Live Now, Live Later?

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Topic Author
turning50
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Live Now, Live Later?

Post by turning50 »

My question is less about portfolio advise, but perhaps strategic advise for a happy pre and post retired life.

I am 50 years old and my husband is 56. We have adult children who are not dependent on us. We are social liberals and fiscal conservatives. Both of us are professionals with good income. Historically, we have saved a third of our income (to include payments towards principal of our home), spent a third, and contributed a third towards taxes. Our house that is worth approximately $2M is paid for. We have roughly $1M in our combined 401K and another $1M in investment accounts. In addition to our 401K savings and Investment accounts, we can start drawing anytime we chose a combined (non COLA) pension of approximately $150K per year in retirement. At some point in time, 11 years for my husband and 17 years for me, we can expect some level (say $40 to $50K) of social security benefits, perhaps.

Recently, my husband and I took up new jobs with attractive compensation. Together with the changes in tax laws, our tax liability has increased three-fold from 2011 to 2013. I must confess that I am reeling from the sticker shock of our tax payments (33% of our AGI) relative to our expenditure (10% of our AGI). Our lifestyle has not changed that much. In other words, whereas in 2011, our expenditure was equal to our tax liability, in 2013 it is a third of our tax liability. We are now saving more than 50% of our income.

That brings me to my question of “live now or live later?” Do we continue to save at this higher rate and accumulate more towards our retirement savings? Or do we maintain our 30% savings rate and change our current lifestyle? In other words, do we scale our expenditure to at least that of our tax payments? Buy that boat that DH has been coveting, do the major remodel that I have been dreaming, and/or take the expensive travels to exotic destination while we are still young (at heart)? Getting used to an expanded lifestyle might make it harder to scale back in retirement? I am thinking that we should retire early in a couple of years. My husband is worried that I still have another 50 years of living ahead of me and that we should save more towards retirement. I think we should live now and not worry too much about the future. Clearly, it is highly unlikely that we will become destitute in our retirement.

I realize that it is a good problem to have. Nevertheless, it is a challenge that has occupied our minds lately.

Advise?
Totoro
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Re: Live Now, Live Later?

Post by Totoro »

Two missing inputs:
* How much are you spending roughly per year?
* Do you want to leave your children an inheritance?

At first glance though, it seems you are set. That would imply more emphasis on getting the most out of life. Although it's always good to check whether spending more will give you that :happy
countdown
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Re: Live Now, Live Later?

Post by countdown »

What are you waiting for?

You have a $150k DB available to you now, plus your other accounts and your home is paid for?

Enjoy your life and devote your time to causes you love and believe in......you are very fortunate.

(I have none of the expertise you'll find on this site, and some seem to never have enough; I say life is too short.)
Professor Emeritus
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Re: Live Now, Live Later?

Post by Professor Emeritus »

One couple's experience. We were within shouting distance of your numbers when my wife was disabled at 60. However we had already done everything on our "bucket list". For healthy people at age 50 the median "fully healthy life expectancy" is about 16 years. You are a long time dead.

I took Emeritus status at 57 to avoid the killer part of my job (grant proposals) . for 3 years we did Everything we wanted to do. DW for the first time used all her annual leave. Very precious time.I

Now we are both retired and still enjoying life. It doesn't take every last nickle to enjoy life.
The Wizard
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Re: Live Now, Live Later?

Post by The Wizard »

You definitely have options to ponder. I'd start by understanding your BASIC expenses first and how they compare to that $150K taxable pension income. The goal here is to determine how much EXTRA income you might have per month after paying all routine expenses.
You have a good decade to bridge before Social Security and Medicare kick in, but you should be able to deal with that.
And then I'd try focussing on what ACTIVITIES you'll be doing in retirement, not all of which need be too expensive...
Attempted new signature...
Twins Fan
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Re: Live Now, Live Later?

Post by Twins Fan »

How about some of both?

You say you are saving 50% of your income now. How about saving 40% this year, 35 or 30% next year, and so on... Then live a little more now with the extra percentage to spend. See how your comfort level feels as that adjusts.
chaz
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Re: Live Now, Live Later?

Post by chaz »

Twins Fan wrote:How about some of both?

You say you are saving 50% of your income now. How about saving 40% this year, 35 or 30% next year, and so on... Then live a little more now with the extra percentage to spend. See how your comfort level feels as that adjusts.
Good advice.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page
Topic Author
turning50
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Re: Live Now, Live Later?

Post by turning50 »

Dear Countdown, Thanks for your advise. You are in my corner….DH worries thinks that we should be working for another 10 years and maximizing our savings. I say, we enjoy it now…
poker27
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Re: Live Now, Live Later?

Post by poker27 »

It sounds like you have already won the financial game. However, will you be happier buying stuff or spending money? Some people dont care about new cars, fancy dinners, or trips. If you want to do something I say do it, but dont just spend to get rid of money.
Topic Author
turning50
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Re: Live Now, Live Later?

Post by turning50 »

Professor Emeritus wrote:One couple's experience. We were within shouting distance of your numbers when my wife was disabled at 60. However we had already done everything on our "bucket list". For healthy people at age 50 the median "fully healthy life expectancy" is about 16 years. You are a long time dead.

I took Emeritus status at 57 to avoid the killer part of my job (grant proposals) . for 3 years we did Everything we wanted to do. DW for the first time used all her annual leave. Very precious time.I

Now we are both retired and still enjoying life. It doesn't take every last nickle to enjoy life.
Dear Professor Emeritus, We were on the same glide path…but we got lucky and got a second career with substantially better compensation…hence the dilemma.
Grt2bOutdoors
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Re: Live Now, Live Later?

Post by Grt2bOutdoors »

countdown wrote:What are you waiting for?

You have a $150k DB available to you now, plus your other accounts and your home is paid for?

Enjoy your life and devote your time to causes you love and believe in......you are very fortunate.

(I have none of the expertise you'll find on this site, and some seem to never have enough; I say life is too short.)
Person spends $200K net or maybe more per year ("two professionals with significant income" they could be raking in 350K + which would be equal or greater to that 200K number I tossed out). $150K DB is gross and fully taxable, OP is talking about purchasing depreciating assets - where will the funds for these purchases come from - income or assets? How much are the "once in a lifetime expenditures"? BOAT - Bust Out Another Thousand. Big difference in determining the lifespan of portfolio. What other "one in a lifetime, live for the moment" expenditures are you contemplating for her? The boat is for him, now the OP needs to decide what else?

Don't count the value of your home as part of asset base to draw upon unless you are readily,willing and able in your mind to a)part with it by selling it and then realizing that only $500K of gain is tax-exempt per couple and only once every 5 years, anything above is taxable by government and b)comfortable still living in it, but now having a loan against the home in retirement.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Raybo
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Re: Live Now, Live Later?

Post by Raybo »

Maybe I am reading your post incorrectly, but as I read it you can stop work today and still make $150K/yr without tapping any investment or retirement accounts and your house is paid for. Is that correct? You still have to worry about inflation on the $150K but that is what investments are for.

It is easy to think that the only variable here is money. But, so is time. You are treating things AS IF you will live another 50 years. But, you may live only a few more. While you aren't so well off that money will never be a worry, you are certainly close to the "no worry" state.

I retired at 48 (14 years ago) with a lot less than you have, paid for a major remodel, and still have most of what I retired with. And, that is going through both the 2000 and 2008 stock debacles (and the rides back up). I have nowhere near your assets, though, like you, my home is paid off.

Maybe a compromise is in order. Can you work part-time? Can you take longer vacations or take leaves without pay to take some of those "dream" vacations?

Frankly, owning a boat is only valuable if you have time to enjoy it. If you don't have the time, why spend the money?

It might be time to reassess your life's goals, current situation and opportunities and future desires.
No matter how long the hill, if you keep pedaling you'll eventually get up to the top.
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turning50
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Re: Live Now, Live Later?

Post by turning50 »

Twins Fan wrote:How about some of both?

You say you are saving 50% of your income now. How about saving 40% this year, 35 or 30% next year, and so on... Then live a little more now with the extra percentage to spend. See how your comfort level feels as that adjusts.

Dear Twins Fan, Good advise. Our worry is that we will get used to the more expansive lifestyle which will make it difficult for us to contract in retirement…but perhaps not...
Topic Author
turning50
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Re: Live Now, Live Later?

Post by turning50 »

Raybo wrote:Maybe I am reading your post incorrectly, but as I read it you can stop work today and still make $150K/yr without tapping any investment or retirement accounts and your house is paid for. Is that correct? You still have to worry about inflation on the $150K but that is what investments are for.

It is easy to think that the only variable here is money. But, so is time. You are treating things AS IF you will live another 50 years. But, you may live only a few more. While you aren't so well off that money will never be a worry, you are certainly close to the "no worry" state.

I retired at 48 (14 years ago) with a lot less than you have, paid for a major remodel, and still have most of what I retired with. And, that is going through both the 2000 and 2008 stock debacles (and the rides back up). I have nowhere near your assets, though, like you, my home is paid off.

Maybe a compromise is in order. Can you work part-time? Can you take longer vacations or take leaves without pay to take some of those "dream" vacations?

Frankly, owning a boat is only valuable if you have time to enjoy it. If you don't have the time, why spend the money?

It might be time to reassess your life's goals, current situation and opportunities and future desires.

Dear Raybo, Yes, you are correct. And you talked DH out of the boat, at least for now.

The clue to our compensation is the 33% of AGI that we are paying in taxes. That makes it harder for DH to walk away. Oh, did I mention that we get 57 days of paid vacation plus weekends. So, it is sort of part-time.
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turning50
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Re: Live Now, Live Later?

Post by turning50 »

Grt2bOutdoors wrote:
countdown wrote:What are you waiting for?

You have a $150k DB available to you now, plus your other accounts and your home is paid for?

Enjoy your life and devote your time to causes you love and believe in......you are very fortunate.

(I have none of the expertise you'll find on this site, and some seem to never have enough; I say life is too short.)
Person spends $200K net or maybe more per year ("two professionals with significant income" they could be raking in 350K + which would be equal or greater to that 200K number I tossed out). $150K DB is gross and fully taxable, OP is talking about purchasing depreciating assets - where will the funds for these purchases come from - income or assets? How much are the "once in a lifetime expenditures"? BOAT - Bust Out Another Thousand. Big difference in determining the lifespan of portfolio. What other "one in a lifetime, live for the moment" expenditures are you contemplating for her? The boat is for him, now the OP needs to decide what else?

Don't count the value of your home as part of asset base to draw upon unless you are readily,willing and able in your mind to a)part with it by selling it and then realizing that only $500K of gain is tax-exempt per couple and only once every 5 years, anything above is taxable by government and b)comfortable still living in it, but now having a loan against the home in retirement.
Great advise. Given that we pay 33% of AGI, our disposable income is substantially higher than your estimate. So, anything that we buy or do for each other will come from our current income and not savings or investments….
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ResearchMed
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Re: Live Now, Live Later?

Post by ResearchMed »

I was going to ask: "What do you WANT to do?"

But you've answered that, in part, already.

"Buy that boat that DH has been coveting, do the major remodel that I have been dreaming, and/or take the expensive travels to exotic destination while we are still young (at heart)? Getting used to an expanded lifestyle might make it harder to scale back in retirement?"

It doesn't look like you'll need to "scale back in retirement" much, if at all, unless you go on a bizarre spending spree.
And that doesn't sound likely from your comments.

Get that boat. Enjoy the remodel, and then enjoy living in the remodeled home.
Take those vacations to exotic destinations, or even regular destinations, if travel is on your list.
Take up some hobbies, if there is anything you've "wanted to do".

We *almost* learned this the hard way.
We kept postponing all of those trips (except for one very, very special - and extravagant - honeymoon in Paris :D

Then DH got sick. We had to cancel our FIRST big trip we had recently planned (of several planned for the next 2 years, for starters).

Fortunately, he has recovered, but the problem *will* recur, and at some point, it will interfere with his enjoyment of traveling (and thus obviously with my enjoyment, too).
So we are planning with a vengeance to start taking those trips.
Heading to Rome and Florence next month, with a few cruises and other land trips planned/rescheduled for the next 2 years... and additional planning in progress.
We are thoroughly enjoying the planning, too!

We are also going to splurge a bit more often on some nice wines, something that we both enjoy a great deal, even if with only cheese and crackers or a good burger. (It's time to replenish the little wine cellar, now that we've started enjoying more of what we had selected in the past.)
And a few years ago, we started having a personal trainer come to the house - the ONLY way DH wouldn't find a way to have excuses!
And we began a rather expensive hobby that also keeps us in excellent physical condition.

But we don't need "things". The only exception will probably be a more comfy car, whenever we do need another.

And we are doing more landscaping, with some specimen trees and other special plantings... things we can see and enjoy daily.

"It's time!"

RM
travellight
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Re: Live Now, Live Later?

Post by travellight »

If you can live on a 100k per year spending, I would only work for fun now.
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freddie
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Re: Live Now, Live Later?

Post by freddie »

I would go with the first question being how much do you need? My estimate is that you have roughly 210k/yr of income (discount the pension by 1/3 for inflation 100k, 50k of SS, and 60k from investments (3% SWR is pretty conservative) as a conservative guess for the rest of your life. Given that if you are living on 200k today, you would have an AGI of 2 million (10%), I have to feel that number is either a much higher than what you spend today or your assets are going to go drastically up in the next couple of years if your saving 50% of your income today:)

The big decision you need to make is how long each of you is going to work. It looks to me that you could retire tomorrow and have enough money. The question then is work enjoyable enough to keep doing and for how long? I would also make a list of things I want to do in the next 10 years. You have cash for a boat, a remodel, and a trip but you probably don't want to do them all in the same year. If your tax rate is 33% of your AGI and your saving 50%, that is going to be 300k+/yr. Spending 100k on lifestyle inflation still leaves a lot of money to go into savings. With lifestyle inflation, in my mind there are 2 types. The permanent (i.e. buying the 2 million dollar house, 100k car, the horse,...) and the temporary (i.e. trip to asia). It is easy to pass up a trip in the future to cut expenses. It is more of a pain to downsize your house.

And finally you might life another 40-50 years but in reality you have ~20 years left until your husband isn't going to be in any shape to travel or operate a boat. Do that stuff now.
ResearchMed wrote:I was going to ask: "What do you WANT to do?"

But you've answered that, in part, already.

"Buy that boat that DH has been coveting, do the major remodel that I have been dreaming, and/or take the expensive travels to exotic destination while we are still young (at heart)? Getting used to an expanded lifestyle might make it harder to scale back in retirement?"

It doesn't look like you'll need to "scale back in retirement" much, if at all, unless you go on a bizarre spending spree.
And that doesn't sound likely from your comments.

Get that boat. Enjoy the remodel, and then enjoy living in the remodeled home.
Take those vacations to exotic destinations, or even regular destinations, if travel is on your list.
Take up some hobbies, if there is anything you've "wanted to do".

We *almost* learned this the hard way.
We kept postponing all of those trips (except for one very, very special - and extravagant - honeymoon in Paris :D

Then DH got sick. We had to cancel our FIRST big trip we had recently planned (of several planned for the next 2 years, for starters).

Fortunately, he has recovered, but the problem *will* recur, and at some point, it will interfere with his enjoyment of traveling (and thus obviously with my enjoyment, too).
So we are planning with a vengeance to start taking those trips.
Heading to Rome and Florence next month, with a few cruises and other land trips planned/rescheduled for the next 2 years... and additional planning in progress.
We are thoroughly enjoying the planning, too!

We are also going to splurge a bit more often on some nice wines, something that we both enjoy a great deal, even if with only cheese and crackers or a good burger. (It's time to replenish the little wine cellar, now that we've started enjoying more of what we had selected in the past.)
And a few years ago, we started having a personal trainer come to the house - the ONLY way DH wouldn't find a way to have excuses!
And we began a rather expensive hobby that also keeps us in excellent physical condition.

But we don't need "things". The only exception will probably be a more comfy car, whenever we do need another.

And we are doing more landscaping, with some specimen trees and other special plantings... things we can see and enjoy daily.

"It's time!"

RM
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HomerJ
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Re: Live Now, Live Later?

Post by HomerJ »

The only danger is spending more now is lifestyle creep...

Not only are you saving less, but your expected expenses in retirement also go up (because who wants to cut-back in retirement?)

My normal advice to this question is to spend more on discretionary items like travel and vacations. Don't buy a larger house for instance. Much easier to cut back from 5 vacations a year to 3 vacations a year than to downsize your house.

However, I'm guessing in your case, you guys are completely set, and you can spend a LOT more without hurting your chances at retirement at all, even buy the bigger house...

I AM guessing though... You need to tell us what your current expenses are... You're easily set to afford a $200k lifestyle in retirement with those pensions and your savings, not even counting Social Security... So you can easily move up to a $200k lifestyle without any worries...

But what are you spending NOW? Are you spending $120k a year? or $300k a year? if $120k, buy that boat, travel to Europe... If $300k a year, you really shouldn't be upping your lifestyle to $350k at this point... You don't have enough saved for that.
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Hector
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Re: Live Now, Live Later?

Post by Hector »

It is personal. You and your spouse need to be on the same page in whatever decision you make.

I personally would retire when I will have more than 25 X annual expense. I am in my 30s and far from retirement. When I was younger, expensive consumer things attracted me a lot. If I saw someone in expensive car, I used to think: that's cool. These days when I see people in their 60s going to office in expensive cars, I think: I hope I wont have to go to work in my 60s. Some would argue that they love what they are doing for work and would never retire - that's a whole different topic.
Last edited by Hector on Thu Apr 17, 2014 3:49 pm, edited 2 times in total.
Grt2bOutdoors
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Re: Live Now, Live Later?

Post by Grt2bOutdoors »

turning50 wrote:
Grt2bOutdoors wrote:
countdown wrote:What are you waiting for?

You have a $150k DB available to you now, plus your other accounts and your home is paid for?

Enjoy your life and devote your time to causes you love and believe in......you are very fortunate.

(I have none of the expertise you'll find on this site, and some seem to never have enough; I say life is too short.)
Person spends $200K net or maybe more per year ("two professionals with significant income" they could be raking in 350K + which would be equal or greater to that 200K number I tossed out). $150K DB is gross and fully taxable, OP is talking about purchasing depreciating assets - where will the funds for these purchases come from - income or assets? How much are the "once in a lifetime expenditures"? BOAT - Bust Out Another Thousand. Big difference in determining the lifespan of portfolio. What other "one in a lifetime, live for the moment" expenditures are you contemplating for her? The boat is for him, now the OP needs to decide what else?

Don't count the value of your home as part of asset base to draw upon unless you are readily,willing and able in your mind to a)part with it by selling it and then realizing that only $500K of gain is tax-exempt per couple and only once every 5 years, anything above is taxable by government and b)comfortable still living in it, but now having a loan against the home in retirement.
Great advise. Given that we pay 33% of AGI, our disposable income is substantially higher than your estimate. So, anything that we buy or do for each other will come from our current income and not savings or investments….

Disposable income is higher than $350K or even aghast! $200K on the low end, then guess what? You can't retire on $2 million today given that burn rate - you'll run out of money in relatively short order, as gross and net difference is big, especially when you're talking about spending $15K+ per month net. Keep working - and with 57 days of vacation, it's a part-time gig really.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Nestegg_User
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Re: Live Now, Live Later?

Post by Nestegg_User »

First, congratulations on reaching your situation.

One thing not yet mentioned: just how secure is the $150K/PA pension -- it is one thing if it is federal, but if state, municipal, or private corporate then things can change, down to pension guarantee (or lower for state, municipal?) This may play a part in your determination of your floor.

We are similar age, but I will be retiring end of next year... spouse may continue for 1-2 yr. While we currently save ~60% of after-tax, we considered in our plan what would happen if we reduced to a couple of lower levels and would it significantly impact standard of living. While we don't have the same pension level, and our home is much less expensive, and having two large in retirement nest egg and assuming 3.5% (per Pfau's adjusted number vis-a-vis international SWR) targeted a significant boost to our current spending level -- the condition which you are most certainly in, as well.
I would probably adjust downward in savings --- he likely gets his boat (assuming it isn't TOO large/expensive). Before you do, find cost of storage, dock costs, etc and determine if those onging costs are too much (assume greater than COL increases in those costs).

For us, we only considered the earliest's SS, remaining spouses SS (near max) should also help with inflation protection.
You should easily be able to afford the $200 K retirement... beyond that, assuming a reasonable conservative AA, one might need be slightly cautious.

Good luck...immediate retirement should be no problem.
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Jazztonight
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Re: Live Now, Live Later?

Post by Jazztonight »

Life is short. Health can often be precarious.

I'd say you need to decide what your priorities are, and what is "enough."

What I took away from your initial post is a lesson that I learned: you work more/longer, you make more money, you pay more taxes, and you have less time to live and enjoy the fruits of your labor.

Many folks have retired with a fraction of what you've accumulated. Others keep working and accumulating more because they don't think they have "enough."

Only you can answer the question. But as you both decide what to do, try to avoid having regrets.

Personally, I semi-retired in my early 50s, and fully retired at 66. I'll have enough, and am doing whatever I want to these days, which is a LOT.

Best of luck to you!
"What does not destroy me, makes me stronger." Nietzsche
freddie
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Re: Live Now, Live Later?

Post by freddie »

I think both of you might want to define disposable income since I think your using different defs.:)

The numbers we know is that 33% of agi go to taxes and 10% go to living expenses and greater than 50% are going to savings. It would almost impossible to have living expenses of more than about 75k while only have a tax rate of only 33% even if you live in a super high tax state when the income comes from working. 75k of spending would translate into ~450k of after tax income which would be about 671k of income. That is going to give you a federal tax burden of about 33%. Throw in state taxes and the like and total income and spending would drop a bit.

Not posting exact numbers is fine but it makes this discussion hard to have. What percentage of your current living expenses is covered by the pension and what percent is done by the pension + SS? Unless I am missing something, I expect both of them to be well over 100% of your needs. At that point you have to ask why you are saving?


Grt2bOutdoors wrote:
turning50 wrote:
Grt2bOutdoors wrote:
countdown wrote:What are you waiting for?

You have a $150k DB available to you now, plus your other accounts and your home is paid for?

Enjoy your life and devote your time to causes you love and believe in......you are very fortunate.

(I have none of the expertise you'll find on this site, and some seem to never have enough; I say life is too short.)
Person spends $200K net or maybe more per year ("two professionals with significant income" they could be raking in 350K + which would be equal or greater to that 200K number I tossed out). $150K DB is gross and fully taxable, OP is talking about purchasing depreciating assets - where will the funds for these purchases come from - income or assets? How much are the "once in a lifetime expenditures"? BOAT - Bust Out Another Thousand. Big difference in determining the lifespan of portfolio. What other "one in a lifetime, live for the moment" expenditures are you contemplating for her? The boat is for him, now the OP needs to decide what else?

Don't count the value of your home as part of asset base to draw upon unless you are readily,willing and able in your mind to a)part with it by selling it and then realizing that only $500K of gain is tax-exempt per couple and only once every 5 years, anything above is taxable by government and b)comfortable still living in it, but now having a loan against the home in retirement.
Great advise. Given that we pay 33% of AGI, our disposable income is substantially higher than your estimate. So, anything that we buy or do for each other will come from our current income and not savings or investments….

Disposable income is higher than $350K or even aghast! $200K on the low end, then guess what? You can't retire on $2 million today given that burn rate - you'll run out of money in relatively short order, as gross and net difference is big, especially when you're talking about spending $15K+ per month net. Keep working - and with 57 days of vacation, it's a part-time gig really.
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ruralavalon
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Re: Live Now, Live Later?

Post by ruralavalon »

turning50 wrote:I am 50 years old and my husband is 56. We have adult children who are not dependent on us. . . . . . . Both of us are professionals with good income.
. . . . .
The clue to our compensation is the 33% of AGI that we are paying in taxes. That makes it harder for DH to walk away. Oh, did I mention that we get 57 days of paid vacation plus weekends. So, it is sort of part-time.
You never know when a disabling injury may occur or your health may go bad. Make sure you take all of the paid vacation, and make sure you use it to do your desired traveling (and anything else requiring good physical condition) while you are able. Don't wait.

Don't be too concerned about lifestyle creep, at your age life-long habits of financially responsible living won't disappear just because you take two months per year in paid time off for some nice trips to those exotic destinations.

And exotic destinations do not necessarily require high expenses.
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TomatoTomahto
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Re: Live Now, Live Later?

Post by TomatoTomahto »

http://Www.ESPlanner.com. Highly customizable consumption smoothing software to, uh, smooth consumption.
I get the FI part but not the RE part of FIRE.
avalpert
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Re: Live Now, Live Later?

Post by avalpert »

You seem to be in good shape to be able to spend more now (I would recommend experiences over things of course) and live well later.

But the whining about taxes is irrelevant and a red herring to your situation.
J295
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Re: Live Now, Live Later?

Post by J295 »

A little over a year ago at age 53 I transitioned from full time part owner of a professional practice to modest part time status. My colleagues supported me 100%, but it was outside of most of their "work to 65+ mindset." My spouse and I spent years planning from both a financial and a life orientation standpoint. Two statements that may summarize our perspective and decision:

1. You can't follow your own path if you are on the road to another person's city.
2. If you want a guarantee buy a Sear's battery.

So, we leaped and we are confident that the parachute will work.

Good luck to you both! I'm confident it will all work out well. Oh yes, be flexible, that's the joy of this adventure involving changes.
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turning50
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Re: Live Now, Live Later?

Post by turning50 »

avalpert wrote:You seem to be in good shape to be able to spend more now (I would recommend experiences over things of course) and live well later.

But the whining about taxes is irrelevant and a red herring to your situation.
Fair enough, even though whining about bosses, taxes and traffic is as american as apple pie! Actually, this is the first time that our taxes have been substantially more than our expenditures. It was really meant as a justification for spending more in discretionary things rather than complaining about high taxes. Note that we are social liberals…so, the idea that we should contribute to the social good is part of our ethos.

Thanks for the advice.
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turning50
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Re: Live Now, Live Later?

Post by turning50 »

J295 wrote:A little over a year ago at age 53 I transitioned from full time part owner of a professional practice to modest part time status. My colleagues supported me 100%, but it was outside of most of their "work to 65+ mindset." My spouse and I spent years planning from both a financial and a life orientation standpoint. Two statements that may summarize our perspective and decision:

1. You can't follow your own path if you are on the road to another person's city.
2. If you want a guarantee buy a Sear's battery.

So, we leaped and we are confident that the parachute will work.

Good luck to you both! I'm confident it will all work out well. Oh yes, be flexible, that's the joy of this adventure involving changes.

Thank you for your thoughtful note and your experience gives us more confidence.
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turning50
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Re: Live Now, Live Later?

Post by turning50 »

ruralavalon wrote:
turning50 wrote: . . . . .
Don't be too concerned about lifestyle creep, at your age life-long habits of financially responsible living won't disappear just because you take two months per year in paid time off for some nice trips to those exotic destinations.

And exotic destinations do not necessarily require high expenses.
Thank you from exotic Simla, foothills of the himalayas…we just had to do it and loving it.
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LadyGeek
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Re: Live Now, Live Later?

Post by LadyGeek »

This thread is now in the Personal Finance (Not Investing) forum (financial planning).
turning50 wrote:Thank you from exotic Simla, foothills of the himalayas…we just had to do it and loving it.
This forum helps members worldwide. If you have any investing questions, we can help from that aspect.
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avalpert
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Re: Live Now, Live Later?

Post by avalpert »

turning50 wrote: It was really meant as a justification for spending more in discretionary things rather than complaining about high taxes.
And in that sense it is an irrelevant anchor - you shouldn't raise or lower your expenditures based on taxes but based on what you can/cannot afford and your needs/wants.
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ruralavalon
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Re: Live Now, Live Later?

Post by ruralavalon »

turning50 wrote: Thank you from exotic Simla, foothills of the himalayas…we just had to do it and loving it.
Sounds wonderful. I am jealous ;-) .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
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Watty
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Re: Live Now, Live Later?

Post by Watty »

You mentioned how frustrated you are with all the taxes you were paying now. It sounded like you are getting into the range where estate taxes will be an issue so some of the money you don't spend now may end up going to pay for estate taxes later so you might want to take that into consideration. There are other ways to minimize estate taxes but increasing your spending to keep the size of your estate smaller would work too. :D

If you start spending more on things like travel any "lifestyle creep" may be temporary. In looking at your future retirement budget you need to look at what you will likely need at different ages.

I have seen relatives that were still in relatively good health and by the time they reached their mid 70's they slowed down a lot and did not feel like doing things like extensive traveling and rarely made any large purchases. They lived in a paid off house in a medium cost of living area and many months they didn't even spend all their social security check even though they had ample assets.

I am not retired yet but I have already seen a number of friends and co-workers that were around my age die or develop limiting health issues. My finances are a lot lower than yours but after going to a few funerals within one year I refocused on the “now” part since I was at the point where my retirement savings were adequate even though I have not reached my “number” yet.

Even if you would not normally go to it if you have a high school class reunion coming up it might be a good idea to go to it. You may be surprised how many of the people in your class have already died.
Dandy
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Re: Live Now, Live Later?

Post by Dandy »

Sounds like you are in very good financial shape. I think you can splurge a bit and enjoy life. Hard core savers rarely go hog wild on spending. Do some capital expenditure planning and budgeting. May be an exotic vacation this year, some home improvements next year or two, a boat in year 4 etc. See how your portfolio and reduced savings go vs your accelerated spending. Life is short and adding a bit more enjoyment makes saving easier. You will be saving for retirement and for near term enjoyment.
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turning50
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Re: Live Now, Live Later?

Post by turning50 »

Dandy wrote:Sounds like you are in very good financial shape. I think you can splurge a bit and enjoy life. Hard core savers rarely go hog wild on spending. Do some capital expenditure planning and budgeting. May be an exotic vacation this year, some home improvements next year or two, a boat in year 4 etc. See how your portfolio and reduced savings go vs your accelerated spending. Life is short and adding a bit more enjoyment makes saving easier. You will be saving for retirement and for near term enjoyment.
Thank you. We have been married thirty years when DH was still in grad school. The first year of our life together, our annual income was $8400. We got lucky; graduate school and hard work paid off.
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turning50
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Re: Live Now, Live Later?

Post by turning50 »

Watty wrote:You mentioned how frustrated you are with all the taxes you were paying now. It sounded like you are getting into the range where estate taxes will be an issue so some of the money you don't spend now may end up going to pay for estate taxes later so you might want to take that into consideration. There are other ways to minimize estate taxes but increasing your spending to keep the size of your estate smaller would work too. :D

Even if you would not normally go to it if you have a high school class reunion coming up it might be a good idea to go to it. You may be surprised how many of the people in your class have already died.
Thank you. We never had a number. I guess hard work and a few lucky breaks helped us along the way.
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