How Much to Spend in Retirement P1

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The entire hypothetical scenario to way of thinking sounds dysfunctional. Sure it sounds nice for the spouse that doesn't get their way to often but I doubt it is realistic. Does anyone think the dominate one of the pair would permit such a plan? In my Father's last days he told me he regretted not traveling more and he was single and had been for 24 years. He was living on social security and was a net saver. It was a habit he could break himself of. Maybe becoming a teenager in 1930 had something to do with that mindset. One of the last things he told me was to not to be so tight.

The best thing that ever happened to me was marriage. Been at it for 27 years through the ups and downs. We discussed all aspects of our life prior to walking down the aisle, I'll leave the other topics alone and focus on financial matters.

When it comes to money we are both frugal. We don't mind spending money on quality but never do so impulsively. When we first started out our agreement was neither of us could spend more than $20 without consulting the other. That has been amended since 1980. The point is we decide jointly on major purchases.

We both hate to pay interest so debt has never been a problem. We have enough in our rainy day fund to pay off our mortgage but haven't since the rainy day fund would get to a level we would not be comfortable with. Besides with a fixed 4.75% loan we're not getting hurt to badly paying interest. We have no other debt.

Life is good and not to terribly difficult when the regular monthly bills are all that is required of our income. We do take a couple nice vacations yearly. We both have hobbies that keep us busy and fulfilled. Our biggest expense is savings. We do that to a greater extent than the majority of Americans as a percentage of gross income but we do have a plan. We both do not want to be working when we turn 60. The way I have things calculated if we stopped adding new money to retirement savings we could very comfortably retire at age 65 with a 8% annual return. We are saving to increase our standard of living when retired and to do so prior to 60. I think this is doable without giving up the pleasures of life along the way.

As of now I expect to take out 3.5% in retirement. It means starting retirement with a little bigger pile of money. This gives a little more cushion and should last a little longer if we are able to make it into our 90s. If not we had a good ride and there are going to be a few chari

Will comments were very interesting and well written and I agree with Steve that a successful marriage is vital concerning money matters but:


I admit that my wife and I have trouble spending money freely after a life time of contributing to Keoghs, defined benefit plans, traditional IRAs and Roth IRAs. We always avoided debt and we were on the same page together concerning money expenditures. In the 37 years we've been married I honestly can't remember an argument over money/income/spending. Our knock down drag out events always related to our children. Both of us were DNA savers and constantly squirreled away money and have more than necessary to qualify as having critical mass. We were reared in the same religion that preached self reliance and frugality. But we really don't consider ourselves misers.


We travel frequently, take cruises, and enjoy life but we remain frugal. After retiring, we both found part time work because we enjoy staying busy and working with friends and associates. Because of sheer luck, I reinvested equity funds into the market in March 2003 and just about have had a double so since retiring we have been blessed financially.


So why can't we splurge with a 2nd beach front home, high profile cars, designer clothes, etc? I really think it's built into our DNA. We are just not comfortable living a high profile life style. Will's comments made us both reevaluate why we live below our means. To date we don't have a real reason. I don't know what would happen if we won the CA jack pot. I think we would still be living and doing about the same things we enjoy now but would share our windfall with our children. As Will wrote, "some people are frugal and some people are cheap. The former can be something of an attribute...the latter is a pain in the a** to not just those they deal with but friends and family as well." Here's hoping we are the former, not the latter.


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Wow Steve, that was great! You and your wife are really lucky people to have each other. I don't even know you but I like you and feel good just reading what you wrote. We all should be so happy!
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I thought Will's post was spectacular but as usual I was so far behind reading here that his comments were 2 or 3 pages back and I was leaving work early so I did not comment on it.
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I think that Steve actually nailed the reason this behavior exists when he said "In my Father's last days he told me he regretted not traveling more and he was single and had been for 24 years. He was living on social security and was a net saver. <b>It was a habit he could break himself of. (TOM HERE I THINK STEVE MEANT COULD NOT) Maybe becoming a teenager in 1930 had something to do with that mindset.</b>"
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The other other comment <b>"I know their financial circumstances are such that they could have the same lifestyle they did before retirement. Her husband, a nice enough guy is obsessed with "saving money"."</b>
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I saw a short movie 15 years ago that I think was made in the 70's. I found it facinating as it was about human behavior. The name of it was "What You Are Now Is Where You Were When" and there's no typo there. The basis of the movie of perhaps 30 minutes was that different people are moviated by different things but generally your desires and wants are formed when you were young. So a person raised in the depression was so tramatized that even as a wealthy adult they take napkins and ketchup packs from McDonald's or reuse paper towels - it's just been so ingrained in them they still try to conserve and make do. These people were moviated by and responded to money. Baby boomers never were broke and had it good so money did not motivate them but personal satisfaction was their movtiving factor so time off to persue their desires appealed to them not money.
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So I think that when you spent your entire working life, 30 or 40 years, saving and investing, making good money over the decades in the markets, you are so geared to saving and investing and seeing the bottom line grow year by year that when you retire this is a shock to the system. You now don't see the bottom line increase monthly and yearly by contributions from salary. Growth is just from returns on investments while you start to draw down the balance. To some people I think this pretty sacry and they withdraw into this cheap behavior as they fear that they are no longer making money and growing th

"WHATEVER THE VIRTUES OF HOARDING FOR ITS OWN sake, saving is more properly viewed as a necessary sacrifice for the accumulation of assets; try adding a "y" to "miser."


<i>As reported in today's Barrons.</i>
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