Author Topic: Wife's peace of mind  (Read 3695 times)

Polixenes

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Wife's peace of mind
« on: July 08, 2015, 09:19:31 AM »
Hello everyone. We will be RE in about a month’s time, in our 40s (just shy of 50 in my case). We will be setting up home in Canada, with 2 young children.

We have estimated our annual expenses will be around CAN$100,000, and this is being quite lavish by our standards in terms of vacations, and also throwing in conservative estimates to replace and maintain the home, vehicles and appliances, as time goes by.

If I use the ‘safe withdrawal’ rate of 4% this would suggest we should have a nest egg of around CAN$2,500,000. In actual fact we will probably have closer to $3M, after buying a house and a car.

However, my wife is very conservative by nature and is still having doubts that this money will be enough. To my mind we could make $3M last the rest of our lives if we had to, even without making a penny of interest.

Right now there is bad news every day from investment markets and she tends to focus on that. We have lost US$50k ‘on paper’ in the past couple of weeks for example. I keep reminding her that in the long term markets have always recovered but right now she is quite anxious and I wonder if anyone else is going through this kind of issue right now, either themselves, or their spouse?

Any advice for me to help calm her down? Or for that matter, does anyone agree with her and want to tell me I am being too cavalier about money?

JLee

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Re: Wife's peace of mind
« Reply #1 on: July 08, 2015, 09:29:38 AM »
$100k in expenses is incredibly high in comparison to most people here - would you be able to reduce that in the event of an economic downturn and remain financially stable?

humbleMouse

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Re: Wife's peace of mind
« Reply #2 on: July 08, 2015, 09:46:07 AM »
I would maybe buy her a book by Peter Lynch about the stock market and have her read it.  She needs more education about the history of the stock market.  You must fight ignorance with education. 

partgypsy

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Re: Wife's peace of mind
« Reply #3 on: July 08, 2015, 10:27:35 AM »
Hello everyone. We will be RE in about a month’s time, in our 40s (just shy of 50 in my case). We will be setting up home in Canada, with 2 young children.

We have estimated our annual expenses will be around CAN$100,000, and this is being quite lavish by our standards in terms of vacations, and also throwing in conservative estimates to replace and maintain the home, vehicles and appliances, as time goes by.

If I use the ‘safe withdrawal’ rate of 4% this would suggest we should have a nest egg of around CAN$2,500,000. In actual fact we will probably have closer to $3M, after buying a house and a car.

However, my wife is very conservative by nature and is still having doubts that this money will be enough. To my mind we could make $3M last the rest of our lives if we had to, even without making a penny of interest.

Right now there is bad news every day from investment markets and she tends to focus on that. We have lost US$50k ‘on paper’ in the past couple of weeks for example. I keep reminding her that in the long term markets have always recovered but right now she is quite anxious and I wonder if anyone else is going through this kind of issue right now, either themselves, or their spouse?

Any advice for me to help calm her down? Or for that matter, does anyone agree with her and want to tell me I am being too cavalier about money?
Maybe show her best case and worse case "budgets" to show that you can adjust if you need to? You have your lavish budget, but show her by delaying replacing vehicles, more budget friendly vacations on years you do not want to withdraw as much shows that you should have money in both worse and bad case situations. Good luck! A great accomplishment.

TrMama

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Re: Wife's peace of mind
« Reply #4 on: July 08, 2015, 11:02:35 AM »
"Honey, we're so rich that $50K is only 1.66% of our net worth."

Polixenes

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Re: Wife's peace of mind
« Reply #5 on: July 08, 2015, 11:16:50 AM »

Thanks everyone, and I think those suggestions to have a back up budget where are not quite so profligate would be a great idea. She is accountant and to her a good spreadsheet beats a good argument. :)

"Honey, we're so rich that $50K is only 1.66% of our net worth."

I pretty much say the exact same thing to her!

Sibley

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Re: Wife's peace of mind
« Reply #6 on: July 08, 2015, 12:12:37 PM »
Do several budgets with her.

1. full fat - vacations, etc. (100k)
2. half fat - cut it down some (75k)
3. bare minimum expenses with same house (50k)
4. SHTF and you're moving to small, cheap place, selling cars, etc. (25k)

My numbers are estimates of course. The point is to show her that you can adjust spending to match income.

And don't forget the possibility of returning to work. Even a part time job could ease budget strain.

DoubleDown

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Re: Wife's peace of mind
« Reply #7 on: July 08, 2015, 01:25:15 PM »
Something that might give her more peace of mind is annuitizing some of your assets. Buying an annuity is usually not the optimal financial move, but it will definitely give peace of mind that might be invaluable to your wife. If you turned part of your net worth into a rock-solid, guaranteed monthly income stream for the rest of your lives, it might allay her fears about market ups and downs, unexpected life events, and so on. You might consider taking a chunk of your net worth to buy an annuity to cover at least a basic, no-frills (or minimum frills) lifestyle. That way, your basic needs would always be met no matter what. Markets tank? No matter, your check keeps coming.

Also, having a paid off house should give you some security/stability.

maryofdoom

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Re: Wife's peace of mind
« Reply #8 on: July 08, 2015, 01:31:11 PM »
I don't have any solid advice for you, just sympathy. Mr. Of Doom is a chronic worrier and needs a lot of reassurance, especially about financial matters. In some ways this is good (because he's almost allergic to debt and insists that we have enough money to pay for an expensive thing before we even think about possibly getting ready to purchase the thing), but in some ways it's annoying, because it means I can't always make the most optimal decisions about our money (because he would find them too risky or they would cause him distress).

I try to remember to tell myself, "Just because this isn't what I would choose doesn't make it wrong." I hope you can find a solution that will work for you and that will give your wife greater peace of mind as well.