Thinking of spending my stache, what do I need to consider?

[HipGnosis]

The https://forum.mrmoneymustache.com/welcome-to-the-forum/broke-by-62-yes/ thread taught me that long term care can/will wipe out huge portions of savings/investments.  (Means testing limits how much medicare pays while you have assets).  It's an old thread, but that stuck with me.
So I'm thinking of spending most of my stache.
I'm 63. I fired at 58 with a small pension (which includes some health coverage).
I started social security a few months ago, but I haven't spent much of it yet.  I've made a 5 figure contribution to my stache.   I made a high 4 figure contribution a few months before starting Soc.Sec.
I grew up poor - and have lived frugally my whole life.  I like cars and motorcycles, but I've never bought a new one.
What triggered this is my sister (who is the intermediary between our mother and her financial advisor) said that the advisor is arraigning Mom's assets to limit estate or inheritance taxes.  (I had no idea she had enough for this to be considered).

I don't know what I'd spend the $tache on, -- I've never allowed myself to think about it, but I'd rather spend / enjoy it than have it go to health care while I'm paying for medicare.
I will leave enough invested for a safe withdrawal rate to cover long term care insurance and some incidentals,

What do I need / should consider before I do this?

[Arbitrage]

While I don't subscribe to the premise, I would think that the biggest thing to consider would be spending money on things that themselves cost a lot of money just to own.

Buy a fancy car, and now you need to pay a lot more on insurance, taxes, maintenance every year.
Buy a fancy house or vacation home, and likewise you have a lot more in insurance, taxes, maintenance, utilities, etc.
Boat, plane, etc...all of these 'things' come with recurring costs that might kill your basic assumptions that you've got your living expenses covered indefinitely.  Some of them, like perhaps a car that's not too ridiculous, could probably be sold fairly easily if things got bad.  A house, on the other hand, could put you in a real world of hurt if you get underwater and can't afford the upkeep. 

'One-off' experiences or expenses would probably be better to focus on.  Or, perhaps, giving money away or spending it on causes you believe in would bring joy.

[maizefolk]

I agree wit Arbitrage's advice, but would add that there are also physical things you can buy which will reduce your expenses going forward and which you may still enjoy. Solar panels are an example. They cost a lot but do reduce your expenses somewhat. For the sort of person who is inclined in that directly I know people who seem to get daily enjoyment from checking and seeing how much power their house is producing/feeding back into the grid.

If cars are your thing, what about renting different fancy/exciting cars for a few days or a week from time to time?

[cool7hand]

What about speaking to an elder care attorney about Miller Trusts?

E.g.: https://www.medicaidplanningassistance.org/miller-trusts/

[reeshau]

What triggered this is my sister (who is the intermediary between our mother and her financial advisor) said that the advisor is arraigning Mom's assets to limit estate or inheritance taxes.  (I had no idea she had enough for this to be considered).

Are you sure she does have enough for this to be considered?  0.1% of estates are subject to the current estate tax.  Does your family really have that kind of wealth, but you were unaware?

If the financial advisor is a fiduciary certified financial planner, then maybe she does.  Or maybe the financial planner believes the estate tax exemption will be lower in the future.

If the financial advisor is a licensed insurance agent (i.e an insurance salesman) then he is just quoting the sales material, and may not even know (in the most benign case) what the limits are.

Looking at your own situation: it's a fair point to think about the scenario of needing long-term care, but what about if you don't need it?  Will you have a satisfactory life after you have spent down, if you remain relatively healthy but are on your own financially?

[Zamboni]

Arbitrage has good points about considering related ongoing costs to any purchase. And MMM had a great blog post recently about renting a Tesla.

I totally understand where you are, though. I'm younger than you are, but already realizing that I just won't be able to enjoy my money in the same ways in 20-30 years as I can now. For example, long-haul travel is already becoming harder for me due to an accumulation of neck/back injuries, and my own parents are no longer willing to travel at all (they are in their 70's). A trip to Europe, Asia, Oceania, even Hawaii? I need to go sooner rather than later. Skiing is another hobby I love that is expensive, but it's hard on my body and getting harder as I get older. I grew up in a literal ski bum family skiing 1-2 times per week all winter, but the demands of my working life slowed that pace down dramatically. When I find time to ski now, my feet & knees hurt more, my hands hurt more, and then there is the whole neck/back problem. As much as it would be awesome for me to ski right off into the sunset, I'm having to face the reality that skiing will eventual become quite difficult if not impossible. My parents are no longer able to ski, and they were absolutely die hard skiers, but at some point the deterioration of one's body or brain just shuts off an avenue of fun.

So, I need to travel now. And I need to ski now. That's reality.

And that's all ignoring the fact that our 'staches could just all be siphoned towards extremely expensive long term care! And it might not even happen by our own choice! Watch the movie "I Care A Lot" on Netflix if you really want to be freaked out about that.

In your case, I can see motorcycles as being a hobby that has a definite shelf life in terms of aging. Fanny fatigue is an issue even in your 20's! So, if you are really into motorcycles, I think you should indeed spend quite a bit of time researching what new motorcycle you would want. Plan every detail of it. This make & model or that? What color? What kind of tires/rims? What accessories? Read the reviews, take multiple visits to different lots window shopping. Think about the extras that would be functional and meaningful. For example, do you need new motorcycle gloves? How's your helmet? Your jacket? The shopping and planning part is at least half of the fun of getting something like that. As you window shop, your 'stache will continue to grow a bit. Eventually you will know exactly what you want and you can just buy it. And ride it. And you deserve it!

Seriously, I just pulled the trigger on doing this exercise with ski stuff. I still was using skiing gloves from when I was a teenager! Yeah, those gloves served me well but they are shot, I should feel no guilt buying new gloves. But I still felt guilty. Are these new warm gortex gloves that fit me perfectly really $60? Hmmm, that's really a lot of moula for gloves. Shouldn't I get something cheaper? What can I get on Craigslist? Okay, these used gloves I see are Craigslist aren't exactly what I need or would pick out, but they'll work and they are only $5. I wore my old ski boots until they literally split in half. And then I went on Craigslist and I actually bought a pair of used ski boots to save money . . . they were nice, nearly new boots, except they were just slightly too big. So as I was trying them on at the seller's house I convinced myself I could wear thicker socks to ski. I did that: still too big. Skiing just wasn't as fun with boots that didn't fit quite right. And then I realized I was being extremely silly by not just getting what I need to enjoy this hobby fully while I can. Used, sure you can shop around, and sometimes you will really luck out, but in the end you get the one option that a seller is selling. In a store I can try on 6 different pairs of boots and get exactly the right size. I needed to shed my lifetime of weird habits around making do with subpar stuff literally all the time.

So, I vote for overcoming your guilt and habits and doing what will bring you true joy and fulfillment. The point is definitely not to die on a giant hill of cash, after all. The point is to find meaning and joy in your life.

[Metalcat]

It's really hard to comment without knowing your situation.

This could either be a great idea or a frankly stupid idea or anything in between.

My advice is to know your personal risk tolerances and plan accordingly. There are a lot of expenses that can come up besides nursing home costs.

If you're sitting at some ridiculous low WR like 1% and still denying yourself any reasonable indulgences because your inner bag lady is in total control, then yeah, get your head out of your ass and start spending a bit to enrich your life.

But if you are at a 4% WR on a very frugal budget that would crumble in the event of something like a divorce, then maybe think carefully about developing a habit of renting luxury cars.

What makes sense for you depends on what makes sense for you.
The simple question is: are you happy with your life right now exactly as it is? If yes, why change anything. If no, then examine it closely and make appropriate changes.

[PDXTabs]

What triggered this is my sister (who is the intermediary between our mother and her financial advisor) said that the advisor is arraigning Mom's assets to limit estate or inheritance taxes.  (I had no idea she had enough for this to be considered).

Are you sure she does have enough for this to be considered?  0.1% of estates are subject to the current estate tax.  Does your family really have that kind of wealth, but you were unaware?

If the financial advisor is a fiduciary certified financial planner, then maybe she does.  Or maybe the financial planner believes the estate tax exemption will be lower in the future.

Or perhaps they are in reference to state estate tax? The limit in OR is $1M.

[EricEng]

What "means testing limits" are you talking about for medicare?
https://www.healthline.com/health/medicare/medicare-income-limits#medicare-premiums
Higher premiums for Medicare Part B don't kick in until over $88k annual income.  There is no income limit for Medicare Part A.  The annual increases for medicare part B are pretty gentle compared to private insurance market.

Are you implying that you want to quality for medicaid when you retire?  I would never want to live broke in retirement.  Sure, you might not have to worry about medical surprises via medicaid, but you will live in fear of other big expenses popping up such as Roof failure, flood, car issues, appliances, etc. 

As for your mother and estate taxes, I think you would know if she had an excess of $12million laying around that you would need to be hit by estate taxes.  So more likely someone is trying to scam her into an annuity.

[Dicey]

You realize that LTC insurance only covers a fraction of your expenses? You know that it's crazy expensive? You  grok that LTC insurance companies do their damnest not to pay out on their policies?

Relipying on LTC might just be the absolute worst choice, especially for a mustachian.

[PDXTabs]

Relipying on LTC might just be the absolute worst choice, especially for a mustachian.

Yup, I'd be far more interested in a MAPT.

[Metalcat]

You realize that LTC insurance only covers a fraction of your expenses? You know that it's crazy expensive? You  grok that LTC insurance companies do their damnest not to pay out on their policies?

Relipying on LTC might just be the absolute worst choice, especially for a mustachian.

OP really hasn't been at all clear whether they mean that they want to spend down all of their savings or whether they've come to realize that they've been too conservative and have realized that they can afford to loosen the purse strings a bit, and seeing that thread just made them feel silly for hoarding cash.

Until we have a clue of what they're actually proposing, all we know is that they like cars and motorcycles and have never felt secure enough to buy them new.

That's not a lot to go on.

[Dicey]

You realize that LTC insurance only covers a fraction of your expenses? You know that it's crazy expensive? You  grok that LTC insurance companies do their damnest not to pay out on their policies?

Relipying on LTC might just be the absolute worst choice, especially for a mustachian.

OP really hasn't been at all clear whether they mean that they want to spend down all of their savings or whether they've come to realize that they've been too conservative and have realized that they can afford to loosen the purse strings a bit, and seeing that thread just made them feel silly for hoarding cash.

Until we have a clue of what they're actually proposing, all we know is that they like cars and motorcycles and have never felt secure enough to buy them new.

That's not a lot to go on.

Agreed that more information is needed, but I was specifically addressing this:

I will leave enough invested for a safe withdrawal rate to cover long term care insurance and some incidentals,

What do I need / should consider before I do this?

[Metalcat]

You realize that LTC insurance only covers a fraction of your expenses? You know that it's crazy expensive? You  grok that LTC insurance companies do their damnest not to pay out on their policies?

Relipying on LTC might just be the absolute worst choice, especially for a mustachian.

OP really hasn't been at all clear whether they mean that they want to spend down all of their savings or whether they've come to realize that they've been too conservative and have realized that they can afford to loosen the purse strings a bit, and seeing that thread just made them feel silly for hoarding cash.

Until we have a clue of what they're actually proposing, all we know is that they like cars and motorcycles and have never felt secure enough to buy them new.

That's not a lot to go on.

Agreed that more information is needed, but I was specifically addressing this:

I will leave enough invested for a safe withdrawal rate to cover long term care insurance and some incidentals,

What do I need / should consider before I do this?

Yeah, if OP really wants to get rid of all of their assets except for just enough to cover LTC insurance plus a little extra, then I would be EXTREMELY concerned about this approach.

It works for one very specific, very limited possible outcome.

[SimpleCycle]

I don't think the decision has to be quite so stark.  It sounds like your pension and SS more than cover your living expenses right now.  So go ahead and add some extra spending if you think it will improve your quality of life and enjoyment of what you have.  Money is just a tool to enable you to reach goals in life.  It sounds like you have been holding yourself back from some important goals because of the cost.

But I don't think you have to spend down your whole stache in anticipation of LTC expenses.  There are much better ways to protect assets from Medicaid spend down, especially if you are still healthy and likely won't need LTC in the next five years.  I'd look into finding an elder care lawyer to talk to about your specific situation, rather than just spending all your money.

[HipGnosis]

OP here.
Sorry, I didn't know what info would be needed for succinct replies and advice.

From: https://www.payingforseniorcare.com/nursing-homes#Veterans-Assistance

Medicaid pays between 45% and 65% of the total nursing home costs in the United States. While on the surface, this may sound encouraging for families whose loved ones require nursing home care, it is important to be aware that Medicaid is a means-tested program, meaning that the applicant's income and financial assets are closely analyzed prior to acceptance into the program.

I am not talking about spending "all my assets".  Just the bulk of my stache (which I haven't withdrawn from).
A highly probable spend is a nicer house (with a nicer garage for working on cars & motorcycles).
I will put funds in a trust(s) for my heirs until the house is paid off.
I don't plan on needing long term care for about 20 yrs.  I know it is cheaper the earlier I get it.  I took Soc.Sec. 'early' because I understand the value of money over time.  That's why I've already invested some of what I've gotten.

The key points are:   I know I will enjoy the money a lot more relatively soon over waiting,   & I won't get any joy out of watching the money go to medical costs before medicaid kicks in.

I like the suggestion of talking with an elder care lawyer.  I understand, and accept, that I am quite un-common.

[Metalcat]

OP here.
Sorry, I didn't know what info would be needed for succinct replies and advice.

From: https://www.payingforseniorcare.com/nursing-homes#Veterans-Assistance

Medicaid pays between 45% and 65% of the total nursing home costs in the United States. While on the surface, this may sound encouraging for families whose loved ones require nursing home care, it is important to be aware that Medicaid is a means-tested program, meaning that the applicant's income and financial assets are closely analyzed prior to acceptance into the program.

I am not talking about spending "all my assets".  Just the bulk of my stache (which I haven't withdrawn from).
A highly probable spend is a nicer house (with a nicer garage for working on cars & motorcycles).
I will put funds in a trust(s) for my heirs until the house is paid off.
I don't plan on needing long term care for about 20 yrs.  I know it is cheaper the earlier I get it.  I took Soc.Sec. 'early' because I understand the value of money over time.  That's why I've already invested some of what I've gotten.

The key points are:   I know I will enjoy the money a lot more relatively soon over waiting,   & I won't get any joy out of watching the money go to medical costs before medicaid kicks in.

I like the suggestion of talking with an elder care lawyer.  I understand, and accept, that I am quite un-common.

Also maybe contemplate things in later life that might be expensive beyond nursing home care.

I'm not in the US, so I don't know how these costs work there, but here most people want to stay out of nursing homes as long as possible, and there can be a lot of expenses in maintaining a comfortable life at home as you age: cooking and cleaning service, driving services, more expensive travel if there are mobility issues to be concerned with.

I've worked with a lot of seniors and the ones I've seen enjoying their senior years the most are the ones with ample assets. I have friends in their late 80s who just moved into a seniors residence, not a nursing home, and they're paying about 12K/mo to live there and the place is fabulous. They have top notch dining, full on university courses and lectures, tons and tons of resources, and their covid response was amazing. Only certain floors of the facility offer nursing home services, the rest is just extremely luxury apartment living with varying levels of support depending on resident needs.

For me, that's the kind of option I want when I'm still healthy enough not to need nursing home care, but compromised enough that having an in house nurse is valuable, and I can get a wide range of services and experiences without having to face the elements if I'm not up for it.

My budgeting isn't so much for medical care as for support care and comfort care as I age.

Just think through what life might end up looking like and what kind of assets you'll want available.