Do you plan to actually spend down your portfolio?

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flyingaway
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Do you plan to actually spend down your portfolio?

Post by flyingaway » Wed Oct 23, 2019 11:12 am

Many retirement calculators or rules usually assume that a retiree will spend down their money at end of the presumed life. A success is that you have more than zero dollar at the end of your modeling years, be it 30 years or 40 years.

Yet we see here again and again statements (from retirees) like:
(1) I have more money now than I had at the retirement;
(2) My portfolio has doubled, thanks to the bull market;
(3) I have more money than I know how to spend it;
(4) My pension and social security cover all my expenses;
(5) How do I do with the money from RMD when I don't need it?

We see discussions about strategies (or advices) about tightening belts (adjusting spending down) when the market is down. Yet the other way is rarely discussed. OK, you spend more when the market is up. Will you or did you?

My question is: Do (did) you REALLY intend to spend down your portfolio and ACTUALLY increase the spending when the market is good?

Old Guy
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Re: Do you plan to actually spend down your portfolio?

Post by Old Guy » Wed Oct 23, 2019 11:25 am

First world problem.

smitcat
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Re: Do you plan to actually spend down your portfolio?

Post by smitcat » Wed Oct 23, 2019 11:34 am

flyingaway wrote:
Wed Oct 23, 2019 11:12 am
Many retirement calculators or rules usually assume that a retiree will spend down their money at end of the presumed life. A success is that you have more than zero dollar at the end of your modeling years, be it 30 years or 40 years.

Yet we see here again and again statements (from retirees) like:
(1) I have more money now than I had at the retirement;
(2) My portfolio has doubled, thanks to the bull market;
(3) I have more money than I know how to spend it;
(4) My pension and social security cover all my expenses;
(5) How do I do with the money from RMD when I don't need it?

We see discussions about strategies (or advices) about tightening belts (adjusting spending down) when the market is down. Yet the other way is rarely discussed. OK, you spend more when the market is up. Will you or did you?

My question is: Do (did) you REALLY intend to spend down your portfolio and ACTUALLY increase the spending when the market is good?
"My question is: Do (did) you REALLY intend to spend down your portfolio and ACTUALLY increase the spending when the market is good?"
No.

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RickBoglehead
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Re: Do you plan to actually spend down your portfolio?

Post by RickBoglehead » Wed Oct 23, 2019 11:35 am

You're not supposed to increase spending when the market is good. You're supposed to pull the same percentage, year after year, adjusted for COLA, regardless of the market being up or down.

Intent is a joke. People intend to do lots of things. When life happens, they do other things.

I intend to climb Mt. ____. My back hurts, so I don't.

We do not intend to spend down our portfolio, but we're 1.67 years from retirement. Who knows what will happen?
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tadamsmar
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Re: Do you plan to actually spend down your portfolio?

Post by tadamsmar » Wed Oct 23, 2019 11:40 am

My goal is to make it unlikely that you will run out of money.

If you fund from a portfolio (rather than an annuity) then you need a buffer to deal with the uncertainties. So you are likely to have some funds left at death.
Last edited by tadamsmar on Fri Oct 25, 2019 9:51 am, edited 1 time in total.

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David Jay
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Re: Do you plan to actually spend down your portfolio?

Post by David Jay » Wed Oct 23, 2019 11:47 am

I have a legacy goal, so I do not intend to spend down my entire portfolio, just a substantial portion.

I treat the legacy portion as a separate “bucket”, if you will. So in reality I do intend to spend down my entire “living expense” portfolio.

The legacy portion also provides a safety margin for my “living expense” portfolio.
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Silk McCue
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Re: Do you plan to actually spend down your portfolio?

Post by Silk McCue » Wed Oct 23, 2019 11:49 am

RickBoglehead wrote:
Wed Oct 23, 2019 11:35 am
We do not intend to spend down our portfolio, but we're 1.67 years from retirement. Who knows what will happen?
We are 1.19 years from retirement (when just shy of 60/62) and we do not intend to spend down but certainly plan to enjoy ourselves and do a good amount of things that we may be less likely to do a decade plus later. One of us can likely live into our 90s and our goal is not to die with nothing in the bank.

Cheers

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Re: Do you plan to actually spend down your portfolio?

Post by MotoTrojan » Wed Oct 23, 2019 11:52 am

RMDs can be reinvested in taxable.

If my portfolio doubled I would not double my withdrawal amount (although logically you could reset it to a SWR based on the new portfolio), but I would probably increase my spending by 20-30% and that would include gifts, vacations, luxuries. I am a few decades from potentially having that problem though.

stoptothink
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Re: Do you plan to actually spend down your portfolio?

Post by stoptothink » Wed Oct 23, 2019 11:56 am

The intent is to spend every penny, but at least 15yrs away from retirement (both mid-30's and enjoying our careers) and with very simple lifestyle tastes I think there will be quite a bit leftover.

Broken Man 1999
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Re: Do you plan to actually spend down your portfolio?

Post by Broken Man 1999 » Wed Oct 23, 2019 11:58 am

Since life is so unpredictable, I have no goal of spending down our portfolio. I honestly don't think that would be a prudent activity at all. I have no idea what medical spending will be as we age. My father's side of the family had longevity. My mother's side of family, not so much. Also, both sides of DW's family had longevity. So, are we looking at a 30 or 40 years of retirement? I have no idea.

Although I have no goal of spending down portfolio, we have certainly spent a lot of dollars over the past couple of years, and still have more than we started with. Most of the extra has been plowed into various home projects.

What I will not do is artificially inflate our regular and routine living expenses just because we have more. We maintain a very good standard of living currently, and are not depriving ourselves of anything.

It isn't like any leftover money in our portfolio will be lost. Whatever DW and I do not spend will be spent by others. That is absolutely fine with me.

Broken Man 1999
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obgraham
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Re: Do you plan to actually spend down your portfolio?

Post by obgraham » Wed Oct 23, 2019 11:59 am

I guess I am the exception here: I am spending mine. That is what it is for. Having been self employed, there is no pension, just what is in the IRA and SS.

It is all about how fast I spend it. 18 years into retirement, it certainly looks like it will last me!

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RickBoglehead
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Re: Do you plan to actually spend down your portfolio?

Post by RickBoglehead » Wed Oct 23, 2019 12:00 pm

Silk McCue wrote:
Wed Oct 23, 2019 11:49 am
RickBoglehead wrote:
Wed Oct 23, 2019 11:35 am
We do not intend to spend down our portfolio, but we're 1.67 years from retirement. Who knows what will happen?
We are 1.19 years from retirement (when just shy of 60/62) and we do not intend to spend down but certainly plan to enjoy ourselves and do a good amount of things that we may be less likely to do a decade plus later. One of us can likely live into our 90s and our goal is not to die with nothing in the bank.

Cheers
Really? You want to be that way? 1.649 to be exact. LOL :D

The whole question goes to intent. Professional researchers know that intent and reality are way different. Do you intend to do X in the next Y months is totally useless.

Decades ago, I had a job where we mailed 100s of millions of catalogs a year, and had to rebuy and liquidate product less than 2 weeks into the life of the catalog, which lasted 30+ weeks. We did a very expensive test, where we supplied the catalog ahead of time to a large sample, gave them "money", and tried to predict results. After a year of testing, and a huge amount of money, we learned that fake money isn't real money and tells you squat.
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Re: Do you plan to actually spend down your portfolio?

Post by JediMisty » Wed Oct 23, 2019 12:32 pm

flyingaway wrote:
Wed Oct 23, 2019 11:12 am
Many retirement calculators or rules usually assume that a retiree will spend down their money at end of the presumed life. A success is that you have more than zero dollar at the end of your modeling years, be it 30 years or 40 years.

Yet we see here again and again statements (from retirees) like:
(1) I have more money now than I had at the retirement;
(2) My portfolio has doubled, thanks to the bull market;
(3) I have more money than I know how to spend it;
(4) My pension and social security cover all my expenses;
(5) How do I do with the money from RMD when I don't need it?

We see discussions about strategies (or advices) about tightening belts (adjusting spending down) when the market is down. Yet the other way is rarely discussed. OK, you spend more when the market is up. Will you or did you?

My question is: Do (did) you REALLY intend to spend down your portfolio and ACTUALLY increase the spending when the market is good?
I am 1-4 years from retirement. I plan to recalculate my SWR each year. It is actually pretty easy for me to increase spending by traveling to exotic locales to scuba dive as opposed to closer, less expensive locales. Also there are lots of other exotic locales for non-scuba activities. As I age, I may worry more about running out of money. Hard to say. But it is my intention to spend it all (or most of it.). I never thought I'd have this much money (2 MM) as a single person, although I don't plan to start buying expensive cars or vacation homes, either.

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GerryL
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Re: Do you plan to actually spend down your portfolio?

Post by GerryL » Wed Oct 23, 2019 1:07 pm

Five years into retirement, about one year into SS and RMDs. Am planning to spend DOWNWARD, but not planning to die with my last nickel gripped in my fist (my dad's unsuccessful plan). At this point, the balance keeps growing. It might be a bit of a shock when the trend reverses, but I am preparing myself for that eventuality.

CnC
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Re: Do you plan to actually spend down your portfolio?

Post by CnC » Wed Oct 23, 2019 1:20 pm

Simple, most of us view passing with ≤$0 as failure.

Passing money into our children is not a failure so since only running out of money is the failure we error on the side of caution.



It's a simple equation if you have a 90%+ chance of having more than $0 in atleast 50% of the times you will have much much more than you need.


I personally plan to retire early to enjoy my money. But I plan to make sure I am still "safe" even if it takes an extra fee years. Gaining 3-4 years and dropping my success rate from +90% to ±60% is not worth it to me.

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Re: Do you plan to actually spend down your portfolio?

Post by jebmke » Wed Oct 23, 2019 1:23 pm

We increased the spending when the market was bad. Good deals on contractors for home improvement and travel. Plus, there were many fewer people traveling so crowds were smaller.

Once we start RMDs I suspect we will greatly ramp up spending again due to the availability of QCDs.
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Re: Do you plan to actually spend down your portfolio?

Post by Sandtrap » Wed Oct 23, 2019 1:40 pm

David Jay wrote:
Wed Oct 23, 2019 11:47 am
I have a legacy goal, so I do not intend to spend down my entire portfolio, just a substantial portion.

I treat the legacy portion as a separate “bucket”, if you will. So in reality I do intend to spend down my entire “living expense” portfolio.

The legacy portion also provides a safety margin for my “living expense” portfolio.
+1
Perfect!
DW and I as well.
j :happy
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NotWhoYouThink
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Re: Do you plan to actually spend down your portfolio?

Post by NotWhoYouThink » Wed Oct 23, 2019 1:47 pm

Down but not out.

I am retired, spouse is one bad meeting from retirement, which has had the perverse effect of making meetings more tolerable. We don't need to hoard the money, but want to make sure there is enough left for end of life care. Pretty tough to predict.

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Stinky
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Re: Do you plan to actually spend down your portfolio?

Post by Stinky » Wed Oct 23, 2019 1:52 pm

The only way fool-proof way to entirely spend down your portfolio, while not running out of money in retirement, is to -
1. At retirement age, use every dollar that you have to purchase single premium immediate annuities that will cease payments when you die.
2. After retirement age, spend every dollar that comes in, every month, no matter whether you need to or not.

I expect that very few folks expect to live that way in retirement. I certainly don't.

So I will be spending prudently in retirement, and expect to have some money left at the end that will go to charities and heirs. I expect that I will spend down in retirement, but not to zero.
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1210sda
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Re: Do you plan to actually spend down your portfolio?

Post by 1210sda » Wed Oct 23, 2019 2:06 pm

David Jay wrote:
Wed Oct 23, 2019 11:47 am
I have a legacy goal, so I do not intend to spend down my entire portfolio, just a substantial portion.

I treat the legacy portion as a separate “bucket”, if you will. So in reality I do intend to spend down my entire “living expense” portfolio.

The legacy portion also provides a safety margin for my “living expense” portfolio.
This is the approach we're taking!

To overcome the "regret" of leaving too much on the table, we are making sure that we don't hold back at all on spending for our "needs" and all our "wants" (even if they seem a bit extravagant at times). If we can accomplish this, there is no reason we should begrudge our heirs the same opportunity.

Full disclosure: we are in our 18th year of retirement. Probably would not have been able to take this approach earlier in our retirement. Back then, we were more concerned with the adequacy of our portfolio, not a legacy.

1210

Bir48die
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Re: Do you plan to actually spend down your portfolio?

Post by Bir48die » Wed Oct 23, 2019 2:35 pm

No I don't. Why?

1) We live very comfortably
2) Yes our portfolio has grown during the 3 1/2 years of retirement
3) There is a chance we'll inherit some money from my MIL
4) I want to have a buffer for our later years in case we have significant medical or asst living bills (not be a burden to our kids)
5) I don't mind my kids inheriting what's left
6) I'm prepared for a downturn and a significant loss of my portfolio

SQRT
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Re: Do you plan to actually spend down your portfolio?

Post by SQRT » Wed Oct 23, 2019 2:51 pm

Old Guy wrote:
Wed Oct 23, 2019 11:25 am
First world problem.
Agree but we are, after all, very much in the first world.

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Re: Do you plan to actually spend down your portfolio?

Post by SQRT » Wed Oct 23, 2019 2:56 pm

Good question. I would like to leave my daughter a nice inheritance. Perhaps somewhere in the range of 1/2 to 3/4 of our current net worth. I am 69 DW is 62. This leaves a fair bit of room to spend the portfolio down but also a fair cushion not to screw if up.

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Re: Do you plan to actually spend down your portfolio?

Post by Doom&Gloom » Wed Oct 23, 2019 3:06 pm

I don't plan to spend it down completely. I plan to spend enough to get "stuff" that I need or want. I can't imagine that consuming my portfolio.

I expect to leave something behind for DS. If circumstances change so much that does not happen, it won't be the end of the world.

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Re: Do you plan to actually spend down your portfolio?

Post by quisp65 » Wed Oct 23, 2019 3:14 pm

I hope to get more wealthy but I could be retiring sooner than most since I'm lazy and hate my job and I will have a good chance of spending down.

I only got 1.1 million and plan on living 40 years with just me & wife in San Diego spending 50 to 60K a year. The math seems funny but since we basically live now on what we will get on SS at 70, we just need to make it 15 years and have our Roth remaining at 70. That means a good chance we will spend down, though I stand a very good chance at large inheritance.

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Re: Do you plan to actually spend down your portfolio?

Post by Ards » Wed Oct 23, 2019 3:23 pm

Old Guy wrote:
Wed Oct 23, 2019 11:25 am
First world problem.

These forums almost exclusively only discuss first world problems.

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Re: Do you plan to actually spend down your portfolio?

Post by willthrill81 » Wed Oct 23, 2019 3:27 pm

flyingaway wrote:
Wed Oct 23, 2019 11:12 am
My question is: Do (did) you REALLY intend to spend down your portfolio and ACTUALLY increase the spending when the market is good?
Yes, I do intend to do just that, although I will likely do so assuming that we will live to at least age 95 and perhaps 100. The odds are high that we won't make it that far and will leave behind a chunk for our daughter and charity.

We are planning to do this by using the time value of money formula to determine each year's withdrawals. The amortization period will be the number of years remaining before attaining age 95 or maybe 100. Using this approach, it is mathematically impossible to prematurely deplete the portfolio. As long as we can defer SS benefits until at least FRA and preferably age 70, those will cover all of our anticipated essential spending, leaving whatever we have remaining in our portfolio at that time only for discretionary spending.
Last edited by willthrill81 on Wed Oct 23, 2019 3:29 pm, edited 1 time in total.
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Re: Do you plan to actually spend down your portfolio?

Post by retiredjg » Wed Oct 23, 2019 3:28 pm

I don't really have a plan.

My savings will be spent if I have several years of long term care. Could even go dry.

My savings will largely be passed on if I don't need long term care because my withdrawal rate has been low (so far).

pyld76
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Re: Do you plan to actually spend down your portfolio?

Post by pyld76 » Wed Oct 23, 2019 3:33 pm

If DW and I have pensions which pan out as promised? Almost a certainty we won't spend down the portfolio.

If we don't (nonremote chance involving a state/muni pension system)? It'll get spent. If SS isn't there when we retire (I believe it is scheduled to have depleted the notional trust fund right around my full retirement age)? It'll get spent. We plan for the worst and hope for the best.

And yeah, it's almost the textbook definition of a first world problem.

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Re: Do you plan to actually spend down your portfolio?

Post by randomguy » Wed Oct 23, 2019 3:39 pm

tadamsmar wrote:
Wed Oct 23, 2019 11:40 am
My goal is to not run out of money.

If you fund from a portfolio (rather than an annuity) then you need a buffer to deal with the uncertainties. So you are likely to have some funds left at death.
I don't plan on spending down my portfolio. It would require me upping my spending in my 80s/90s which doesn't seem likely. With a conservative 4% SWR, odds are you aren't spending down your portfolio. You need to be getting bottom 10% returns for that to happen.

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Re: Do you plan to actually spend down your portfolio?

Post by Mr. Rumples » Wed Oct 23, 2019 3:46 pm

No, I do not plan on spending down my portfolio, but the money will hopefully be there if I need it. I have been very fortunate in my life both with my family and work. I have had support, love and mentors. Many are not that lucky. I hope to leave an endowed scholarship.

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Re: Do you plan to actually spend down your portfolio?

Post by TomatoTomahto » Wed Oct 23, 2019 3:55 pm

David Jay wrote:
Wed Oct 23, 2019 11:47 am
I have a legacy goal, so I do not intend to spend down my entire portfolio, just a substantial portion.

I treat the legacy portion as a separate “bucket”, if you will. So in reality I do intend to spend down my entire “living expense” portfolio.

The legacy portion also provides a safety margin for my “living expense” portfolio.
+1

At some point, we will have to take RMDs. We might spend some of that money, but most likely we won’t. What is left goes to kids and charity. No promises, but it should be a nice stash.
Okay, I get it; I won't be political or controversial. The Earth is flat.

LiterallyIronic
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Re: Do you plan to actually spend down your portfolio?

Post by LiterallyIronic » Wed Oct 23, 2019 4:00 pm

I plan to spend it down, yes. Ideally, I would bounce my last check. Obviously I don't know when I'm going to die, so I can't time it like that, but the closer I am to zero on my deathbed, the better. Having money left over means I worked too long. My dad always tells me (and my siblings) that we should expect an inheritance of about four dollars. And I'll say the same thing to my kid(s).

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Re: Do you plan to actually spend down your portfolio?

Post by afan » Wed Oct 23, 2019 4:35 pm

I hope to have our networth continue to increase during retirement. It should under some pretty conservative estimates of real returns on our investments.
The after tax value of SS and RMDs will be considerably more than we have any intention of or interest in spending. So we will be reinvesting the remainder from those sources and the entire after tax income from taxable investments.

An increase in the markets would not change our spending at all. It would not create some new need and we currently buy, at reasonable prices, what we want. Compared to friends and colleagues in similar financial circumstances, we want a lot less than do others. Thankfully, we agree that we have no interest in luxuries. No travel, no jewelry, no art, no fancy meals, no expensive clothing, we buy good condition used non-luxury cars when needed and drive them until repairs become onerous, then get a new used car.

We can afford our lifestyle on much less than we make and on much less than our income will be in retirement. If there is massive drop in the stock market, more like the Depression than the great Recession, then we would probably cut back, but we would not need to.

So, no. We have no intention of spending down our assets in retirement. Things would have to go terribly wrong for that to occur.
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Re: Do you plan to actually spend down your portfolio?

Post by Trader Joe » Wed Oct 23, 2019 4:50 pm

flyingaway wrote:
Wed Oct 23, 2019 11:12 am
Many retirement calculators or rules usually assume that a retiree will spend down their money at end of the presumed life. A success is that you have more than zero dollar at the end of your modeling years, be it 30 years or 40 years.

Yet we see here again and again statements (from retirees) like:
(1) I have more money now than I had at the retirement;
(2) My portfolio has doubled, thanks to the bull market;
(3) I have more money than I know how to spend it;
(4) My pension and social security cover all my expenses;
(5) How do I do with the money from RMD when I don't need it?

We see discussions about strategies (or advices) about tightening belts (adjusting spending down) when the market is down. Yet the other way is rarely discussed. OK, you spend more when the market is up. Will you or did you?

My question is: Do (did) you REALLY intend to spend down your portfolio and ACTUALLY increase the spending when the market is good?
No, I do not intend to spend any of my portfolio. 100% of my portfolio is intended for my heirs.

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Re: Do you plan to actually spend down your portfolio?

Post by Gnirk » Wed Oct 23, 2019 5:00 pm

The only reasons I withdraw from my portfolio is:

Provide financial assistance to a child who has bipolar disorder, and as such as been unable to keep a job since diagnosed (before that had a stellar career).

Periodic nice vacations.

Otherwise, I don't withdraw from it because it is my self-insurance for Long Term Care.

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Re: Do you plan to actually spend down your portfolio?

Post by RDHUSA » Wed Oct 23, 2019 5:01 pm

deleted
Last edited by RDHUSA on Sat Oct 26, 2019 11:25 am, edited 1 time in total.
Life is good.

WhiteMaxima
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Re: Do you plan to actually spend down your portfolio?

Post by WhiteMaxima » Wed Oct 23, 2019 5:02 pm

Trader Joe wrote:
Wed Oct 23, 2019 4:50 pm
flyingaway wrote:
Wed Oct 23, 2019 11:12 am
Many retirement calculators or rules usually assume that a retiree will spend down their money at end of the presumed life. A success is that you have more than zero dollar at the end of your modeling years, be it 30 years or 40 years.

Yet we see here again and again statements (from retirees) like:
(1) I have more money now than I had at the retirement;
(2) My portfolio has doubled, thanks to the bull market;
(3) I have more money than I know how to spend it;
(4) My pension and social security cover all my expenses;
(5) How do I do with the money from RMD when I don't need it?

We see discussions about strategies (or advices) about tightening belts (adjusting spending down) when the market is down. Yet the other way is rarely discussed. OK, you spend more when the market is up. Will you or did you?

My question is: Do (did) you REALLY intend to spend down your portfolio and ACTUALLY increase the spending when the market is good?
No, I do not intend to spend any of my portfolio. 100% of my portfolio is intended for my heirs.
then your heirs will waste your hard earn money. what's the purpose of saving?

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Re: Do you plan to actually spend down your portfolio?

Post by WhiteMaxima » Wed Oct 23, 2019 5:08 pm

I will plan to spend down all my retirement saiving while saving 529 for my heirs. No inherit for fancy cars and luxury vacation. Money has to be earned not to be inherited.

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Re: Do you plan to actually spend down your portfolio?

Post by TomatoTomahto » Wed Oct 23, 2019 5:09 pm

WhiteMaxima wrote:
Wed Oct 23, 2019 5:02 pm
Trader Joe wrote:
Wed Oct 23, 2019 4:50 pm
flyingaway wrote:
Wed Oct 23, 2019 11:12 am
Many retirement calculators or rules usually assume that a retiree will spend down their money at end of the presumed life. A success is that you have more than zero dollar at the end of your modeling years, be it 30 years or 40 years.

Yet we see here again and again statements (from retirees) like:
(1) I have more money now than I had at the retirement;
(2) My portfolio has doubled, thanks to the bull market;
(3) I have more money than I know how to spend it;
(4) My pension and social security cover all my expenses;
(5) How do I do with the money from RMD when I don't need it?

We see discussions about strategies (or advices) about tightening belts (adjusting spending down) when the market is down. Yet the other way is rarely discussed. OK, you spend more when the market is up. Will you or did you?

My question is: Do (did) you REALLY intend to spend down your portfolio and ACTUALLY increase the spending when the market is good?
No, I do not intend to spend any of my portfolio. 100% of my portfolio is intended for my heirs.
then your heirs will waste your hard earn money. what's the purpose of saving?
Do you know Trader Joe’s heirs? It seems a strange assumption that the heirs will waste the money. I expect my heirs to make good use of our money.
Okay, I get it; I won't be political or controversial. The Earth is flat.

WhiteMaxima
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Re: Do you plan to actually spend down your portfolio?

Post by WhiteMaxima » Wed Oct 23, 2019 5:12 pm

Only if you have a business to be inherited and your heirs are good business managers. There are two must. Even business could be run down.

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Sandtrap
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Re: Do you plan to actually spend down your portfolio?

Post by Sandtrap » Wed Oct 23, 2019 5:18 pm

TomatoTomahto wrote:
Wed Oct 23, 2019 5:09 pm
WhiteMaxima wrote:
Wed Oct 23, 2019 5:02 pm
Trader Joe wrote:
Wed Oct 23, 2019 4:50 pm
flyingaway wrote:
Wed Oct 23, 2019 11:12 am
Many retirement calculators or rules usually assume that a retiree will spend down their money at end of the presumed life. A success is that you have more than zero dollar at the end of your modeling years, be it 30 years or 40 years.

Yet we see here again and again statements (from retirees) like:
(1) I have more money now than I had at the retirement;
(2) My portfolio has doubled, thanks to the bull market;
(3) I have more money than I know how to spend it;
(4) My pension and social security cover all my expenses;
(5) How do I do with the money from RMD when I don't need it?

We see discussions about strategies (or advices) about tightening belts (adjusting spending down) when the market is down. Yet the other way is rarely discussed. OK, you spend more when the market is up. Will you or did you?

My question is: Do (did) you REALLY intend to spend down your portfolio and ACTUALLY increase the spending when the market is good?
No, I do not intend to spend any of my portfolio. 100% of my portfolio is intended for my heirs.
then your heirs will waste your hard earn money. what's the purpose of saving?
Do you know Trader Joe’s heirs? It seems a strange assumption that the heirs will waste the money. I expect my heirs to make good use of our money.
+1
DW and I have an educational and special needs subtrust set up for heirs. Helping with education and career advancement, etc, benefits all who are motivated to better themselves. If a descendent graduates medical school or some other career because of this family legacy funding vs if it was not available, then it will be worth the effort.
j
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almostretired1965
Posts: 144
Joined: Mon Nov 13, 2017 2:02 pm

Re: Do you plan to actually spend down your portfolio?

Post by almostretired1965 » Wed Oct 23, 2019 5:25 pm

To really spend down, you need to have some degree of certainty about your life expectancy along the way. I suppose there are ways to guarantee that but they are not options I wish to contemplate. My plan is/was to have sufficient funds capable of generating enough income to cover my current standard of living. We've been there for a few years now so the odds are there will be a bonanza for some charity one day.

The things that I enjoy doing and bring happiness do not involve large expenditure of funds, so I have no particular incentive to spend down as it were.

A

MikeG62
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Location: New Jersey

Re: Do you plan to actually spend down your portfolio?

Post by MikeG62 » Wed Oct 23, 2019 5:30 pm

We are spending around 3.0% of our portfolio. I believe that covers us for the reasonable worst case outcome. By covers us, I mean our money would last for our lifetimes (but most of it would be spent by the end).

I think it is highly likely that the future will be a lot better than the reasonable worst case outcome I just mentioned (more like the average of the past outcomes) and we will end up leaving a very large legacy to our two daughters.

We are following Guyton & Klinger’s withdrawal decision rules. Those rules contain guardrails. So if we trip a guardrail, our spending will be adjusted either up or down based upon a predetermined formula. We are way closer to the lower guardrail than the upper guardrail. So I think it likely we will end up ratcheting up our spending if/when we cross that guardrail (we are not all that far away from hitting it now). So while we haven’t crossed it yet, I can’t say we have done it (ramped our spending - which is what the OP asked). However, what I will say is that I fully intend to include the increased spend in our budget (in the T&E and other one-off category) and plan our T&E with the intent of spending up to the amount available - which is what we have done for the last four years.

I have said on this forum many times, our goal in retirement is to spend “up to” the level of our means. We are not looking to leave experiences on the table by living frugally in our retirement.
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RAchip
Posts: 382
Joined: Sat May 07, 2016 7:31 pm

Re: Do you plan to actually spend down your portfolio?

Post by RAchip » Wed Oct 23, 2019 5:32 pm

I expect to spend a good portion. I am going to owe a lot of estate taxes so im going to try to spend most of that part instead of letting the govt have it.

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HueyLD
Posts: 7237
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Re: Do you plan to actually spend down your portfolio?

Post by HueyLD » Wed Oct 23, 2019 5:35 pm

My goal is to spend more than I have and hopefully my last check of $10 million will bounce after I am gone.

randomguy
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Re: Do you plan to actually spend down your portfolio?

Post by randomguy » Wed Oct 23, 2019 5:36 pm

MikeG62 wrote:
Wed Oct 23, 2019 5:30 pm
We are spending around 3.0% of our portfolio. I believe that covers us for the reasonable worst case outcome. By covers us, I mean our money would last for our lifetimes (but most of it would be spent by the end).

Seems very unlikely if you are spending 3% of your portfolio that it will not be growing constantly throughout retirement even with pretty low stock allocations.

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2pedals
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Re: Do you plan to actually spend down your portfolio?

Post by 2pedals » Wed Oct 23, 2019 5:51 pm

Top priorities are to stay healthy, be happy and have fun. :happy

We are first year of retirement at 60 old & 59 DW. I am finding that spending down my portfolio may be hard to do even with a good plan, if you have enough. I have a significant pension that covers most if not all of my current expenses. I am happy, spending money on trips, travel, misc home repairs and other things. Hard to justify spending more than we need to spend, the future is always uncertain. We have always been careful about how much money we spend. The saver mentality is hard to change.

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Leif
Posts: 2715
Joined: Wed Sep 19, 2007 4:15 pm

Re: Do you plan to actually spend down your portfolio?

Post by Leif » Wed Oct 23, 2019 6:01 pm

2pedals wrote:
Wed Oct 23, 2019 5:51 pm
Top priorities are to stay healthy, be happy and have fun. :happy
...
The saver mentality is hard to change.
I agree. Being retired for a couple of years and my portfolio is increasing. But not surprising with the market. I plan to step up my spending with more travel and getting out of the "student budget" mindset. I'm not "planning" to spend down, but I'm not putting any limits on spending now. Enjoy while health still allows.

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flyingaway
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Re: Do you plan to actually spend down your portfolio?

Post by flyingaway » Wed Oct 23, 2019 6:23 pm

Backtesting says the 4% rule is safe in the worst cases, with a large amount left on average.
So, in order to guarantee having something left, we have been debating some 3% rule or 3.33% rule.

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