View Full Version : How do you plan your retirement spending?
I retired in 2019 and I have yet to really feel comfortable with understanding how to plan my spending. I obviously don't want to over-spend, and I want to leave assets to my heirs, but I also don't want to pass up some travel experiences during these last few years that I have right now of being healthy enough to travel (I'm 70.)
I think this might be a common question and I'm looking forward to hearing how other people arrive at their own personal formulae.
iris lilies
4-12-23, 9:16am
I retired in 2019 and I have yet to really feel comfortable with understanding how to plan my spending. I obviously don't want to over-spend, and I want to leave assets to my heirs, but I also don't want to pass up some travel experiences during these last few years that I have right now of being healthy enough to travel (I'm 70.)
I think this might be a common question and I'm looking forward to hearing how other people arrive at their own personal formulae.
I don’t have the goal you have, to leave any assets to anyone. But if I had your goal, I guess I would set aside for them an amount of money from my current liquid assets, put it in a couple of index funds, and forget about it. That is your set aside for your heirs.
But without knowing how much is your income, how much you spend normally, and how much in investment assets you have, it is impossible to know how much you have for travel.
I would caution you about the “ leaving money to heirs” idea since late in life care can be very expensive and YOU may need that money. So, don’t tie up any “inheritance” fund so that you can’t touch it.
Our own spending goes like this:
Income of about $85,000 annually not including investment growth.
We spend about $80,000 annually.
We have large assets to draw from for big vacations to Europe, purchase of cars, houses.
Teacher Terry
4-12-23, 10:45am
If I don’t need to go to a nursing home my kids will inherit my condo. Very few people in my family were not able to live alone until the end so hoping I will be the same. I live on my income and use my savings for travel and large expenses. I am finishing my bucket list in the next 2 years because you never know how long you can physically travel. I just got home from a trip to Europe which was a tour and we walked between 11-16k steps a day. I had a great time!
iris lilies
4-12-23, 11:19am
If I don’t need to go to a nursing home my kids will inherit my condo. Very few people in my family were not able to live alone until the end so hoping I will be the same. I live on my income and use my savings for travel and large expenses. I am finishing my bucket list in the next 2 years because you never know how long you can physically travel. I just got home from a trip to Europe which was a tour and we walked between 11-16k steps a day. I had a great time!
your trip sounds great! I bet you were able to eat whatever you want of that great European food and not worry about getting weight.
Teacher Terry
4-12-23, 11:25am
IL, I didn’t gain any weight and ate much more than usual. The food was so good. At the summer palace in Prague our tour group had a private tour, dinner and musicians for a private recital before dinner. The meal was homemade and there were only 12 of us that took this optional excursion.
iris lilies
4-12-23, 11:33am
IL, I didn’t gain any weight and ate much more than usual. The food was so good. At the summer palace in Prague our tour group had a private tour, dinner and musicians for a private recital before dinner. The meal was homemade and there were only 12 of us that took this optional excursion.
Where is the summer palace?
I stayed in old town Prague and ventured over the river to the palace (summer palace?) just once.
I love Prague and would go back for a few days just there. The spa twon of Karlovy Vary is a beautiful day trip. Lots of awful touristy junk all over for sale, but the architecture is sublime. That is where the Moser glass factory is.
Now you have me all heated up for a trip thru just the Czech Republic.
Teacher Terry
4-12-23, 2:34pm
It was the Sychrov Castle about a hour from Prague. My favorite European city was krakow but Prague is prettier although I love the town square in krakow and how it’s laid out.
I retired in 2019 and I have yet to really feel comfortable with understanding how to plan my spending. I obviously don't want to over-spend, and I want to leave assets to my heirs, but I also don't want to pass up some travel experiences during these last few years that I have right now of being healthy enough to travel (I'm 70.)
I think this might be a common question and I'm looking forward to hearing how other people arrive at their own personal formulae.
I am in a similar boat with wanting to plan spending and leave assets to heirs, but having seen how expensive my mom's care has been, I'm telling them there may not be anything left, I just don't know.
Basically, I try not to spend principal and keep spending to what we can bring in--still working part time. I would try to plan travel that I could pay for with current income and not spend savings on it, since savings is my principal.
Probably not the answer anyone wants to hear, but that's the way it is. Those with bigger pockets can obviously afford to travel.
I'm ~60, and have been "retired" for 20+ years now.
My budget is running about $84k/year. I try to end up with substantially-less taxable income than that, which at the moment saves me ~$14k/year on health insurance costs.
I plan on 3.1% inflation over time, and a 4% draw from my retirement assets. This currently produces a growing asset base.
My original thinking was to arrange to leave significant assets to my child, but she is doing so well with her life now that I suspect that isn't a requirement anymore, so I'm evaluating a more spend-to-zero approach, possibly however retaining the family home for her.
I am definitely front-loading spending on "fun" now, while I am still spry enough to enjoy it. My family tends to live into their mid-to-late 90s, so I have to be a little careful.
Teacher Terry
4-12-23, 4:58pm
Rachel, if you want to travel I would do it now while you can. 9 of my friends have died between the ages of 59-71. Some were too sick or disabled for a few years before dying. Europe is not very easy to visit if you can’t walk a lot, etc so you need to be in decent shape. Often cars aren’t allowed in the town squares and the sidewalks and streets are uneven, cobblestone, etc so if you have a physical disability it would be difficult to visit.
frugal-one
4-12-23, 5:10pm
I have on my list for this week to contact a tax attorney... to find out the best way to spend down. Just contacted 2 real estate agents who have people in line looking for older houses for sale in my area (there are none). I scheduled appointments for Friday and Monday and then will decide what we want to do. Still have an idea on how to sell on my own. This will impact on how much we need or want to spend on a home (probably mobile home) in TX and possibly a small condo north (or rent). All of this will impact our retirement spending. I can't wait to get this all over so we can get back to traveling!
Teacher Terry
4-12-23, 9:21pm
Frugal I always use a realtor and do repairs and make sure it’s super clean. I do a major decluttering and pack personal items and pictures away. I make my home as nice as possible so it shows well. I always want top dollar and the effort is worth it to me.
Teacher Terry
4-12-23, 9:47pm
Rachel, what are your major concerns? For instance not enough monthly income for expenses, not enough savings, investments or all of the above.
frugal-one
4-13-23, 2:25am
Frugal I always use a realtor and do repairs and make sure it’s super clean. I do a major decluttering and pack personal items and pictures away. I make my home as nice as possible so it shows well. I always want top dollar and the effort is worth it to me.
The last house I found a buyer and should have sold it myself. We will make that judgment after talking to realtors. The above things mentioned are common practice. I’m looking for a critical eye to see if there is something we are missing or needs to be done that we are not seeing? We have lived here many years so may have a blind eye?? We probably will go with a realtor but want to consider all options.
My plan is to live within my Social Security income and use savings for capital expenses such as if I need a new car or furnace, etc. I do not plan to do overnight travel. I have 50 places within 50 minutes of my house on my list and won't get to all of them on my upcoming vacation. I come up with new places to add all the time, and these are all places I have never been before despite living in the area most of my life. The world isn't just big, it's dense.
iris lilies
4-13-23, 8:07am
My plan is to live within my Social Security income and use savings for capital expenses such as if I need a new car or furnace, etc. I do not plan to do overnight travel. I have 50 places within 50 minutes of my house on my list and won't get to all of them on my upcoming vacation. I come up with new places to add all the time, and these are all places I have never been before despite living in the area most of my life. The world isn't just big, it's dense.
This is a super interesting way to view the world around us. I agree that there’s plenty of things to visit nearby. When we retired we started doing that and then got distracted by… Life or maybe got lazy about it. So, there are still things in the city of St. Louis that we haven’t visited. True for Hermann now as well.
Big and also dense, interesting tought.
Planning is mostly a foreign concept to me.
ETA: I always identified with the grasshopper in that fable; things have a way of working out.
iris lilies
4-13-23, 3:43pm
Planning is mostly a foreign concept to me.
ETA: I always identified with the grasshopper in that fable; things have a way of working out.
oh, I plan, that’s for sure, but very broadly. For instance, I’m planning my life knowing that the month of May is Iris season and I’m not going to schedule anything else in May because I know I will be consumed with Iris stuff. Whenever people want me to do something and it’s not related to Iris I say no.
sure, I might be able to fit things into my calendar but I don’t want to, I wish to remain open to whatever opportunities iris bloom offer me.
If I’m not planning in some way, I am exerting no control on my life so I don’t like that either. But excessive detail planning & scheduling to the nth degree on my calendar… Nope.
Portuguese John Here
4-16-23, 7:49am
I obviously don't want to over-spend, and I want to leave assets to my heirs, but I also don't want to pass up some travel experiences during these last few years that I have right now of being healthy enough to travel (I'm 70.)
You remind me of my grandmother, died five years ago, age eighty-something.
She knew hunger, and deprivation, what a strong woman, the strongest I ever knew, and will probably know, I'm sure of that.
She didn't know what a yogurt was, an ice cream. She didn't get much money while living, same with my grandfather.
The last years, my mother took care of her, she knew certain things, she'd never experienced them before.
I remember the first time I saw her eating ice cream, she said: "It's very good", the face changed afterward;
A guilt face, that saddened my hearth, she was doing something for herself, something she probably never did before.
She wanted to leave something for their children's, but their children's were taught to hunt, they had stuff.
When she died, she left a large sum in the bank, that was the right thing to do, the old folks mentality.
Cleaning up the house she was born, raised their children's, and died on, one of them found money hidden.
You know what they did? They excavated the frinking thing, every wall, to find the rest.
Believe me, parents never think their children's would do such a thing, but they do.
She died with integrity, and honor, something overrated nowadays.
Don't deprive yourself of anything, grannie.
Teacher Terry
4-16-23, 9:55am
That’s a sad story John. We told my parents to enjoy themselves and spend their money which they did. My kids have told me the same.
Portuguese John Here
4-16-23, 11:04am
That’s a sad story John. We told my parents to enjoy themselves and spend their money which they did. My kids have told me the same.
That is something I abide by.
Teach your children to fish, they won't need you.
Anything else, it's just greedy.
frugal-one
4-16-23, 4:40pm
The last house I found a buyer and should have sold it myself. We will make that judgment after talking to realtors. The above things mentioned are common practice. I’m looking for a critical eye to see if there is something we are missing or needs to be done that we are not seeing? We have lived here many years so may have a blind eye?? We probably will go with a realtor but want to consider all options.
Neighbors told a friend we were selling. Friend came out Thursday and will come out Wednesday again for hubby to check out. Seemed really interested but who knows? Realtor came Friday and could not find a comparable house. Did not impress us. Said we cleaned the house and did a good job of making it impersonal (which is what I read to do). Did not give any ideas of things we should do differently. Another realtor is coming tomorrow. Best of all would be if we did not have to use a realtor. Hate tons of people going through the house. Will call and check on real estate attorneys tomorrow and see who or if they still do auctions for entire goods in a house? Just got back from being gone 5 months and it has been a whirlwind trying to clean and clean out stuff. Still have a ways to go. Supposed to have village wide garage sales this week but looks like it will be rained/snowed out... unfortunately. Have piles of small stuff in the garage to get rid of. Keeping fingers crossed!
You remind me of my grandmother, died five years ago, age eighty-something.
She knew hunger, and deprivation, what a strong woman, the strongest I ever knew, and will probably know, I'm sure of that.
She didn't know what a yogurt was, an ice cream. She didn't get much money while living, same with my grandfather.
The last years, my mother took care of her, she knew certain things, she'd never experienced them before.
I remember the first time I saw her eating ice cream, she said: "It's very good", the face changed afterward;
A guilt face, that saddened my hearth, she was doing something for herself, something she probably never did before.
She wanted to leave something for their children's, but their children's were taught to hunt, they had stuff.
When she died, she left a large sum in the bank, that was the right thing to do, the old folks mentality.
Cleaning up the house she was born, raised their children's, and died on, one of them found money hidden.
You know what they did? They excavated the frinking thing, every wall, to find the rest.
Believe me, parents never think their children's would do such a thing, but they do.
She died with integrity, and honor, something overrated nowadays.
Don't deprive yourself of anything, grannie.
A corollary to this good advice is that if you pass on money to your heirs, it may be that your very hard earned dollars will be disrespected. I have seen in my own family the dollars earned by the elder by working in low-paying jobs, and who spent a lifetime of careful saving, being absolutely squandered by the heir. Talk about Your Money or Your life life energy--how about 40 years of a working life traded for meaningless crap. Also, I have friends waiting for their elderly parents to die so they can buy this or that. As I've said here several time before, I am so glad that my mother's only inheritance was the same $60 I had given her the month before. And that was it. I am so fine with that.
In my parents’ case my sister and I both encouraged them to spend it but they didn’t have any dreams of fancy travel or a fancy home or anything. To the end they were frugal, probably at least in part from growing up in the depression. At the end even though dad was miserable with a roommate in the nursing home he was worried about the cost we were paying to upgrade him to a single room.
It pleases me more to leave something for my kid than to collect selfies of myself in foreign climes. My theory is that the best way to keep him from wasting his inheritance is not to raise a wastrel.
Teacher Terry
4-17-23, 10:54am
It pleases me more to leave something for my kid than to collect selfies of myself in foreign climes. My theory is that the best way to keep him from wasting his inheritance is not to raise a wastrel.
You sound like a person that doesn’t enjoy traveling which is fine. It’s silly to spend money on something that doesn’t bring you happiness.
I have become more cognizant of how inflation and maintaining a standard of living with things like a separate house, and not living in a senior apartment, for example, will impact how much money is required going forward. Thus I will have to keep my spending in line with how much cost of living has gone up, and how I can't afford what I used to be able to afford.
Rachel, what are your major concerns? For instance not enough monthly income for expenses, not enough savings, investments or all of the above.
Teacher Terry, and everyone: I really appreciate the responses. Each person has said something that gave me a somewhat different angle on my question.
My thoughts are influenced by my gratitude to my parents, who left me considerable assets that have hugely alleviated the stress and fear of getting older. DH also inherited some money from his parents, and hardly a day goes by that we don't remark upon how grateful we are and how important it is to us to honor their memories in how we spend that money.
Also, knowing the difference the inheritances have made to us we would like to offer that sort of gift to our children. The world has gotten very challenging these last few years. Life in America can be brutal even for well educated people. All of our kids are good workers, responsible and kind.
Given our relatively modest day to day expenses, we both feel that we have plenty for a very pleasant life. Trips to Europe, however, take us into some major expense. We both have health issues that make tourist class very difficult. So -- that is what we are mulling over.
I do take to heart the advice to "do it now." I also have friends in the 70-75 category who are facing major health issues, major mobility and cognition issues. That could become us, too - any time.
As of right now, we're planning one very big trip in the Fall. After that, we'll see. I'm trying to be much more conscious of things we used to spend money on without even thinking -- taxi cabs, restaurants, wine...the list goes on.
Teacher Terry, your trip sounds fantastic! Good for you for taking advantage of the dinner at the castle with the concert afterwards. I think we were at that same castle about 20 years ago -- outside of Prague, beautiful baroque paintings on the ceilings, parts of the architecture from the middle ages, others from later eras. It was gorgeous.
I have become more cognizant of how inflation and maintaining a standard of living with things like a separate house, and not living in a senior apartment, for example, will impact how much money is required going forward. Thus I will have to keep my spending in line with how much cost of living has gone up, and how I can't afford what I used to be able to afford.
Ditto that, Tybee.
Teacher Terry
4-26-23, 12:51am
Rachel, glad you have a trip planned and sounds like you have been to Europe before. I bet you were at the same castle. It was a little over a hour from Prague.
I early retired at age 55. I did not fundamentally change my frugal spending and my nest egg has grown.
One thing I just did was to open a very small donor advised fund, and I will add to it each year. Then, when I die, it will be split among the beneficiaries--I currently have two but might add a third.
I can make donations from it each year but will probably keep the donations to about 5% so it can grow.
That way I am building in giving to my retirement plan, but in a low stress way.
ETA: just went and added a third beneficiary. So it is divided neatly into past, present, and future: college I attended, college where I teach, and college where I give money.
Very fun!
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