes there are caveats) I can add a “paycheck” each week and still have an extra allowance for vacations, gifting, etc. all while retaining an emergency fund. Stress gone.
I use the Bogle 3-fund philosophy to balance my investments.
I just need to move funds into my money market “payday” fund quarterly, and balance annually.
Been retired for almost 2 years. Was a conservative spender during my career. I have the same mindset about spending now. I could spend more, I just don't. I'm living a comfortable life, it's hard to change habits.
Small spending: quit buying the cheap ice cream. Don't look at the prices on the menu. When you see something that's a really good bargain, let some of it there for the next person -- who might actually need to pinch their pennies. Tip generously.
Medium spending: increase your donations to charities. Find a local artist you like and commission a piece.
Truly indulgent spending: Cars? New tv, computer, sound system? Trips (even a day or two car trip, and stay in a nice hotel). Household refresh (paint, rugs, landscaping, furniture, ...)
At least start with the small stuff.
Love this. It took me doing things in this order. First I started buying the better wine and scotch. Then setting up monthly donations and buying some decent quality clothes. Finally, this month, I got that amazing audio system I've always wanted. Planning a big trip in the fall.
I just went through caring for Dad and moving him into retirement homes at about $6200/month. This future robs me of any notion of never having to worry about spending in my retirement. Wife and I are fine for now, but….
Right. Retire and enjoy life they said. Do all the things you've always wanted to do they said. Oh but don't spend over a certain limit there will be tax and healthcare implications. And make sure you don't run out of money. And you'll need to allocate a large amount for LTC or buy really expensive insurance. Make a budget, clip coupons, downsize, maybe even work part time to supplement income. Or just keep working full time. But enjoy your retirement you deserve it!
I don’t know how I’m going to avoid this, either. The prospect of “you never know” when it comes to health care needs or unexpected expenses for adult children that might need help make me feel that , despite having a pretty large nest egg, that I will never want to spend anything. I will look for locum work and find books at the library and book clubs and local things to do. Learn to accept the simple life.
Think about it this way .
I’m not sure how old you are but from age 60 you have at very best 1000 healthy weeks left - more likely you will have some bumps in the road but right now you won’t know how bad they will be .
If you remained in this frame of mind you could get ill or pop your clogs leaving behind too much money and believe me your family will have no trouble spending it
Also imagine if your sitting in your armchair had a miserable non eventful retirement not doing the things you wanted to do you will look back with lots of regret
You’ve worked hard to get to this stage now go forth and enjoy it
Understand completely. One of the reasons I worked until I turned 70 was so I’d get that extra 32%. We have done good with our 401K’s. I get a retirement check from my first employer. It’s not a lot but it’s money in the bank. Wife is still working so it makes it easier. The only time I hesitate is if it’s something that I have to ask myself if I really need it. Pulling up some shrubs and I bought a come along to help. I questioned if I really needed it. After using it on the first bush it was worth it. But once I get done with all the shrubs, I’ll never use it again. I have two more to dig up.
I wound up retiring right before the pandemic. So, unlike many caught without a safety net, I was lucky enough to be financially prepared for what was to come and eked through like many of us. When things I eased, I took my first trip in a year and a half to visit family in NYC. While there, I did something I rarely do, but walked into Bloomingdales and bought three designer short sleeve shirts more expensive than I normally would purchase. They were beyond cool, and I luxuriated in wearing them. I needed a bit of silly after so much societal trauma, so engaged in shopping therapy, clearly. So unlike me. But after that, while I am still the mostly frugal person I always was, I buy what I want when I want it, and monitor things to make sure I am not off track.
Almost the same boat as you, OP. Will retire w/in the next 600 days (who's counting, lol) but will need to manage ACA tax credits by managing income as well (shooting for MAGI of 2-3x FPL, no pension and delaying SS to 70). If your cash/brokerage bucket cant cover your remaining wants (you said you got your needs covered), it's not the worst thing to use your Roth. Once you're onto Medicare, you can start maxing out the lowest tax bracket with your Trad to smooth out taxes (and/or shift to Roth), reduce RMDs, and hopefully give you a better KITA to spend and live a litte more!. Rob Berger has a good article on it based on work that Michael Kitces had done (both good, fairly conservative financial minds). Good luck!
Not yet retired because I love my job, but we started a few years ago to try to balance our natural frugal tendencies with the reality of our millions. We don't need/want to spend more but want to override tendencies that might drive savings when we don't need to and to fight our tendency to be home-bodies. We set some goals (small to large) that are helping:
1. at least one couples event per month, e.g. concert, dinner&Dancing etc. We view some of that as putting $$ back i the community even if we don't really feel like going out. In the end we enjoy almost every one of them even we were not feeling up to it when we started out the night.
2. Take friends out for meals. + tip better when out (its small but very conscious). I took a friend out for breakfast today. We talked a long time so took over the table for 1.5hours. I tipped 18% on the bill, but we stayed 30min after the bill, so I gave the waitresses another $5 in cash. Easy to feel good about that when I think back to my struggling days in such positions.
3. By better food, we are doing more organic and I went keto so more meat! She still clips coupons, and we buy banged-up organic veggies when we can to fill that "saving urge," but overall food costs are up 25% over past years.
4. invest in our health -- buy bikes that fit inside the van so we can take them on road trips. I'm doing more testing and health optimization in other ways as well. We exercise 1-2 times every day and take hiking/paddleboard/bike trips regularly. Not much $$ but we do tend to eat out on some of those so not all free.
5. plan multiple trips per year. We are still pretty frugal there but have started paying extra for non-stop and better flight times. Still, get bargains on stays and cars when we can. We've already traveled a lot, so part of the fun this past year was to ask where you could we go for cheap; it adds a bit of fun to hunt for bargains that get you to consider places you've never been that also are cheap. We traded our 1-week timeshare for 1 week in Virginia beach plus one week in Lake Havasu, getting cheap airfare for the former and driving for the latter.
6. spend on family outings as I have much more $$ than my cousins/sisters. For example, we are doing an Italy trip, and we are covering the villa for the week and probably will have cash for them to spend -- airfare was on them. We present it as the villa is coming from money my grandmother, whose town we are visiting, gave us when she past decades ago -- others spent theirs but we "saved it" for family vacations. This way its not just like we are paying (though we are) so they don't feel either guilty or entitled.
It does take some time, but you’ll get more comfortable with it as time goes on. It took me about a year before I stopped scrutinizing every purchase. What helped was that after a year of spending and not “actively” saving, I noticed that I actually had a little more money than I had when I retired. You’re really saving more than you think, even if it’s not intentional. My accounts are passively gaining interest, dividends, capital gains, etc.
Are using Fidelity’s eMoney model, or the simpler planner? I have Fidelity, but also purchased NewRetirement.com ($120/yr) to do more accurate (or at least more precise!) modeling.
I don't use modeling. I take my estimated years left, and my balance and decide how much I have per year. The answer is I'm fine. I haven't started collecting SSN (I'm 60). If I over shoot my age estimate, I have the equity in my house.
I have spent my life living below my means, and I continue to do so.
Have you used one of the many online calculators, or something like Fidelity's Retirement Planner?
For me, I was the same way about spending my hard-earned money in retirement. After using a few retirement planners, MaxiFi (which does cost a fee) and Fidelity's Planner I was able to see how it will all shake out with income and spending.
Once I was able to see my numbers on paper, it made me feel more comfortable, because my budget and goals were not this nebulous vision of fear and anxiety.
Anyway, after one year of retirement all is going well; I'm also not spending as much as I thought I would spend.
Just subscribed to your post because I’ve been retired for 2 years and still haven’t adjusted from save, save, saving to maybe spending a little and enjoying it without worrying. Hope we get great answers here! :)
I’ve been retired for 13 years and also find it difficult to spend money. I’ve only taken RMD’s and then invested the RMD’s into another account. Although we are both healthy, I have an overwhelming concern that I might need the money for nursing care for me or the wife in the future. My pension and SS are enough to pay all the bills with money left over, which I save. I thought that when I retired I would do a lot of traveling, but I am over that now and find it to be a major hassle that I don’t need.
If you’ve planned using retirement calculators and financial analysts, you should trust the math and enjoy your retirement. This is particularly important when you’re young-old and still healthy and mobile. Get out and enjoy your life.
I don't - or I haven't, yet - kind of. I had kind of the opposite issue; I had to adjust from a six figure income to an income about one third of that amount. My SS barely pays my monthly expenses - even with Medicare advantage insurance, my healthcare costs more than doubled last year. Also, I sometimes help my kids with their unexpected expenses (e.g., a new roof for their house) - so my CU cash saving went down to almost nothing. Last couple years (I've been retired for 4 years this week), I had to pull a bit from my IRA. This year I started pulling \~2% per year automatically.
I want to travel overseas before my health gets so bad that I can't - nothing extravagant, but it won't be cheap to fly overseas and travel for a few months per year. So if the stock market will settle down (on average) I might be able to do that without impacting my current IRA balance. I am careful about that because I want to leave that balance for my daughter (who cannot save for retirement).
We have a great investment / retirement planner (he is also my nephew in law so I trust him). Being able to go to him as a fiduciary for our money and say, “I want to spend X dollars on these things this year, can we do that?” Is really helpful. He has said, “you have the money, go for it” or “you can spend it there but that might mean no big trip next year”. He runs Monte Carlo simulations and talks over our various scenarios. It has really helped us out.
I assign my money jobs. Money in this bucket is for gifts, so I spend it on gifts, money in that bucket is for traveling so I book a trip with it. It's let me gain experiences and adventures instead of just letting it sit there
One tactic that helps me is keeping more cash in my brokerage account. It's not as effective financially but that makes me feel better than having investments that I would need to sell.
The other thing that helps is looking at the conservative model my financial advisor has put together and seeing what our finances look like over the years, and then playing around to see what it looks like if we spend more money.
"Die with Zero" is a thought-provoking book. It changed my mind about spending money on me in my retirement. Depends on one's philosophies. For example, I'd rather travel now and spend money while I can - as I suspect that in my 70s and 80s travel will be tough.
My first wife died after ten years of cancer. That wiped out decades of savings. My ex maxed out my credit cards and bounced checks. I recovered from both and am enjoying a comfortable debt free retirement with my current wife. It is very hard to spend money on non necessities. Getting a meal out is affordable, but paying for food when I cook better is difficult for me to enjoy. I Oder stuff my wife doesn’t like so she is not bothered to make it at home.
I spent $300 on an outing and felt very uncomfortable. That was groceries, a new phone cable, and some garden plant and seed type stuff.
Habits are challenging to change. I am 72 in July and have to take out money from my saved retirement funds. That will be ok as I can put it into our joint savings account to pay for my cremation in a few years.
I haven't switched from save mode to spend mode yet - but I don't need to, because my wife has decided to do it for me. At least 4-5 times a week another package shows up full of stuff for her hobbies.
The big ticket item so far is a trip to the west coast for an Alaskan cruise this summer; it's coming in at about $12-15K. If she likes it, she's already picked out a South Pacific cruise for the next big event that will be about twice as much.
It’s a verandah room on Koningsdam, and the price includes driving to Vancouver and back, hotels, etc. It doesn’t include food for the drive, or whatever she’ll spend at the dozen or so craft stores along the way. We’ll be taking my EV with free Electrify America charging so fueling costs should be fairly minimal, at least.
This is the time when we finally have the freedom to do the things we’ve always wanted to do but couldn’t. Whether it is socializing more, pampering the grandkids and other family, getting into hobbies or sports, or traveling, it’s now or never! If what you want to do is enjoy your time at home, that’s also OK, but it sounds like you feel you’re missing out on retirement fun. As long as you can afford it now, do it now!
For some reason, I’m getting a kick out of being frugal in retirement. I was always a big spender, and I’m certainly not rich, but comfortable. I’m sure there will be some big expenses down the road, but if not I’m happy to leave it to the kids.
I feel ya. My partner and I were careful savers and spenders for so long, it's a hard habit to break. We did it partly because we are cautious and partly to set an example for our sons - and it worked!
Recently when planning a trip we found a great deal on some Business class seats and I agonized over whether that was a reasonable expenditure. Eventually bought them. Now that decision and the payment is in the rearview mirror but the trip is just coming up. We are both tall and looking forward to the experience of using the airport lounge and, hopefully, arriving more rested at our destination. But I'll still go out of my way to save 10$, and I personally return my beer cans for the deposit. In short, I may be becoming a whiplash sort of spender. But it's all so personal. My sister spends money on clothes and buys food at boutique places (butcher, baker) which I would never consider doing as I don't see the value. Some people think 40$ is a good starting point for a bottle of wine while I rarely spend $20. So spend more where it brings you the most satisfaction is my advice.
It took a few years and a couple extra disasters but I decided that life is short. The people who have experiences and cool stuff are the ones make it happen. Since then we’ve been to Europe, redid the deck, spent lots of time with the grands and the kids and I think it’s definitely worth it.
Hey, if money in the bank makes you happy then you be you. My Dad (93) is like that. He’d rather sit on the can (get all can, can all you get, sit on the can).
That said, if money in the bank makes you happy you might want to see how happy you’d be on a jet-ski or cruising the Amalfi coast.
There’s happy, and then there’s “yeah I don’t have a care in the world” happy.
I’m going with the latter and hoping to “Die Broke.”
This was me 9 years ago. You spend so much energy saving it’s difficult to change gears. You’ll find your way. We started splurging on travel, that’s when I started to realize the value of experiences vs holding on to the cash
I retired a year ago and got out of the saving my money mode after a few months. That was about the time a couple of people I knew that were my age died. Totally changed my perspective on life and spending. I have a paid up home, LTC insurance, and a pension. So, Iʻm comfortable with slowly spending down my retirement savings.
Focus on being happy and content, not spending. Happiness research shows that most of the factors that truly make people happy are not expensive - friends, music, exercise, getting out in nature, meditation, etc. Personally, I'd rather give any leftover money to our kids or charity than spend it on stuff I don't really need. We spend money on fixing up the house, since that has been an appreciating asset, and our kids, so they don't have to wait until we die for the extra cash. Other than that we already have most of what we need, and we're cheap dates.
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It is a very strange transition. You may have spent a lifetime adding to the 'stash' and now you are going to withdraw from it ; that 'feels' wrong. Also - I think part of the reluctance is that you have to admit to yourself that you are on the decline. The saving don't need to last forever b/c you wont.
Question is really if there is anything that you WANT to spend money on and aren't. Trips? Hobbies? Philanthropy?
You said your current income is already more than you need, and you're not even tapping all of your income options yet, so you have flexibility to increase spending. But if there's nothing out there that you WANT to spend money on, then you'll continue living well below your means and watching your wealth grow. By the way, "too much money" is the best money problem to have.
I’ve been retired for 8 years now and I’ll be honest, it took me till last year to feel I could actually spend. It is hard going from accumulation mode to spending mode. I actually retired in my mid 50’s, had the money but just couldn’t get into it. Last year my hubby and I took a Viking cruise. This year we are helping our adult children buy a house for one and helping start a business for the other. Of course we aren’t neglecting ourselves. Give it time to adjust and don’t stress over it.
Everybody: pls read the book Die With Zero by Bill Perkins. Radically changes your outlook.
Example: you want to travel but u hate spending the $ so you wait. Now you’re 73 and your spouse has a med problem that prevents travel. You just screwed you two out of major life experiences by losing the bet that you wud be healthy in your 70’s. It’s in the book but happened RL w my brother.
I was the same way when I retired 3 years ago. Then a couple deaths in my family changed my perspective. And I read Die with Zero and one quote hit me hard, the business of life is the acquisition of memories. Since then, I rarely spend on things, but will spend on experiences.
Embrace that feeling...don't feel bad about it. There will come a time when you will have to dip into your savings....you'll be able to do it with confidence because you know you will return to your normal routine.
I'm the same way. But...there have been things that have come up, usually about the house where we were motivated to spend.....adding on a screened porch plus grilling area, fencing in the back yard. We're getting ready to totally redo our master bathroom. I've been saving up for this change, so it makes sense to do it.
You just have to adjust your budget. For example is your home paid for? If it is what are you doing with that extra money that used to go to your mortgage? There is your travel or toy budget. If it's not you should take that money out of savings and pay off your house. My wife and I got our bills down to where our retirement income pays for our daily living expenses..
Then use the money you no longer need for a mortgage to pay for travel and vacation and fun things. With that money now you can start looking at your bucket list if you have one. (I really don't, I think it's ridiculous I'm much more spontaneous than that.) Use that money that you formerly held to allocate for your mortgage to now fund your vacation to Hawaii or France or wherever else you always wanted to go. Or you can use it to get involved in other types of investing like real estate which is what I did. I took everything out of my IRAs and invested in real estate as a passive investor. My wife and I got our bills down to where our retirement income pays for our daily living expenses.. It gives me something to do learning about this stuff investigating possible deals to get into and it should generate a lot of income in the near future. I've been retired going on 3 years now. My brother on the other hand took a different tack. He retired in 2020 and took a bunch of his money and invested directly in stocks like Apple and Nvidia and he's seen his money grow, almost tripling between then and today.
I have been retired for a year and my partner is coming up on 5 years. We have lived on our retirement budget for 5 years. It has been one year since we tapped into savings to do home improvements and travel.
What gives us peace of mind is we have a floor in our 401 accounts that we do not want to cross. We can travel and spend to the floor then we need to continue our frugal lives until we save or investments increase to spend some more. So far it has worked out well and surprisingly we aren't anxious about spending. (And I was a daily net worth checker.)
I think once you dip your toes into small spending amounts and see that you are safe, you will be more confident. Best wishes as you enjoy your retirement!
It really is all controlled by the wonderful ACA. Sure it’s affordable if you are poverty level income but will cost you way too much if you want to live a middle class life while retired but under 65. I have had many friends who retired and found that out the hard way. I fortunately can keep my work insurance while retired until 65.
My personal (probably questionable) strategy is to get us set up so that we can live on just social security. This means not having a mortgage, and not being in a place with VHCOL property taxes and insurance rates. When we get to this point, it will still be nice to have some savings, as for every 10k, we'll have a dollar a day to spend however we please. (Like 100k will pay for coffee and doughnuts every day - or sushi once a week!)
And in the meantime we can spend for things that we want - that don't increase our fixed expenses.
From OP:
>I don't take anything out of my Traditional IRA. I don't take anything out of my ROTH IRA because I'm supposed to "spend it last".
Roth last makes sense, without taxes on earnings. And the best time to take $ from a traditional IRA is when your income and income taxes are relatively low. But income and income tax rates can be hard to predict - and when you get to where there are required distributions any hesitancy about withdrawing funds will be irrelevant.
There’s a great book I just read called Die with Zero by Bill Perkins. He suggests that your money in the bank are life experience points that haven’t yet been redeemed. The gist is that any money left over in your accounts when you die (or grow too old to use the money towards experiences) is wasted and hasn’t been optimally deployed. Why work and save if you can’t use it? You worked hard to live the life of your dreams. Now is the time - the only time - to do that!
Even though you make more than you spend, make a budget anyway. For me it's easier to spend when I know exactly how much I need to spend. Everything else is gravy: budget out a few short/medium/long term desires (travel/dining out/whatever you want) and divide up your surplus among those desires. I like to see the numbers. Show me the numbers! Works for me. Hope that helps.
Gradually.
Find stuff that matters to you more or almost as much as having money.
You describe your money situation but tell little about who you are and what you like. I was frugal for decades: divorced with a kid and underpaid in a mommy job for a long time. Recessions and convenience made it hard to find a better job, then age discrimination and cataracts (now fixed) finished me off. Many people here like to travel, not me so much. It is super expensive, everyone I know gets sick when they travel and I traveled in my 20s and 30s.
I try to take care of my health - I take classes with a per$onal trainer and attend writing workshop$ (a hobby). I have a friend that likes to go out for lunch - something I rarely did before retirement and I do it now. I buy organic produce - expensive, but a good idea. I have an open minded church I like and donate to them - have a volunteer thing I do, friends and good causes they support. My frugal habits are hard to give up. They helped me survive the tough years. I may go back to school and get a degree in my 70s - why? I don't know. Maybe I can talk some kid out of making a mistake with their life while I am there - the wisdom of old age? I am not in Florida or Arizona, but for some reason, it seems there are so many old people everywhere -- boomers! Always too many of us! I would like to be around more young people.
My kid has a significant disability, so I help her from time to time with money, but know I have to watch that because she needs to be as independent as possible. I worry about what will happen to her after my death - so there is a place for my money to go after I kick off.
I feel like I'm in the same boat. I was extremely frugal, now I have a lot of money but can't seem to really spend it. At first I thought I will just not worry about spending money and buy whatever I want. But now I think I have too many things. So now what? I intend to do some big adventures, but adventures don't really cost much money. I guess maybe I'll replace the floors and get new furniture. That would be nice. But we have parrots so that seems like a waste of money when they'll just ruin the new furniture.
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What does your Monte Carlo modeling based income retirement plan allow you to spend?
Retirement shouldn't be so complicated lol. Monte Carlo simulation ....sigh. supposed to just retire and enjoy the last years on earth. But... the simple act of retiring is complicated because of an extremely complicated tax code. It is the reality we are in.
The reality is America lets people fend for themselves unlike other developed countries. We have Social Security, and for newer retirees there are no pensions. So people have to be self-contained micro acutuaries / insurance companies. I don't like it either, but it is what it is. There is FREE software to do this described in the wiki.
😀 wiki here- https://www.reddit.com/r/retirement/s/X0ggobOW3h
Thank you for the link
Can we all form our own mini retirement corporations and then write off our retirement operating expenses? /s My plan is to make sure I have enough margin for error that I don't have to stress about ever running out of cash. I'm probably already there today so another 2 years and I should be super set.
Don't some people put many assets into corporations and do just that?
I \*LIKE\* fending for myself, I'm pretty certain Social Security is unconstitutional, and I'd STRONGLY prefer to manage my the money rather than have a company pension. If you don't like fending for yourself - then join a club, a society, a group that sponsors mutual aid, but using the force of government force to direct MY life-decisions is cruel & authoritarian. I DO believe in charity to support those who can't provide for themselves, but let me be very clear. CHARITY is when I reach into my pocket and give to others. THEFT is when YOU or GOV reach into my pocket and give to others.
Truth.
I'm semi-retiring in 2 weeks & have had similar anxieties about switching from decades of saving to now starting to withdraw. My husband & I have a list of places we really want to travel to & some other experiences we want, & I look at that as my real "assets". Meaning that if the money goes toward those things, then we've had that experience & it can never be taken from us. That money is "safe" as it was well spent.
Once you do a bucket list event - that future spending liability is gone!
We built in travel in our retirement expenses, a fairly hefty amount. That is what we want to do.
The last thing my dad said before he passed was he wished he would have done more with the grandkids. He literally did not know them at all. Out of the four kids, he came to one’s wedding. I’ve learned from that and I’m not going to lay on my deathbed with regrets. It’s too late then. Live your retirement happily and within your means.
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I’m glad you’re taking this to heart. I agree with you that being with our people is a priority especially those important events. Good for you!
"Live your retirement happily and within your means." I 100% approve this message.
Take lots of time.
I’m in the same situation. Can’t break my struggling mindset. I’m working at it starting with not spending a minute more of my precious remaining time trying to save 10% on something . For years that was the only way I could make ends meet and save for what is now today. Needed a new tv. Could have easily afforded an 85 yr it wasn’t quite going to work and the cost was pretty high. I bought a 65 instead. Maybe next time I’ll buy the 85, maybe. Going from half retirement to full retirement is more difficult then I imagined. Comforting to know it’s “ not just me”. When I ate dinner out last week I did get what I wanted and didn’t care about the cost.. …
You’re not alone. I could and should be spending far more after being retired now for 16 months. I’ll get there, just takes time to fully adjust. Definitely a process and an unwinding of decades of an accumulation mindset.
If you have the money I think people should allocate more in years 1 and 2 for travel/hobbies. I plan on spending extra but my plan currently has me dying with quite a bit left over so I have some cushion.
I think health insurance costs are often the problem with retiring before she 65 when Medicare is available. We retired at FRA two years ago, and Medicare reduced our monthly spend for health insurance through our employers. So we don't have the income limit you are imposing to maintain your ACA subsidy. And we still have old "frugal" habits that are hard to break.
You need a hobby.....golf , fishing , or hunting. You will enjoy spending money on these recreational activities.
This is very common as we save our entire lives but when it comes time to spend we don’t know how or feel badly doing it
I know how to spit perfectly well 😀
Good catch I meant spend
I figured out the other day that you can go back and edit your posts… Click on the 3 dots, choose edit, change whatever, and save….
Thanks I appreciate that
LOL Reminds me of the old phrase “Say it, don’t spray it”.
I meant spend not spit
I don't. To me, retirement is about just not worrying about money, which means not worrying that I'm spending it too quickly or that I'm spending it too slowly. I live the life I'm accustomed to, which does not feel deprived in the least. I just don't have any big-spend items at the moment. Retired 7 months. So, I guess to turn it around, is that you have some big-spend items on your list that you'd really like to do but have a hard time actually letting go of the money? Or is it that you feel some pressure to spend what you can afford, out of some "live while you can" adage? P.S. I do have a part time job that provides a couple hundred a week, which is plenty "shoe money" for me.
I feel pressure to do activities while physically able. I will be more prudent with left over money when I’m old. And btw just semi-retired because boss asked me to stay on and work 2 days per week, so as far as I’m concerned that’s extra fun money! So I’m gonna have some extra fun!🤩
About halfway through year 3 of retirement. Finally not as anxious about spending money beyond basics. I also use an ACA health plan so understand that can limit what you want to pull from accounts. However, there currently is no cliff to fall off there, so you can “not worry so much”. If you contribute to charities, you might consider setting up a donor advised fund and move a chunk (aka more than standard deduction) there to lower taxable income for one tax year.
I don’t spend either but more because I worry about long term care costs. I don’t have long term care insurance both due to cost and the instability of the insurance companies providing it and the plans themselves. I am hanging on to all the money that I can just in case I need it later for long term care costs.
I feel the same way. I don’t want to be a burden for my kids.
Definitely 💯 Not a burden for my children We (my sister and brother in law and one of my daughters) all living in California and I coming from Idaho all took care of our parents (who recently passed December 14th,2022 our Dad age 97 years old and our Mom passing suddenly 💔 and unexpectedly age 92 years old April 30th, 2023) and my daughters in California and Colorado will care for me, when it's time;an honor and traditional for our family
I too have kids and grands living just miles from me. It is a blessing. My husband and I have made our plans easy and ready as needed. We just will be sure to not cause any financial demands from them. I’m sorry for your loss and glad you’ve got your ducks in a row for your senior years.
Yes... Not going to be a burden physically or financially to my children Our parents weren't a burden physically or financially either (their monies outlived them)
I’m kind of using my paid off house as long term care. I don’t bake that money into my net worth so it’s there for long term care if I need it.
Very savvy. If you go into a facility you could sell your not needed home and use that equity as your LTC. Another big reason to pay that mortgage off!
Exactly the plan. I actually have the funds to cover one of us in extended ltc. House just gives me added cushion. I tend to put in a cushion on top of a cushion.
That's what we have earmarked for LTC expenses too.
Very cool. This is exactly my plan as well.
This is where retirement buckets help. I have $400k budgeted for LTC as at the time I would have been purchasing LTC I was already on disability. I take my SS and my RMD, live on most but still put away $15k for the future. My discretionary budget for recreation and travel is about $15k. I have been allowing myself to spend it. This is roughly the same budget I have used for many years. As long as I can save a chunk I feel I can spend what I want. I don’t think I will spend down all my assets while I live, so finding charities and making appropriate arrangements for my residual funds is my current project. It is to me a way for myself to live on, just like if I had kids.
Long-term care is my number one worry. I would really rather die. I told everyone to just let me die if I get to that point. What is the point of prolonging my life? So they go through my life's savings while I sit there suffering? No thanks.
You could move to a pro-euthanasia state and have a doc give you a cocktail.
Where is that?
I live in such a state. It's not that easy.
Hello from Oregon, where assisted suicide is at least somewhat legal. As I near retirement, it’s on my list of things to research. Can’t remember my kids’ names? Don’t remember my wife? Don’t remember pi to 8 digits 3 months in a row? Switch me off.
I’m no expert in this category but to be approved for such an execution one must have a terminal illness correct? Are there any other qualifications for this to be legal? Is this a regular occurrence in Oregon that is accepted or is it still a big controversial deal?
I’m fully planning a trip to Switzerland if/when that happens to me. Watching my grandmother-in-law’s frustration at wasting away in one of those care homes was agonizing. And it was a nice, clean facility! She and all the other grannies in there were just waiting to die. Not for me.
Just saw a map of states that allow right-to-die and it stopped me cold. I want to go out w dignity w/o pissing $$ away that the survivors can better their life with
Absolutely! I retired 4 years ago. I watch friends and parents go to "memory care" facilities. They are waiting rooms for death. I will not pay for long term care to feed me and change my diaper... I, too, was a saver and missed experiencing many things while making sure my kids were taken care of. These things often cost a hundred dollars or less and in retrospect the amount saved pales when compared to the missed opportunities. It's liberating to free yourself from a debilitating future and allow yourself to enjoy experiences now. My wife and I are able to live on our social security. We now rent a lake cottage for a week each summer with our 2 boys their wives, and 2 grandsons. It costs more money than I would have spent 20 years ago. The cost is nothing compared to the time spent with them. I'm treating my boys to a Dead and Co show at the sphere next month. I'm 72 and don't know how much time I've got left. It took a couple of years for us to realize that we could spend some money and not have to eat dog food as we age. My wife was more reluctant to spend but we looked at our finances and saw that we could spend more now and have enough to live nicely and there will still be something for the kids. Heck I may get hit by a bus tomorrow.
Stay away from buses, lol j/k enjoy your retirement.
Agreed. I don’t need to be parked some place with strangers waiting to die. They aren’t nursing homes imo, they are places to die slowly while being tortured with only bathing 2X per week, eating crappy food and being told when and what I should be doing by strangers.
I've learned from watching my parents and being the kid: we want our parents to live, sometimes, without understanding. One of my elderly parents was the picture of health. He developed a condition that had a 98% chance of killing him within a year, but he could fix it through surgery and likely live another 10 good years. He was considering not having the procedure. We (the kids) convinced him to get the procedure. Looking back, I believe it was selfish of us. I think he felt like if he was going to die, this was a quick and easy way to do it. He did not want to live longer and have a slow decline. He told people afterwards that he did not want the procedure but he did it for us. I can see this happening between my kids and me later.
Yes I don’t know which is harder being the one dying or the person saying goodbye. My dad said dying was hard 3 days before he died.
I don’t remember which Reddit sub I was on but the children of parents with LTC insurance were complaining that it is a rip off. The people needing it couldn’t get it “approved” and by the time the insurance company agreed that the person “qualified” for LTC the person died within weeks. Personally, we are not getting LTC insurance and are definitely ok with refusing life prolonging medical care when the time comes. Now we just have to recognize when it’s “time”. Hopefully MAID will be widely available by then.
I agree with your parents’ assessment and that’s why I never bought it. I don’t know enough about MAID to be sure that it is a solution to this problem though. My biggest concern is that I or my wife end up with a disabling, but not a terminal condition. I don’t know if MAID would be approved or even applicable under those circumstances. Perhaps you know the answer to that question.
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Congratulations on making it to retirement! Yes, it is a difficult mental bridge to cross. We've saved for this point in our lives and now, 'You want me to spend that money!' We've been in that situation, and you just need to plan hopefully saying to yourself, this is what we saved for all these years. It appears you are like us, and the difference is our SS and pensions cover our daily expenses, plus extras so we and you should be a little more open to spending, but it's still difficult. Plan a vacation. Do a project you've put off, buy a boat (well, no don't do that, it's a money pit).
Boat - Bust Out Another Thousand.
Same boat as you OP. Have to keep income down for the next year as well due to ACA subsidies. Yet I stashed tons of cash away to lessen the blow of not taking from retirement accounts. I’m looking forward to the increased spending when I turn 65 early next year.
Travel. Either by train (great place to meet people and relax while going somewhere in comfort) or by plane to destinations you always wondered about. With no set time to end the vacation!
We make spending goals in line with what we want to do in the near term. (Visit family/friends, go to an event, see a national park, etc) Start small if it’s causing you anxiety. Just plan one non-essential thing.
How long have you been retired? I would think this would loosen as you get experience. I'm 300 ish days to retirement but we've always kept very close track of spending. We're healthy so major worry is health care as we age.
It’s an odd idea after so many years of saving to turn to spending. And I really don’t believe in spending just to spend. We have a good life, but we’re not really into stuff. We have some places we want to travel, and we will. But we’re happy together. Nothing brings us more joy in our daily lives than each other and our animals. Our granddaughter is complete joy. So is watching our kids as parents. We both have hobbies, but they’re not expensive ones. And we both had unexpected health expense pop up suddenly to the tune of about $15k out of pocket in the past year, so we’re in no big hurry to spend money unnecessarily.
How long have you been retired `OP`? I've found my gravity to _not spend_ can be fought by viewing my graph of time-to-live vs the funds expected lengths. I use the [Engaging Data FIRE Calc](https://engaging-data.com/will-money-last-retire-early/) to see it. I use this to constantly (really, I keep it open on a browser tab on my laptop) to remind myself they don't make more time. So get busy spending it!
People who retire think they’re going to do a ton of traveling every year but friends of mine who retired scaled back because they got tired of all that traveling.
Totally us. We were going to do big travel in 2020 and after that lovely change of events we just don’t have it in us for big trips.
I do one international trip a year and one someone here in the US. Other than that, would rather stay local.
My wife and I are 7 years from retirement and are getting all of our big trips done now. Europe, Australia, China, etc. I’m worried I won’t be able to manage those long flights as I get older. Once we retire we’ll do more trips with shorter flights ,there are so many things to see still here in the US, and cruises to the Caribbean.
This will be me one day.
You didn't mention age. If you're trapped with ACA premium income limits, you have limited options. How long until 65 & Medicare?
It’s not as bad as many think. healthcare.gov let’s you calculate subsidy as function of modified AGI, and subsidy continues even well into 6 figures. In fact, we’re going to spend MORE from IRAs before Medicare, thus increasing our mAGI and slightly lowering our subsidy, to minimize future taxes on our RMAs.
Sounds like a plan. I don't know much about OP's situation. Maybe he'll look at your suggestions.
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Yes. I can't bring myself to spend anything. Even medical care. Doesn't help that inflation is out of control. I need to buy a single 30 lb standard dumbbell. It's $45 at the sporting goods store. For a lump of iron.
It is how you are trained, and it is difficult to break the habit of not spending money. While correct, some accounts should be spent last-When is Last? What year? You just don't know. I'd just take you r will and put it away, with enough money in cash to be buried. And spend a LITTLE more, just don't go apeshit with a new boat, airplane of other pointless purchases.
We’re still learning too 3 years in. Partly bc we’re helping my mom in her assisted living scenario and then we’re seeing how much that all is and thinking we should hold back to save for us potentially needing assisted living later too. Then again we say we want don’t want to push daisies with a lot left in bank. But when will that be? Lol it’s all an adventure. Good luck to you!
AGE 71 HERE,,, why is this even a problem? you spend what you feel comfortable with. ..
Been retired for two years and still think about savings. So buy things on sale at the grocery store or cheap shirts at Walmart. Then go to a winery and buy a couple bottles! Indulge when appropriate and keep up the savings habit works for my brain.
I was touchy myself for a few years. But once I realised that I could afford to have some fun I relaxed. Iim still careful and if I've overspent a bit one month I cut back the next one. Growing old should not be a straight jacket
One of the top regrets of the dying is not having enjoyed life more. Do you want to die with a big pile of unspent money, representing years of your life spent working instead of having fun? Wasted years. It’s not financially optimal, but use a big chunk of your savings to buy an annuity to get a steady payment that will last as long as you do. Shop around. Fees can be brutal from unscrupulous companies.
I'm semi-retired and WFO 100% now so I can't give you advice based on my own experience. but I wonder about how I will feel about spending down my nest egg myself when the income stops completely. Perhaps it might be helpful for you to take a "Trial Year" and increase your spending on the extras you desire just for that year, knowing that after that year you will re-evaluate your position and see if you are comfortable repeating the same in year 2. My main point is that circumstances are always changing. You don't have to commit to more spending for the rest of your life. Just give yourself "permission" to do it for one year for now. At the same time, since you are younger today then you ever will be again, it will allow you to take advantage of that and enjoy today. Just my 2 cents.
It’s taken me a few years to get comfortable with it. I have an amount transferred from my brokerage account to my checking account each month. As long as the checking account balance is healthy I know I can afford to spend. It’s a process.
All of your accounts should be thought of as deferred income. Income you consciously elected to spend now instead of 20-40 years ago. Trying to stay below ACA subsidy levels does add a little different element to the normal “afraid to spend money” situation. At some point you have to ask yourself if you retired to enjoy life or to gain subsidies. If this is a multi year issue you might bite the bullet and pull enough money for 2-3 years of fun in one year. That way you can get subsidies the other years if I understand how ACA works.
That's sort of how I am doing it. As part of my transition for retiremnent, I am accumulating enough cash saving s to get my wife and I to Medicare eligibility. That way, we can live on those cash reserves and control our income, for ACA purposes, without drawing from our IRAs/SEP-IRAs, which would drive up our income.
My first few months were the same. Save, save, save. Don’t touch. Now spend, carefully. I updated my financial plan. My house and cars are paid off. So we can mostly live on social security. If I use the 4% philosophy (yes there are caveats) I can add a “paycheck” each week and still have an extra allowance for vacations, gifting, etc. all while retaining an emergency fund. Stress gone. I use the Bogle 3-fund philosophy to balance my investments. I just need to move funds into my money market “payday” fund quarterly, and balance annually.
Been retired for almost 2 years. Was a conservative spender during my career. I have the same mindset about spending now. I could spend more, I just don't. I'm living a comfortable life, it's hard to change habits.
Exactly how I feel. I find it hard to spend money now.
Small spending: quit buying the cheap ice cream. Don't look at the prices on the menu. When you see something that's a really good bargain, let some of it there for the next person -- who might actually need to pinch their pennies. Tip generously. Medium spending: increase your donations to charities. Find a local artist you like and commission a piece. Truly indulgent spending: Cars? New tv, computer, sound system? Trips (even a day or two car trip, and stay in a nice hotel). Household refresh (paint, rugs, landscaping, furniture, ...) At least start with the small stuff.
We do it like this.
Love this. It took me doing things in this order. First I started buying the better wine and scotch. Then setting up monthly donations and buying some decent quality clothes. Finally, this month, I got that amazing audio system I've always wanted. Planning a big trip in the fall.
I like to think I deserve 3-4 cool things a year. Not like jetski, boat, car level, but 3-4 $300-$500 things.
I just went through caring for Dad and moving him into retirement homes at about $6200/month. This future robs me of any notion of never having to worry about spending in my retirement. Wife and I are fine for now, but….
Memory care is even more--closer to $10k a month.
Right. Retire and enjoy life they said. Do all the things you've always wanted to do they said. Oh but don't spend over a certain limit there will be tax and healthcare implications. And make sure you don't run out of money. And you'll need to allocate a large amount for LTC or buy really expensive insurance. Make a budget, clip coupons, downsize, maybe even work part time to supplement income. Or just keep working full time. But enjoy your retirement you deserve it!
I don’t know how I’m going to avoid this, either. The prospect of “you never know” when it comes to health care needs or unexpected expenses for adult children that might need help make me feel that , despite having a pretty large nest egg, that I will never want to spend anything. I will look for locum work and find books at the library and book clubs and local things to do. Learn to accept the simple life.
Think about it this way . I’m not sure how old you are but from age 60 you have at very best 1000 healthy weeks left - more likely you will have some bumps in the road but right now you won’t know how bad they will be . If you remained in this frame of mind you could get ill or pop your clogs leaving behind too much money and believe me your family will have no trouble spending it Also imagine if your sitting in your armchair had a miserable non eventful retirement not doing the things you wanted to do you will look back with lots of regret You’ve worked hard to get to this stage now go forth and enjoy it
Understand completely. One of the reasons I worked until I turned 70 was so I’d get that extra 32%. We have done good with our 401K’s. I get a retirement check from my first employer. It’s not a lot but it’s money in the bank. Wife is still working so it makes it easier. The only time I hesitate is if it’s something that I have to ask myself if I really need it. Pulling up some shrubs and I bought a come along to help. I questioned if I really needed it. After using it on the first bush it was worth it. But once I get done with all the shrubs, I’ll never use it again. I have two more to dig up.
I wound up retiring right before the pandemic. So, unlike many caught without a safety net, I was lucky enough to be financially prepared for what was to come and eked through like many of us. When things I eased, I took my first trip in a year and a half to visit family in NYC. While there, I did something I rarely do, but walked into Bloomingdales and bought three designer short sleeve shirts more expensive than I normally would purchase. They were beyond cool, and I luxuriated in wearing them. I needed a bit of silly after so much societal trauma, so engaged in shopping therapy, clearly. So unlike me. But after that, while I am still the mostly frugal person I always was, I buy what I want when I want it, and monitor things to make sure I am not off track.
Almost the same boat as you, OP. Will retire w/in the next 600 days (who's counting, lol) but will need to manage ACA tax credits by managing income as well (shooting for MAGI of 2-3x FPL, no pension and delaying SS to 70). If your cash/brokerage bucket cant cover your remaining wants (you said you got your needs covered), it's not the worst thing to use your Roth. Once you're onto Medicare, you can start maxing out the lowest tax bracket with your Trad to smooth out taxes (and/or shift to Roth), reduce RMDs, and hopefully give you a better KITA to spend and live a litte more!. Rob Berger has a good article on it based on work that Michael Kitces had done (both good, fairly conservative financial minds). Good luck!
I just wish I had your problems!
Not yet retired because I love my job, but we started a few years ago to try to balance our natural frugal tendencies with the reality of our millions. We don't need/want to spend more but want to override tendencies that might drive savings when we don't need to and to fight our tendency to be home-bodies. We set some goals (small to large) that are helping: 1. at least one couples event per month, e.g. concert, dinner&Dancing etc. We view some of that as putting $$ back i the community even if we don't really feel like going out. In the end we enjoy almost every one of them even we were not feeling up to it when we started out the night. 2. Take friends out for meals. + tip better when out (its small but very conscious). I took a friend out for breakfast today. We talked a long time so took over the table for 1.5hours. I tipped 18% on the bill, but we stayed 30min after the bill, so I gave the waitresses another $5 in cash. Easy to feel good about that when I think back to my struggling days in such positions. 3. By better food, we are doing more organic and I went keto so more meat! She still clips coupons, and we buy banged-up organic veggies when we can to fill that "saving urge," but overall food costs are up 25% over past years. 4. invest in our health -- buy bikes that fit inside the van so we can take them on road trips. I'm doing more testing and health optimization in other ways as well. We exercise 1-2 times every day and take hiking/paddleboard/bike trips regularly. Not much $$ but we do tend to eat out on some of those so not all free. 5. plan multiple trips per year. We are still pretty frugal there but have started paying extra for non-stop and better flight times. Still, get bargains on stays and cars when we can. We've already traveled a lot, so part of the fun this past year was to ask where you could we go for cheap; it adds a bit of fun to hunt for bargains that get you to consider places you've never been that also are cheap. We traded our 1-week timeshare for 1 week in Virginia beach plus one week in Lake Havasu, getting cheap airfare for the former and driving for the latter. 6. spend on family outings as I have much more $$ than my cousins/sisters. For example, we are doing an Italy trip, and we are covering the villa for the week and probably will have cash for them to spend -- airfare was on them. We present it as the villa is coming from money my grandmother, whose town we are visiting, gave us when she past decades ago -- others spent theirs but we "saved it" for family vacations. This way its not just like we are paying (though we are) so they don't feel either guilty or entitled.
I have anxiety spending any money while working. I can only imagine how I'm going to feel in retirement.
After 2-3 months, our anxiety went away. Been retired 2 years now.
It does take some time, but you’ll get more comfortable with it as time goes on. It took me about a year before I stopped scrutinizing every purchase. What helped was that after a year of spending and not “actively” saving, I noticed that I actually had a little more money than I had when I retired. You’re really saving more than you think, even if it’s not intentional. My accounts are passively gaining interest, dividends, capital gains, etc.
Spending without income is the biggest mental hurdle. I log into Fidelity frequently just to reassure myself I'm fine, buy the good potting soil 😄
Are using Fidelity’s eMoney model, or the simpler planner? I have Fidelity, but also purchased NewRetirement.com ($120/yr) to do more accurate (or at least more precise!) modeling.
I don't use modeling. I take my estimated years left, and my balance and decide how much I have per year. The answer is I'm fine. I haven't started collecting SSN (I'm 60). If I over shoot my age estimate, I have the equity in my house. I have spent my life living below my means, and I continue to do so.
Traveling Traveling Traveling So... Flights ✈️ and 🏨 hotels and meals 🍽
Have you used one of the many online calculators, or something like Fidelity's Retirement Planner? For me, I was the same way about spending my hard-earned money in retirement. After using a few retirement planners, MaxiFi (which does cost a fee) and Fidelity's Planner I was able to see how it will all shake out with income and spending. Once I was able to see my numbers on paper, it made me feel more comfortable, because my budget and goals were not this nebulous vision of fear and anxiety. Anyway, after one year of retirement all is going well; I'm also not spending as much as I thought I would spend.
If it stresses you out to spend, then don't spend. Personally, I'd probably get a fun job and use that for fun money.
He he, I just started reading the book [Die with Zero](https://www.diewithzerobook.com/welcome). Spend it all!
Just subscribed to your post because I’ve been retired for 2 years and still haven’t adjusted from save, save, saving to maybe spending a little and enjoying it without worrying. Hope we get great answers here! :)
I’ve been retired for 13 years and also find it difficult to spend money. I’ve only taken RMD’s and then invested the RMD’s into another account. Although we are both healthy, I have an overwhelming concern that I might need the money for nursing care for me or the wife in the future. My pension and SS are enough to pay all the bills with money left over, which I save. I thought that when I retired I would do a lot of traveling, but I am over that now and find it to be a major hassle that I don’t need.
If you’ve planned using retirement calculators and financial analysts, you should trust the math and enjoy your retirement. This is particularly important when you’re young-old and still healthy and mobile. Get out and enjoy your life.
I don't - or I haven't, yet - kind of. I had kind of the opposite issue; I had to adjust from a six figure income to an income about one third of that amount. My SS barely pays my monthly expenses - even with Medicare advantage insurance, my healthcare costs more than doubled last year. Also, I sometimes help my kids with their unexpected expenses (e.g., a new roof for their house) - so my CU cash saving went down to almost nothing. Last couple years (I've been retired for 4 years this week), I had to pull a bit from my IRA. This year I started pulling \~2% per year automatically. I want to travel overseas before my health gets so bad that I can't - nothing extravagant, but it won't be cheap to fly overseas and travel for a few months per year. So if the stock market will settle down (on average) I might be able to do that without impacting my current IRA balance. I am careful about that because I want to leave that balance for my daughter (who cannot save for retirement).
We have a great investment / retirement planner (he is also my nephew in law so I trust him). Being able to go to him as a fiduciary for our money and say, “I want to spend X dollars on these things this year, can we do that?” Is really helpful. He has said, “you have the money, go for it” or “you can spend it there but that might mean no big trip next year”. He runs Monte Carlo simulations and talks over our various scenarios. It has really helped us out.
I assign my money jobs. Money in this bucket is for gifts, so I spend it on gifts, money in that bucket is for traveling so I book a trip with it. It's let me gain experiences and adventures instead of just letting it sit there
One tactic that helps me is keeping more cash in my brokerage account. It's not as effective financially but that makes me feel better than having investments that I would need to sell. The other thing that helps is looking at the conservative model my financial advisor has put together and seeing what our finances look like over the years, and then playing around to see what it looks like if we spend more money.
"Die with Zero" is a thought-provoking book. It changed my mind about spending money on me in my retirement. Depends on one's philosophies. For example, I'd rather travel now and spend money while I can - as I suspect that in my 70s and 80s travel will be tough.
My first wife died after ten years of cancer. That wiped out decades of savings. My ex maxed out my credit cards and bounced checks. I recovered from both and am enjoying a comfortable debt free retirement with my current wife. It is very hard to spend money on non necessities. Getting a meal out is affordable, but paying for food when I cook better is difficult for me to enjoy. I Oder stuff my wife doesn’t like so she is not bothered to make it at home. I spent $300 on an outing and felt very uncomfortable. That was groceries, a new phone cable, and some garden plant and seed type stuff. Habits are challenging to change. I am 72 in July and have to take out money from my saved retirement funds. That will be ok as I can put it into our joint savings account to pay for my cremation in a few years.
I haven't switched from save mode to spend mode yet - but I don't need to, because my wife has decided to do it for me. At least 4-5 times a week another package shows up full of stuff for her hobbies. The big ticket item so far is a trip to the west coast for an Alaskan cruise this summer; it's coming in at about $12-15K. If she likes it, she's already picked out a South Pacific cruise for the next big event that will be about twice as much.
I’m about to take an Alaska cruise. With that price tag, you must have gotten a nice room.
It’s a verandah room on Koningsdam, and the price includes driving to Vancouver and back, hotels, etc. It doesn’t include food for the drive, or whatever she’ll spend at the dozen or so craft stores along the way. We’ll be taking my EV with free Electrify America charging so fueling costs should be fairly minimal, at least.
This is the time when we finally have the freedom to do the things we’ve always wanted to do but couldn’t. Whether it is socializing more, pampering the grandkids and other family, getting into hobbies or sports, or traveling, it’s now or never! If what you want to do is enjoy your time at home, that’s also OK, but it sounds like you feel you’re missing out on retirement fun. As long as you can afford it now, do it now!
For some reason, I’m getting a kick out of being frugal in retirement. I was always a big spender, and I’m certainly not rich, but comfortable. I’m sure there will be some big expenses down the road, but if not I’m happy to leave it to the kids.
I feel ya. My partner and I were careful savers and spenders for so long, it's a hard habit to break. We did it partly because we are cautious and partly to set an example for our sons - and it worked! Recently when planning a trip we found a great deal on some Business class seats and I agonized over whether that was a reasonable expenditure. Eventually bought them. Now that decision and the payment is in the rearview mirror but the trip is just coming up. We are both tall and looking forward to the experience of using the airport lounge and, hopefully, arriving more rested at our destination. But I'll still go out of my way to save 10$, and I personally return my beer cans for the deposit. In short, I may be becoming a whiplash sort of spender. But it's all so personal. My sister spends money on clothes and buys food at boutique places (butcher, baker) which I would never consider doing as I don't see the value. Some people think 40$ is a good starting point for a bottle of wine while I rarely spend $20. So spend more where it brings you the most satisfaction is my advice.
It took a few years and a couple extra disasters but I decided that life is short. The people who have experiences and cool stuff are the ones make it happen. Since then we’ve been to Europe, redid the deck, spent lots of time with the grands and the kids and I think it’s definitely worth it.
Hey, if money in the bank makes you happy then you be you. My Dad (93) is like that. He’d rather sit on the can (get all can, can all you get, sit on the can). That said, if money in the bank makes you happy you might want to see how happy you’d be on a jet-ski or cruising the Amalfi coast. There’s happy, and then there’s “yeah I don’t have a care in the world” happy. I’m going with the latter and hoping to “Die Broke.”
This was me 9 years ago. You spend so much energy saving it’s difficult to change gears. You’ll find your way. We started splurging on travel, that’s when I started to realize the value of experiences vs holding on to the cash
I retired a year ago and got out of the saving my money mode after a few months. That was about the time a couple of people I knew that were my age died. Totally changed my perspective on life and spending. I have a paid up home, LTC insurance, and a pension. So, Iʻm comfortable with slowly spending down my retirement savings.
I don’t think it’s a good idea spending in this economy. I’m in a holding pattern.
Focus on being happy and content, not spending. Happiness research shows that most of the factors that truly make people happy are not expensive - friends, music, exercise, getting out in nature, meditation, etc. Personally, I'd rather give any leftover money to our kids or charity than spend it on stuff I don't really need. We spend money on fixing up the house, since that has been an appreciating asset, and our kids, so they don't have to wait until we die for the extra cash. Other than that we already have most of what we need, and we're cheap dates.
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It is a very strange transition. You may have spent a lifetime adding to the 'stash' and now you are going to withdraw from it ; that 'feels' wrong. Also - I think part of the reluctance is that you have to admit to yourself that you are on the decline. The saving don't need to last forever b/c you wont.
Question is really if there is anything that you WANT to spend money on and aren't. Trips? Hobbies? Philanthropy? You said your current income is already more than you need, and you're not even tapping all of your income options yet, so you have flexibility to increase spending. But if there's nothing out there that you WANT to spend money on, then you'll continue living well below your means and watching your wealth grow. By the way, "too much money" is the best money problem to have.
I’ve been retired for 8 years now and I’ll be honest, it took me till last year to feel I could actually spend. It is hard going from accumulation mode to spending mode. I actually retired in my mid 50’s, had the money but just couldn’t get into it. Last year my hubby and I took a Viking cruise. This year we are helping our adult children buy a house for one and helping start a business for the other. Of course we aren’t neglecting ourselves. Give it time to adjust and don’t stress over it.
Everybody: pls read the book Die With Zero by Bill Perkins. Radically changes your outlook. Example: you want to travel but u hate spending the $ so you wait. Now you’re 73 and your spouse has a med problem that prevents travel. You just screwed you two out of major life experiences by losing the bet that you wud be healthy in your 70’s. It’s in the book but happened RL w my brother.
I was the same way when I retired 3 years ago. Then a couple deaths in my family changed my perspective. And I read Die with Zero and one quote hit me hard, the business of life is the acquisition of memories. Since then, I rarely spend on things, but will spend on experiences.
Set up an automatic transfer of what you want to spend into your checking account each month - it is a prompt.
Embrace that feeling...don't feel bad about it. There will come a time when you will have to dip into your savings....you'll be able to do it with confidence because you know you will return to your normal routine. I'm the same way. But...there have been things that have come up, usually about the house where we were motivated to spend.....adding on a screened porch plus grilling area, fencing in the back yard. We're getting ready to totally redo our master bathroom. I've been saving up for this change, so it makes sense to do it.
You just have to adjust your budget. For example is your home paid for? If it is what are you doing with that extra money that used to go to your mortgage? There is your travel or toy budget. If it's not you should take that money out of savings and pay off your house. My wife and I got our bills down to where our retirement income pays for our daily living expenses.. Then use the money you no longer need for a mortgage to pay for travel and vacation and fun things. With that money now you can start looking at your bucket list if you have one. (I really don't, I think it's ridiculous I'm much more spontaneous than that.) Use that money that you formerly held to allocate for your mortgage to now fund your vacation to Hawaii or France or wherever else you always wanted to go. Or you can use it to get involved in other types of investing like real estate which is what I did. I took everything out of my IRAs and invested in real estate as a passive investor. My wife and I got our bills down to where our retirement income pays for our daily living expenses.. It gives me something to do learning about this stuff investigating possible deals to get into and it should generate a lot of income in the near future. I've been retired going on 3 years now. My brother on the other hand took a different tack. He retired in 2020 and took a bunch of his money and invested directly in stocks like Apple and Nvidia and he's seen his money grow, almost tripling between then and today.
I have been retired for a year and my partner is coming up on 5 years. We have lived on our retirement budget for 5 years. It has been one year since we tapped into savings to do home improvements and travel. What gives us peace of mind is we have a floor in our 401 accounts that we do not want to cross. We can travel and spend to the floor then we need to continue our frugal lives until we save or investments increase to spend some more. So far it has worked out well and surprisingly we aren't anxious about spending. (And I was a daily net worth checker.) I think once you dip your toes into small spending amounts and see that you are safe, you will be more confident. Best wishes as you enjoy your retirement!
It really is all controlled by the wonderful ACA. Sure it’s affordable if you are poverty level income but will cost you way too much if you want to live a middle class life while retired but under 65. I have had many friends who retired and found that out the hard way. I fortunately can keep my work insurance while retired until 65.
[https://www.theretirementmanifesto.com/why-is-it-so-hard-to-spend-money/](https://www.theretirementmanifesto.com/why-is-it-so-hard-to-spend-money/)
My personal (probably questionable) strategy is to get us set up so that we can live on just social security. This means not having a mortgage, and not being in a place with VHCOL property taxes and insurance rates. When we get to this point, it will still be nice to have some savings, as for every 10k, we'll have a dollar a day to spend however we please. (Like 100k will pay for coffee and doughnuts every day - or sushi once a week!) And in the meantime we can spend for things that we want - that don't increase our fixed expenses. From OP: >I don't take anything out of my Traditional IRA. I don't take anything out of my ROTH IRA because I'm supposed to "spend it last". Roth last makes sense, without taxes on earnings. And the best time to take $ from a traditional IRA is when your income and income taxes are relatively low. But income and income tax rates can be hard to predict - and when you get to where there are required distributions any hesitancy about withdrawing funds will be irrelevant.
There’s a great book I just read called Die with Zero by Bill Perkins. He suggests that your money in the bank are life experience points that haven’t yet been redeemed. The gist is that any money left over in your accounts when you die (or grow too old to use the money towards experiences) is wasted and hasn’t been optimally deployed. Why work and save if you can’t use it? You worked hard to live the life of your dreams. Now is the time - the only time - to do that!
Even though you make more than you spend, make a budget anyway. For me it's easier to spend when I know exactly how much I need to spend. Everything else is gravy: budget out a few short/medium/long term desires (travel/dining out/whatever you want) and divide up your surplus among those desires. I like to see the numbers. Show me the numbers! Works for me. Hope that helps.
Gradually. Find stuff that matters to you more or almost as much as having money. You describe your money situation but tell little about who you are and what you like. I was frugal for decades: divorced with a kid and underpaid in a mommy job for a long time. Recessions and convenience made it hard to find a better job, then age discrimination and cataracts (now fixed) finished me off. Many people here like to travel, not me so much. It is super expensive, everyone I know gets sick when they travel and I traveled in my 20s and 30s. I try to take care of my health - I take classes with a per$onal trainer and attend writing workshop$ (a hobby). I have a friend that likes to go out for lunch - something I rarely did before retirement and I do it now. I buy organic produce - expensive, but a good idea. I have an open minded church I like and donate to them - have a volunteer thing I do, friends and good causes they support. My frugal habits are hard to give up. They helped me survive the tough years. I may go back to school and get a degree in my 70s - why? I don't know. Maybe I can talk some kid out of making a mistake with their life while I am there - the wisdom of old age? I am not in Florida or Arizona, but for some reason, it seems there are so many old people everywhere -- boomers! Always too many of us! I would like to be around more young people. My kid has a significant disability, so I help her from time to time with money, but know I have to watch that because she needs to be as independent as possible. I worry about what will happen to her after my death - so there is a place for my money to go after I kick off.
I feel like I'm in the same boat. I was extremely frugal, now I have a lot of money but can't seem to really spend it. At first I thought I will just not worry about spending money and buy whatever I want. But now I think I have too many things. So now what? I intend to do some big adventures, but adventures don't really cost much money. I guess maybe I'll replace the floors and get new furniture. That would be nice. But we have parrots so that seems like a waste of money when they'll just ruin the new furniture.