An advantage of living below means (high savings rate)

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tonyclifton
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An advantage of living below means (high savings rate)

Post by tonyclifton »

My spouse is 5 years away from being fully vested in her pension. We are just starting to look at the realities of her retirement.

One awesome plus for living below your means and saving as much as you can while working is that when you retire you need much less income to achieve the same standard of living.

This may be obvious to many but really surprised me once I started comparing our current actual monthly spending to our future projected income.
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Sandtrap
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Re: An advantage of living below means (high savings rate)

Post by Sandtrap »

Search the forum archive threads (upper right corner) for "lifestyle creep".
In post retirement, it's a real thing.
Also search for "sequence of returns risk".

Some are frugal as a lifestyle and ethos that continues in retirement.
Others are not.

Congratulations on your successes.
j :D
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Topic Author
tonyclifton
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Re: An advantage of living below means (high savings rate)

Post by tonyclifton »

Sandtrap wrote: Sun May 09, 2021 7:52 am Search the forum archive threads (upper right corner) for "lifestyle creep".
In post retirement, it's a real thing.
Also search for "sequence of returns risk".
Good tips! Thank you!
Thesaints
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Re: An advantage of living below means (high savings rate)

Post by Thesaints »

tonyclifton wrote: Sun May 09, 2021 7:07 am One awesome plus for living below your means and saving as much as you can while working is that when you retire you need much less income to achieve the same standard of living.
Well, let’s just say that, for at least some, living below one’s means (i.e. not taking full advantage of one’s wealth), only to retire to continue “enjoying” the same, lower, lifestyle, is not an acceptable strategy.

In addition “frugal” lifestyles are not even that safe. In case things go south, stepping down from “frugal” is quite close to “destitute”. Planning for a more comfortable lifestyle has some intrinsic safety margin.
jucor
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Re: An advantage of living below means (high savings rate)

Post by jucor »

Thesaints wrote: Sun May 09, 2021 11:59 am
tonyclifton wrote: Sun May 09, 2021 7:07 am One awesome plus for living below your means and saving as much as you can while working is that when you retire you need much less income to achieve the same standard of living.
Well, let’s just say that, for at least some, living below one’s means (i.e. not taking full advantage of one’s wealth), only to retire to continue “enjoying” the same, lower, lifestyle, is not an acceptable strategy.

In addition “frugal” lifestyles are not even that safe. In case things go south, stepping down from “frugal” is quite close to “destitute”. Planning for a more comfortable lifestyle has some intrinsic safety margin.
On the other hand, "taking full advantage of one's wealth" can include not consuming as much, but saving more --especially if the consumption is not purely functional (e.g.: deciding to buy a luxury car for $76k instead of a solid midlevel for $30k -- both serve the role of transport, but the luxury one costs 2X+ to but and likely 2X+ to maintain for very little practical gain -- or going with a $7k "luxury" kitchen range instead of a solid good one for $1500 -- same story, etc.).

Living comfortably but frugally and saving the excess has FAR more "intrinsic safety margin" than planning on a higher consumption lifestyle with reduced marginal return.

I'm very happy I'm not in the lifestyle creep crowd when I read threads on $500k + house remodels. YMMV. :sharebeer
sailaway
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Re: An advantage of living below means (high savings rate)

Post by sailaway »

Thesaints wrote: Sun May 09, 2021 11:59 am
In addition “frugal” lifestyles are not even that safe. In case things go south, stepping down from “frugal” is quite close to “destitute”. Planning for a more comfortable lifestyle has some intrinsic safety margin.
That is a bizarre claim, as if there were a specific definition of frugal that is only one step away from destitute. Especially in the context of living below your means, which is a highly recommended strategy on this site, because it implies a higher than normal savings rate, not due to some moral high ground of minimalism (go see Jacob at ERE or Pete at MMM for that high horse). You don't want to live in a smaller house than you chose, fine. But to imply that such a choice is somehow living on the edge is just ridiculous.
H-Town
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Re: An advantage of living below means (high savings rate)

Post by H-Town »

tonyclifton wrote: Sun May 09, 2021 7:07 am My spouse is 5 years away from being fully vested in her pension. We are just starting to look at the realities of her retirement.

One awesome plus for living below your means and saving as much as you can while working is that when you retire you need much less income to achieve the same standard of living.

This may be obvious to many but really surprised me once I started comparing our current actual monthly spending to our future projected income.
Living below our means help us to achieve FI (50x) at mid-30.
delamer
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Re: An advantage of living below means (high savings rate)

Post by delamer »

sailaway wrote: Sun May 09, 2021 12:22 pm
Thesaints wrote: Sun May 09, 2021 11:59 am
In addition “frugal” lifestyles are not even that safe. In case things go south, stepping down from “frugal” is quite close to “destitute”. Planning for a more comfortable lifestyle has some intrinsic safety margin.
That is a bizarre claim, as if there were a specific definition of frugal that is only one step away from destitute. Especially in the context of living below your means, which is a highly recommended strategy on this site, because it implies a higher than normal savings rate, not due to some moral high ground of minimalism (go see Jacob at ERE or Pete at MMM for that high horse). You don't want to live in a smaller house than you chose, fine. But to imply that such a choice is somehow living on the edge is just ridiculous.
Agreed.

If my family income is $150,000, I pay $30,000 in taxes, and I save $50,000, I am pretty frugal.

But I’m not going to be destitute if I have to cut my living costs by 20% and exist on $56,000 instead of $70,000 in retirement.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
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