Author Topic: Spending reality vs planned. Saved too much?  (Read 9676 times)

Drew664

  • 5 O'Clock Shadow
  • *
  • Posts: 88
Spending reality vs planned. Saved too much?
« on: January 18, 2015, 08:00:08 PM »
Just curious to anyone that has been retired for a while, if you are hitting your planned monthly withdrawal amounts or if you are under that amount because you aren't spending it. My guess is that most are underspending and have 'saved too much' for their month to month needs. Having too much is a good problem to have, but of course this may change retirement goal setting for someone planning life without the 9 to 5.

deborah

  • Walrus Stache
  • *******
  • Posts: 7367
  • Location: At Home
Re: Spending reality vs planned. Saved too much?
« Reply #1 on: January 18, 2015, 10:12:10 PM »
Under planned withdrawal amounts, and my spending budget was already less than I expected each year (just in case). However, I plan never to do paid work again, and I needed a bit more just in case I started a business...

roadtofreedom

  • 5 O'Clock Shadow
  • *
  • Posts: 44
Re: Spending reality vs planned. Saved too much?
« Reply #2 on: January 19, 2015, 01:05:29 AM »
Generally, real withdrawals are smaller than planned withdrawals.

The main reason is that, you are quite prudent when you are planning your RE expenses.

Also, when you are RE is key being more mustachian than before.

MDM

  • Walrus Stache
  • *******
  • Posts: 8264
Re: Spending reality vs planned. Saved too much?
« Reply #3 on: January 19, 2015, 08:35:17 AM »
Close to planned. 

Less than allowed for when calculating ability to RE.

DoubleDown

  • Handlebar Stache
  • *****
  • Posts: 1994
Re: Spending reality vs planned. Saved too much?
« Reply #4 on: January 20, 2015, 12:20:47 PM »
Close to planned. 

Less than allowed for when calculating ability to RE.

+1

I knew our regular spending prior to RE, and it has continued to track the same in RE.

Ozstache

  • Pencil Stache
  • ****
  • Posts: 811
  • Age: 50
  • Location: Oztralia
Re: Spending reality vs planned. Saved too much?
« Reply #5 on: January 27, 2015, 02:45:58 AM »
Just curious to anyone that has been retired for a while, if you are hitting your planned monthly withdrawal amounts or if you are under that amount because you aren't spending it. My guess is that most are underspending and have 'saved too much' for their month to month needs. Having too much is a good problem to have, but of course this may change retirement goal setting for someone planning life without the 9 to 5.

I underspent by 1/3 in my first year of RE, due to two reasons. Firstly, I had saved too much due to the huge surplus created when, thanks to discovering MMM, I suddenly shifted my retirement income target from a high % of my income to my estimated retirement spending + 20% buffer. Secondly, through fear of failure, I ran a much tighter financial ship than was required, amplified by having so much more time to optimise spending.

The first issue can be attributed to me being a late FIRE bloomer. As there's nothing I can do to reverse the hands of time and FIRE earlier, I just have to chalk that one up as a fortunate happenstance. The second issue is something I can work on by broadening my spending to encompass more travel, donations and helping other family members in genuine need. As you can expect, these are not issues I lose sleep over!

RootofGood

  • Handlebar Stache
  • *****
  • Posts: 1361
  • Age: 38
  • Location: North Carolina
  • Retired at age 33. 5 years in, still loving it!
    • Root of Good
Re: Spending reality vs planned. Saved too much?
« Reply #6 on: February 12, 2015, 06:00:05 PM »
We spent $34,500 in 2014 and budgeted $32k.  That $34.5k included an $8,700 major renovation that won't happen again for 20+ years (new siding and windows plus major roof repair).  Otherwise we would have been well under budget. 

I intentionally put some fluff in the budget to cover unexpected expenses and increases over time as the kids get older.  And I didn't properly account for getting more efficient spending in ER (groceries, for example). 

We'll probably underspend in 2015 since we won't take any big trips other than maybe a cheapo road trip and maybe a cruise to the Caribbean ($3000-3500 total). With $5300 budgeted for travel, we probably won't use it all up.  There's a 2 year old involved, so traveling isn't as much fun as it will be when he's older.

Long term, I'm expecting a 90% chance of having more money than we know what to do with and a 5% chance of feeling a real budget crunch from poor portfolio performance.  Such is the way of planning for the worst knowing it's not likely to come true (4% rule adjusted to 3% for age 30-something retirees). 

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 1239
  • Age: 46
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: Spending reality vs planned. Saved too much?
« Reply #7 on: February 12, 2015, 06:18:25 PM »
My estimate was within my actual by about a 1000 a year.  I don't live very 'stachian and can prune back a lot of unnecessary luxuries if things get tight.

Retired To Win

  • Handlebar Stache
  • *****
  • Posts: 1494
  • Age: 70
  • Location: Virginia
  • making the most of my time and my money
    • Retired To Win
Re: Spending reality vs planned. Saved too much?
« Reply #8 on: February 15, 2015, 06:32:15 AM »
Just curious to anyone that has been retired for a while, if you are hitting your planned monthly withdrawal amounts or if you are under that amount because you aren't spending it...

I've got passive income that's almost 3 times my retirement basic living expenses*.  And my frugality mindset has got me so satisfied with low-to-no-cost activities that I've actually had to task myself TO spend more discretionary money.  It's a nice pickle, but it's a pickle nevertheless, which affects other parts of my life. (Like my blog, which I'm very unmotivated to monetize because "it would just mean more money to have to spend" (!!)



*To give a full picture on this big disparity between income and expenses, I managed to lower my basic living expenses by several more thousands of dollars a year AFTER I had FIRE'd.  :D

Allen

  • Stubble
  • **
  • Posts: 246
Re: Spending reality vs planned. Saved too much?
« Reply #9 on: February 18, 2015, 02:13:19 PM »
Do we know anyone who has under-saved?  It seems like the mind-set that achieves FI also is extra cautious and one more years it into way too much.

MDM

  • Walrus Stache
  • *******
  • Posts: 8264
Re: Spending reality vs planned. Saved too much?
« Reply #10 on: February 18, 2015, 02:17:18 PM »
Do we know anyone who has under-saved?  It seems like the mind-set that achieves FI also is extra cautious and one more years it into way too much.

Yes, we might be getting survivorship bias here: those who saved enough or too much have time to post in these forums, while those who didn't save enough are back at work...?

deborah

  • Walrus Stache
  • *******
  • Posts: 7367
  • Location: At Home
Re: Spending reality vs planned. Saved too much?
« Reply #11 on: February 18, 2015, 02:37:46 PM »
Do we know anyone who has under-saved?  It seems like the mind-set that achieves FI also is extra cautious and one more years it into way too much.

Yes, we might be getting survivorship bias here: those who saved enough or too much have time to post in these forums, while those who didn't save enough are back at work...?
And it is always difficult to say you failed.

brooklynguy

  • Handlebar Stache
  • *****
  • Posts: 2199
  • Age: 37
Re: Spending reality vs planned. Saved too much?
« Reply #12 on: February 18, 2015, 03:00:23 PM »
Yes, we might be getting survivorship bias here: those who saved enough or too much have time to post in these forums, while those who didn't save enough are back at work...?

This could very well be the case, but as skyrefuge once postulated, the subset of the early-retiree population that actively participates in early-retirement forums may already be non-representative of the general early-retiree population due to selection bias in the first instance:  those of us who post on internet forums by definition have taken up FIRE-planning as a "hobby" and are therefore perhaps less likely to experience retirement failure.  So we can't necessarily draw conclusions about the overall early-retiree population based on a sample consisting of early-retirement forum participants.  If survivorship bias is at work, it may really be survivorship bias on top of an underlying broader form of selection bias!

MDM

  • Walrus Stache
  • *******
  • Posts: 8264
Re: Spending reality vs planned. Saved too much?
« Reply #13 on: February 18, 2015, 03:41:05 PM »
If survivorship bias is at work, it may really be survivorship bias on top of an underlying broader form of selection bias!

Yep, it's biases all the way down....

deborah

  • Walrus Stache
  • *******
  • Posts: 7367
  • Location: At Home
Re: Spending reality vs planned. Saved too much?
« Reply #14 on: February 18, 2015, 03:57:36 PM »
When I was planning to retire, a financial adviser gave me a spreadsheet of how my stash would accumulate in retirement based upon my spending patterns and the returns expected. I was amazed, and I told him he was making assumptions that were not right - it couldn't possibly grow like that (especially not in retirement when I was spending rather than saving).

I was looking at my net worth this morning, and thinking how much it had grown, so I looked for those silly over-the-top projections. They were wrong. I am worth more that the projections predicted. However, we have had a few good years, so I suspect that sometime they will go back to being right.

marty998

  • Walrus Stache
  • *******
  • Posts: 5541
  • Location: Sydney, Oz
Re: Spending reality vs planned. Saved too much?
« Reply #15 on: February 18, 2015, 06:01:54 PM »
If survivorship bias is at work, it may really be survivorship bias on top of an underlying broader form of selection bias!

Yep, it's biases all the way down....

Good one MDM.

For those who didn't get it, this is a reference to the "World Turtle" myth - the world is flat and floats through space on the back of a turtle. The story may have roots in Hindu Mythology, which also involved an elephant between earth and turtle.

When asked what the turtle sits on, the answer is "another turtle". Extrapolating, when asked what the final turtle sits on, the reply can only be "turtles all the way down".
« Last Edit: February 18, 2015, 06:11:58 PM by marty998 »

kathrynd

  • Bristles
  • ***
  • Posts: 413
Re: Spending reality vs planned. Saved too much?
« Reply #16 on: February 19, 2015, 03:49:40 AM »
Just curious to anyone that has been retired for a while, if you are hitting your planned monthly withdrawal amounts or if you are under that amount because you aren't spending it. My guess is that most are underspending and have 'saved too much' for their month to month needs. Having too much is a good problem to have, but of course this may change retirement goal setting for someone planning life without the 9 to 5.

While we are aggressively paying off debt (rental properties) we live on approx $12-$15 yr (total for me and  my husband )

In about 10 yrs we will be debt free, but I'm not really sure if our spending will increase.
We find this amount to be quite sufficient.

Time will tell.

Exflyboy

  • Walrus Stache
  • *******
  • Posts: 5395
  • Age: 56
  • Location: Corvallis, Oregon
  • Expat Brit living in the New World..:)
Re: Spending reality vs planned. Saved too much?
« Reply #17 on: February 21, 2015, 08:12:35 PM »
I estimated somewhere between 25 to 30K spend and we came in at $29k.

I am assuming our HC costs will push our spend up to $35k when we both retire and have to use the ACA. This will represent about 2.3% WR.. plus we get some rent and pensions kick in in 6 years.

Yeah I think we over saved, but then I want to be able to drop some serious coin on travel when we're both free too.