How Much to Spend in Retirement P2
Should you spend more or less than the 4% 'safe rate?'
May 23, 2007
Will_L first published this commentary in our Bob Brinker Free Discussion Forum here.
Read Part 1 here.
What really bugs me is that if someone has retired and their great pleasure in life is living below their means, counting the pennies that collect and saving more and more, building an estate that they cannot take with them...more power to them. But what about the spouse? In many of these situations like the one above, the guy did the financial planning and earned the lions share of the income during their working lives. Now that retirement has set in, I truly believe that many men think their spouse should be happy following their lifestyle and budgeting.
While the guy brags about how little they spend on clothes and cars and dining out, the "good lil woman" is supposed to be happy and have the exact same glee from having a larger investment portfolio as they come nearer and nearer to death, doing less and less to enjoy their growing largesse.
Now don't get me wrong, some people are frugal and some people are cheap. The former can be something of an attribute if not carried to an extreme, the latter is a pain in the a** to not just those they deal with commercially but friends and family as well.
If the spouse that has "handled" the finances is "cheap" and gets more so in retirement, it impacts the spouse who helped them reach retirement dramatically. Often that spouse feels powerless to confront her partner who now is obsessed with seeming how little they can get by on. It's a crying shame to be yoked to someone like that imo (in my opinion.)
For that reason I would strongly encourage the more dominant partner in financial affairs to seriously consider loosening up the purse strings a tad in the conditions Alan relates.. One way to do that is to instead of "hoarding" the money in one pot and begrudgingly doling out as little as possible --while bragging constantly on how little "we" are spending to consider something like this.
Use a reasonable "take out figure" for your situation. Let's say 4%. Then don't spend all of your time telling your spouse how you could really really get buy on 2% and how much more fun that would be!
Since Alan is talking about people with significant net worth in the larger two examples they can likely take that 4% and divide it into 3 pools. Put this sum of money in a money market fund at the beginning of each year.
Read Part 2 here.
