Do you plan to actually spend down your portfolio?

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

Post by TN_Boy »

willthrill81 wrote: Tue Jan 14, 2020 4:05 pm
wrongfunds wrote: Tue Jan 14, 2020 4:00 pm
willthrill81 wrote: Tue Jan 14, 2020 11:38 am
TresBelle65 wrote: Tue Jan 14, 2020 7:40 am Lots and lots of posters in this thread seem to have devoted much of their life's resources in order to be able to turn those funds over to the long term care industry, if needed.

What are the options for long term care?

- a facility

- paying someone(s) to come to your home and care for you full time

- family or friends care for you in your home or theirs for compensation or not

I seem to recall an article in this past week in the WSJ where people are shipping their relatives to long term care facilities offshore - Thailand or Mexico, for a fraction of the cost.
In general, those with at least $2 million of invested assets can pretty easily self-insure LTC risk. The lion's share of those needing LTC need it for no more than five years, and even in a nursing home (typically the highest cost LTC setting), that would cost about $500k in most places today. That would leave the surviving spouse with a still very significant $1.5 million of assets. Depending on how much non-portfolio income a couple has, they might be able to self-insure the risk of LTC with well under $2 million.

Based on the options currently available, I think that we would be most attracted to buying into a CCRC with a type 'A' contract (i.e. guarantees lifetime care regardless of future inability to pay the monthly fees) using the proceeds from selling our home by the time we're around age 70. Last year, we visited a new facility (actually an ILF and not a CCRC) that opened a couple of miles from our current home, and it felt like a nice cruise ship, certainly a place that my wife and I would be very happy living in. The amenities were incredible.
You said $0.5M "today". When you reach 70 years, which is probably few decades away, what would be that number? Are you planning to have that amount available at age 70?

If you plan on self-funding for both of you and for many years (worst case scenario), is there an upper limit on the amount that will be extracted from you by the elder care industry? Would having double digit millions be enough when two people need 15 years of solid care each?

Will there be ever a point where the collective us will say "enough is enough" and I am not throwing any more money to that industry?
I'm referring to inflation-adjusted numbers. So everything, including the needed portfolio size, may double in the next 20 years.

No one is 'forced' to go to a LTC facility. If you don't want to go, then don't go, but you will have to make other arrangements for needed care. Usually, this burden falls to a family member, the afflicted's spouse or child(ren). I think that paying for in-home care is a relatively cost-effective solution in many instances, but it's not a one-size-fits-all solution. There are no such solutions.

I don't think that many will be open to "shipping their relatives" to offshore facilities for LTC, no matter what. We certainly would not.
Just one nitpick/note (which I think willthrill81knows), in much/most of the country home health (no medical training except perhaps basic CNA type stuff) is going to cost $20 to $25 an hour if you use an agency (and using an agency means you have a backup when someone calls in sick, quits, etc).

At $20+ [it's $23 where I live, generally] per hour, you are not looking at many hours of help before a facility becomes substantially more cost effective than hiring people. Though if you hire someone to sit there, your loved one will get quicker help (i.e. needs to go to bathroom) and better monitoring.

What some people might try is hiring help during the day and then manage things at night themselves. Of course, that means that they cannot go anywhere at night without making arrangements. And if you have somebody with Alzheimer's that wanders, you are not going to get much sleep. Ever. From what I've seen, I don't think in-home help works well unless you have a lot of money (I do mean a lot) or you don't need anywhere near 24x7 help.
TN_Boy
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Re: Do you plan to actually spend down your portfolio?

Post by TN_Boy »

Freefun wrote: Tue Jan 14, 2020 6:23 pm I will spend it. Last $ is for the coffin.
How do you know when you will need the coffin?
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willthrill81
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Re: Do you plan to actually spend down your portfolio?

Post by willthrill81 »

TN_Boy wrote: Tue Jan 14, 2020 6:33 pm Just one nitpick/note (which I think willthrill81knows), in much/most of the country home health (no medical training except perhaps basic CNA type stuff) is going to cost $20 to $25 an hour if you use an agency (and using an agency means you have a backup when someone calls in sick, quits, etc).

At $20+ [it's $23 where I live, generally] per hour, you are not looking at many hours of help before a facility becomes substantially more cost effective than hiring people. Though if you hire someone to sit there, your loved one will get quicker help (i.e. needs to go to bathroom) and better monitoring.

What some people might try is hiring help during the day and then manage things at night themselves. Of course, that means that they cannot go anywhere at night without making arrangements. And if you have somebody with Alzheimer's that wanders, you are not going to get much sleep. Ever. From what I've seen, I don't think in-home help works well unless you have a lot of money (I do mean a lot) or you don't need anywhere near 24x7 help.
Yes, you're absolutely right. Where I think that home health makes the most sense is in its potential ability to give family members who are otherwise the one's providing the care a needed break. Spending $50k annually for 40 hours of home health may be all that's really needed.

When I was a teenager, my grandparents were involved in a terrible auto accident that left both of them needing care, and my mother, who was trained as an R.N., provided them that care for six months straight. They were almost completely bedridden for six months. People coming over to help them was the only way that she was able to maintain her sanity.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
Freefun
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Re: Do you plan to actually spend down your portfolio?

Post by Freefun »

TN_Boy wrote: Tue Jan 14, 2020 6:35 pm
Freefun wrote: Tue Jan 14, 2020 6:23 pm I will spend it. Last $ is for the coffin.
How do you know when you will need the coffin?
When I’m down to my last $ then that’s when I’ll need the coffin.
Remember when you wanted what you currently have?
TN_Boy
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Re: Do you plan to actually spend down your portfolio?

Post by TN_Boy »

willthrill81 wrote: Tue Jan 14, 2020 7:13 pm
TN_Boy wrote: Tue Jan 14, 2020 6:33 pm Just one nitpick/note (which I think willthrill81knows), in much/most of the country home health (no medical training except perhaps basic CNA type stuff) is going to cost $20 to $25 an hour if you use an agency (and using an agency means you have a backup when someone calls in sick, quits, etc).

At $20+ [it's $23 where I live, generally] per hour, you are not looking at many hours of help before a facility becomes substantially more cost effective than hiring people. Though if you hire someone to sit there, your loved one will get quicker help (i.e. needs to go to bathroom) and better monitoring.

What some people might try is hiring help during the day and then manage things at night themselves. Of course, that means that they cannot go anywhere at night without making arrangements. And if you have somebody with Alzheimer's that wanders, you are not going to get much sleep. Ever. From what I've seen, I don't think in-home help works well unless you have a lot of money (I do mean a lot) or you don't need anywhere near 24x7 help.
Yes, you're absolutely right. Where I think that home health makes the most sense is in its potential ability to give family members who are otherwise the one's providing the care a needed break. Spending $50k annually for 40 hours of home health may be all that's really needed.

When I was a teenager, my grandparents were involved in a terrible auto accident that left both of them needing care, and my mother, who was trained as an R.N., provided them that care for six months straight. They were almost completely bedridden for six months. People coming over to help them was the only way that she was able to maintain her sanity.
Well you could spend 50k for 40 hours of help or spend 60k to 65k and place the family member in assisted living (in most areas of the country). And get your life back.

But obviously, those numbers depend upon the level of care needed, whether one is willing place a relative in a facility, etc.
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willthrill81
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Re: Do you plan to actually spend down your portfolio?

Post by willthrill81 »

TN_Boy wrote: Tue Jan 14, 2020 8:08 pm
willthrill81 wrote: Tue Jan 14, 2020 7:13 pm
TN_Boy wrote: Tue Jan 14, 2020 6:33 pm Just one nitpick/note (which I think willthrill81knows), in much/most of the country home health (no medical training except perhaps basic CNA type stuff) is going to cost $20 to $25 an hour if you use an agency (and using an agency means you have a backup when someone calls in sick, quits, etc).

At $20+ [it's $23 where I live, generally] per hour, you are not looking at many hours of help before a facility becomes substantially more cost effective than hiring people. Though if you hire someone to sit there, your loved one will get quicker help (i.e. needs to go to bathroom) and better monitoring.

What some people might try is hiring help during the day and then manage things at night themselves. Of course, that means that they cannot go anywhere at night without making arrangements. And if you have somebody with Alzheimer's that wanders, you are not going to get much sleep. Ever. From what I've seen, I don't think in-home help works well unless you have a lot of money (I do mean a lot) or you don't need anywhere near 24x7 help.
Yes, you're absolutely right. Where I think that home health makes the most sense is in its potential ability to give family members who are otherwise the one's providing the care a needed break. Spending $50k annually for 40 hours of home health may be all that's really needed.

When I was a teenager, my grandparents were involved in a terrible auto accident that left both of them needing care, and my mother, who was trained as an R.N., provided them that care for six months straight. They were almost completely bedridden for six months. People coming over to help them was the only way that she was able to maintain her sanity.
Well you could spend 50k for 40 hours of help or spend 60k to 65k and place the family member in assisted living (in most areas of the country). And get your life back.

But obviously, those numbers depend upon the level of care needed, whether one is willing place a relative in a facility, etc.
Yes, that might be the better option, but as you noted, a lot depends on the level of care needed.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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btq96r
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Re: Do you plan to actually spend down your portfolio?

Post by btq96r »

I plan to spend down my portfolio, hoping to travel and enjoy a nice time in life's third act. At worst case I feel a good sense of being able to support myself in comfort and peace. Long term stats and odds favor me if I keep focused and disciplined. My perfect world is having to make a good bit of charitable contributions to spend down my portfolio, because I think that would give me a lot of joy in my old age, and something to keep engaged by figuring out where to donate.

Right now I'm working off of a model I built on a few assumptions...this will seem more modest than others, but I was late to the game, and still under 100k in salary.

1) With no debt, a steady career, and no kids, I have quite a bit of ability to flex my income towards investing. Keeping a pace of $15-20k per year is feasible on my current salary. It's not even factoring in any future increases, because I've never wanted to count chickens that haven't hatched. The more I make, the more I'll invest, but I also want to live a bit before retirement as well.

2) I can realize 10% average of annual returns from now until when I'm age 60 in 2042. Some might see it as a conceit, but it's one driven by faith in America.

3) From age 60 on, I can keep the amount built up invested at acceptable risk with bond funds and dividend stocks -pause for disgust- getting an annual return of 3.5%.

4) I would then budget roughly 4.75% of my portfolio per year for my retirement "salary" to myself, winding myself down to zero sometime in age 96 (family genetics have me thinking that's the ceiling of life for me).

I'm not naive enough to think life can't laugh at me, say "hold my beer and watch this", but I like the above as a planning tool.
sf_tech_saver
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Re: Do you plan to actually spend down your portfolio?

Post by sf_tech_saver »

No, I'd like to leave at least $10M to my only son.
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TNWoods
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Re: Do you plan to actually spend down your portfolio?

Post by TNWoods »

My plan is to withdraw less each year than the portfolio grows. That way when it is time for me to go into assisted living and then a nursing home I can get a nice one.

That's the plan, anyways.

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

Post by H-Town »

randomguy wrote: 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.
Unfortunately this is true. By using conservative rate 4% or less, we are likely not running out of money. But there is a good chance that we will leave behind money. If you like your family enough, leave it to them. If not, do what you want with your legacy.
TN_Boy
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Re: Do you plan to actually spend down your portfolio?

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TNWoods wrote: Tue Jan 14, 2020 9:47 pm My plan is to withdraw less each year than the portfolio grows. That way when it is time for me to go into assisted living and then a nursing home I can get a nice one.

That's the plan, anyways.

TNWoods
I don't follow. If the portfolio is down due to a stock market crash, how much will you withdraw? Growth was negative. What if the portfolio drops several years in a row?

Unless you've left out details, this is not a plan .....
TN_Boy
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Re: Do you plan to actually spend down your portfolio?

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btq96r wrote: Tue Jan 14, 2020 9:01 pm I plan to spend down my portfolio, hoping to travel and enjoy a nice time in life's third act. At worst case I feel a good sense of being able to support myself in comfort and peace. Long term stats and odds favor me if I keep focused and disciplined. My perfect world is having to make a good bit of charitable contributions to spend down my portfolio, because I think that would give me a lot of joy in my old age, and something to keep engaged by figuring out where to donate.

Right now I'm working off of a model I built on a few assumptions...this will seem more modest than others, but I was late to the game, and still under 100k in salary.

1) With no debt, a steady career, and no kids, I have quite a bit of ability to flex my income towards investing. Keeping a pace of $15-20k per year is feasible on my current salary. It's not even factoring in any future increases, because I've never wanted to count chickens that haven't hatched. The more I make, the more I'll invest, but I also want to live a bit before retirement as well.

2) I can realize 10% average of annual returns from now until when I'm age 60 in 2042. Some might see it as a conceit, but it's one driven by faith in America.

3) From age 60 on, I can keep the amount built up invested at acceptable risk with bond funds and dividend stocks -pause for disgust- getting an annual return of 3.5%.

4) I would then budget roughly 4.75% of my portfolio per year for my retirement "salary" to myself, winding myself down to zero sometime in age 96 (family genetics have me thinking that's the ceiling of life for me).

I'm not naive enough to think life can't laugh at me, say "hold my beer and watch this", but I like the above as a planning tool.
1) Sure seems reasonable.

2) I assume you mean 10% nominal? Which is (if inflation stays about the same) around 8% real per year. For the next 20+ years. Maybe. Maybe not. That's pretty darn optimistic given that we are now 10 years into a bull market. I'd have a plan that didn't require that growth for success. You may be sorely disappointed.

3) I assume you mean nominal return again. The idea of dividend only stock and bonds is not one I'm fond of. I'd go with a total return portfolio, which may be more tax efficient. (There are lots of threads on total return versus dividend investing on this board, no point in rehashing all that in this thread .... but you might want to give them a look).

4) You want to retire at 60 and pull a non inflation adjusted 4.75% of yearly portfolio balance? That implies:
a) there is potentially a lot of variability in your yearly income due to stock market fluctuations (presumably you'll have a decent % in stocks)
b) unless your portfolio grows in real terms, your spending power will be reduced over time.
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unclescrooge
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Re: Do you plan to actually spend down your portfolio?

Post by unclescrooge »

stoptothink wrote: Tue Jan 14, 2020 4:30 pm
unclescrooge wrote: Tue Jan 14, 2020 11:36 am
Meg77 wrote: Thu Oct 24, 2019 2:32 pm
Yep, this is very normal and should be expected for most retirees. Studies show even those who retire with "only" $100K or $200K (and live off social security or pensions, etc.) rarely actually spend down their assets.
On the flip side, we don't really hear about the people who end up living off cat food in their retirement.

A mentor of mine told me a story about his aunt. She was living in a paid off home, but had no money for food and was literally eating canned cat food.

He put a reverse mortgage on it (he carried the note) and helped her live out her remaining years in dignity.
There are so many avenues in this country for people of limited means to get food (without any cost to them) that this should never be a thing. I think the bigger issue is not that this individual had such limited financial resources, but maybe they did not have knowledge of all the programs that could provide them food or simply the ability to physically go and get it.
Yes. And, they're not widely advertised.

Also, as you age your mental faculties decline. It's not like we have a good health care system to address this issue either.
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Re: Do you plan to actually spend down your portfolio?

Post by afan »

If a portfolio is largely or completely composed of stable value assets then there will be little or no risk of down years. If your income needs are covered by SS, pensions and annuities then there would be no need to withdraw anything from the portfolio.
If there is no need to draw anything from the portfolio then one could have it aggressively invested, tolerate down years, and live on reliable income.
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Re: Do you plan to actually spend down your portfolio?

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afan wrote: Wed Jan 15, 2020 9:37 am If a portfolio is largely or completely composed of stable value assets then there will be little or no risk of down years. If your income needs are covered by SS, pensions and annuities then there would be no need to withdraw anything from the portfolio.
If there is no need to draw anything from the portfolio then one could have it aggressively invested, tolerate down years, and live on reliable income.
While it is not my particular bent, I do somewhat admire the conviction of most BH not to increase spending just because they can afford to. That said after watching my parents who had sufficient pension and SS income plus covered healthcare not spend any of their modest nest egg to do any of their bucket list because seeing the number gave them an additional sense of security I hope not to follow that path.
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Re: Do you plan to actually spend down your portfolio?

Post by afan »

Not all of us have bucket lists that involve spending extra money.
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TN_Boy
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Re: Do you plan to actually spend down your portfolio?

Post by TN_Boy »

afan wrote: Wed Jan 15, 2020 9:37 am If a portfolio is largely or completely composed of stable value assets then there will be little or no risk of down years. If your income needs are covered by SS, pensions and annuities then there would be no need to withdraw anything from the portfolio.
If there is no need to draw anything from the portfolio then one could have it aggressively invested, tolerate down years, and live on reliable income.
I'm clearly not getting the point of this thread and some of the responses .... I think I should stop reading this thread!

If you don't need the portfolio sure, no need to spend it. But that seems like an uninteresting case.

Our portfolio is NOT only stable value assets. This seems like a very unusual portfolio. How many people have 100% of their investments in such vehicles?

Our income needs are NOT entirely covered by SS and pensions and annuities.

I think our situation is extremely common; we need to pull some money from the portfolio to maintain our standard of living and have some fun. Somewhat more in early retirement, less after SS kicks in.
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Re: Do you plan to actually spend down your portfolio?

Post by SQRT »

TheTimeLord wrote: Wed Jan 15, 2020 9:43 am
afan wrote: Wed Jan 15, 2020 9:37 am If a portfolio is largely or completely composed of stable value assets then there will be little or no risk of down years. If your income needs are covered by SS, pensions and annuities then there would be no need to withdraw anything from the portfolio.
If there is no need to draw anything from the portfolio then one could have it aggressively invested, tolerate down years, and live on reliable income.
While it is not my particular bent, I do somewhat admire the conviction of most BH not to increase spending just because they can afford to. That said after watching my parents who had sufficient pension and SS income plus covered healthcare not spend any of their modest nest egg to do any of their bucket list because seeing the number gave them an additional sense of security I hope not to follow that path.
Agree. I just don’t see the point of saving money if you have no desire to spend it or at least give it away at some point. What what the heck, everybody is different.
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Re: Do you plan to actually spend down your portfolio?

Post by MnD »

TheTimeLord wrote: Wed Jan 15, 2020 9:43 am
afan wrote: Wed Jan 15, 2020 9:37 am If a portfolio is largely or completely composed of stable value assets then there will be little or no risk of down years. If your income needs are covered by SS, pensions and annuities then there would be no need to withdraw anything from the portfolio.
If there is no need to draw anything from the portfolio then one could have it aggressively invested, tolerate down years, and live on reliable income.
While it is not my particular bent, I do somewhat admire the conviction of most BH not to increase spending just because they can afford to. That said after watching my parents who had sufficient pension and SS income plus covered healthcare not spend any of their modest nest egg to do any of their bucket list because seeing the number gave them an additional sense of security I hope not to follow that path.
It's fairly common that maintaining the "portfolio/pile/number" becomes the end and not the means to enhancing retirement income. This phenomena also injects a lot of bias into overall investment planning. I think the race to the bottom on what constitutes a safe withdrawal rate, ultra-low expectations of future returns and the chaining together of other numerous negative assumptions in calculating how long to work and how much to save are all related to a desire to never stop growing ones portfolio and certainly never see it diminish even a little bit. The portfolio, which should be a servant to enhance ones retirement has become the master for many.
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Re: Do you plan to actually spend down your portfolio?

Post by rustymutt »

Son, is this you? Yes, I'm spending my money. I'll leave you enough to bury me, and some. I love you. Don't blow this opportunity yourself. Get educated son. Learn to think for yourself, and don't pay attention to all the damn noise.
Even educators need education. And some can be hard headed to the point of needing time out.
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Re: Do you plan to actually spend down your portfolio?

Post by willthrill81 »

unclescrooge wrote: Tue Jan 14, 2020 11:28 pm
stoptothink wrote: Tue Jan 14, 2020 4:30 pm
unclescrooge wrote: Tue Jan 14, 2020 11:36 am
Meg77 wrote: Thu Oct 24, 2019 2:32 pm
Yep, this is very normal and should be expected for most retirees. Studies show even those who retire with "only" $100K or $200K (and live off social security or pensions, etc.) rarely actually spend down their assets.
On the flip side, we don't really hear about the people who end up living off cat food in their retirement.

A mentor of mine told me a story about his aunt. She was living in a paid off home, but had no money for food and was literally eating canned cat food.

He put a reverse mortgage on it (he carried the note) and helped her live out her remaining years in dignity.
There are so many avenues in this country for people of limited means to get food (without any cost to them) that this should never be a thing. I think the bigger issue is not that this individual had such limited financial resources, but maybe they did not have knowledge of all the programs that could provide them food or simply the ability to physically go and get it.
Yes. And, they're not widely advertised.

Also, as you age your mental faculties decline. It's not like we have a good health care system to address this issue either.
Canned cat food is a lot pricier than rice, beans, flour, etc. in our area at least.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: Do you plan to actually spend down your portfolio?

Post by SQRT »

MnD wrote: Wed Jan 15, 2020 11:04 am
TheTimeLord wrote: Wed Jan 15, 2020 9:43 am
afan wrote: Wed Jan 15, 2020 9:37 am If a portfolio is largely or completely composed of stable value assets then there will be little or no risk of down years. If your income needs are covered by SS, pensions and annuities then there would be no need to withdraw anything from the portfolio.
If there is no need to draw anything from the portfolio then one could have it aggressively invested, tolerate down years, and live on reliable income.
While it is not my particular bent, I do somewhat admire the conviction of most BH not to increase spending just because they can afford to. That said after watching my parents who had sufficient pension and SS income plus covered healthcare not spend any of their modest nest egg to do any of their bucket list because seeing the number gave them an additional sense of security I hope not to follow that path.
It's fairly common that maintaining the "portfolio/pile/number" becomes the end and not the means to enhancing retirement income. This phenomena also injects a lot of bias into overall investment planning. I think the race to the bottom on what constitutes a safe withdrawal rate, ultra-low expectations of future returns and the chaining together of other numerous negative assumptions in calculating how long to work and how much to save are all related to a desire to never stop growing ones portfolio and certainly never see it diminish even a little bit. The portfolio, which should be a servant to enhance ones retirement has become the master for many.
Good point. Well said. That would indeed seem to be the case for many people here. The same people who say they don’t want their “stuff” to “pile up” simply watch their portfolio “pile up”.
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willthrill81
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Re: Do you plan to actually spend down your portfolio?

Post by willthrill81 »

MnD wrote: Wed Jan 15, 2020 11:04 amThe portfolio, which should be a servant to enhance ones retirement has become the master for many.
Sadly, I'm afraid that this is very true for many BHs. You almost quoted P.T. Barnum: "Money is a terrible master but an excellent servant."
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: Do you plan to actually spend down your portfolio?

Post by AerialWombat »

TresBelle65 wrote: Tue Jan 14, 2020 7:40 am What are the options for long term care?

- a facility

- paying someone(s) to come to your home and care for you full time

- family or friends care for you in your home or theirs for compensation
You forgot one: Robots.

There are already remote monitoring systems and services to help those that choose to age in place, in lieu of 24/7 on-site personal care (making it more like “on call care”).

Several companies are developing robots that will help with CNA-type care tasks. They are years away from real functionality obviously, but within a couple decades they will likely be commonplace. And I’m sure one of the BH MD’s could comment on the emerging state of telerobotics in the operating room and how that might trickle down to home health care or assisted living.

I’m not saying technology will solve everything, but there are some very smart people out there working on these kinds of solutions to this massive issue.
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Re: Do you plan to actually spend down your portfolio?

Post by Admiral »

willthrill81 wrote: Wed Jan 15, 2020 11:28 am
MnD wrote: Wed Jan 15, 2020 11:04 amThe portfolio, which should be a servant to enhance ones retirement has become the master for many.
Sadly, I'm afraid that this is very true for many BHs. You almost quoted P.T. Barnum: "Money is a terrible master but an excellent servant."
Yep. I will likely be one of those lucky few who, even with spending at the same or even higher levels than now, once I am 70 (presuming still alive) WRs will be 2% or less. So, the pile will grow. I do plan to transfer some $ to my adult children at that time and not hold it all for an estate. But both my parents and my DW's parents are quite successful and we will likely be getting sizable sums from them.

So, I expect that a lot will go to causes we support. I see us living well (as we do now) and perhaps the occasional extravagance but it's hard to change to a profligate lifestyle at age 58 when you have not lived that way your entire adult life. Not impossible, but it's just not something one is used to.
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Re: Do you plan to actually spend down your portfolio?

Post by Stef »

How do you plan to spend down your portfolio? Do you know exactly when you're going to die? What if it's 10 years sooner than expected or 20 years later?
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Re: Do you plan to actually spend down your portfolio?

Post by Darth Xanadu »

MnD wrote: Wed Jan 15, 2020 11:04 am
It's fairly common that maintaining the "portfolio/pile/number" becomes the end and not the means to enhancing retirement income. This phenomena also injects a lot of bias into overall investment planning. I think the race to the bottom on what constitutes a safe withdrawal rate, ultra-low expectations of future returns and the chaining together of other numerous negative assumptions in calculating how long to work and how much to save are all related to a desire to never stop growing ones portfolio and certainly never see it diminish even a little bit. The portfolio, which should be a servant to enhance ones retirement has become the master for many.
A very insightful post. :beer

I'm probably 15-20 years away from any thought of retirement, but as a reasonably self-aware individual, I already know that it will take some conscious effort on my part to not fall into this camp.
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Re: Do you plan to actually spend down your portfolio?

Post by Admiral »

Darth Xanadu wrote: Wed Jan 15, 2020 1:15 pm
MnD wrote: Wed Jan 15, 2020 11:04 am
It's fairly common that maintaining the "portfolio/pile/number" becomes the end and not the means to enhancing retirement income. This phenomena also injects a lot of bias into overall investment planning. I think the race to the bottom on what constitutes a safe withdrawal rate, ultra-low expectations of future returns and the chaining together of other numerous negative assumptions in calculating how long to work and how much to save are all related to a desire to never stop growing ones portfolio and certainly never see it diminish even a little bit. The portfolio, which should be a servant to enhance ones retirement has become the master for many.
A very insightful post. :beer

I'm probably 15-20 years away from any thought of retirement, but as a reasonably self-aware individual, I already know that it will take some conscious effort on my part to not fall into this camp.
I agree and tend toward that myself. When one is a conscious saver all their lives making the switch from accumulation to de-accumulation is likely to be difficult.

Bhs (to generalize) are a pretty fiscally conservative bunch, which tends to lead inevitably to the race to the bottom in terms of SWRs and predicted annual returns. That's just the nature of the msg board. Combine that with recent low bond returns and the result is arguments about 50x expenses and 2.5% SWRs.
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Re: Do you plan to actually spend down your portfolio?

Post by TheTimeLord »

Stef wrote: Wed Jan 15, 2020 12:55 pm How do you plan to spend down your portfolio? Do you know exactly when you're going to die? What if it's 10 years sooner than expected or 20 years later?
Joyfully. The first step to being able to spend down your portfolio is accepting you are mortal and in all likelihood your health will decline years before your demise (so even if you have the money you might not be able to do what you want). That said it is probably much easier for people who retire with a buffer or other income streams (SS, pensions or annuities) than it is for someone who is counting on a 25x portfolio alone to support them.
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Re: Do you plan to actually spend down your portfolio?

Post by afan »

MnD wrote: Wed Jan 15, 2020 11:04 am
TheTimeLord wrote: Wed Jan 15, 2020 9:43 am
afan wrote: Wed Jan 15, 2020 9:37 am If a portfolio is largely or completely composed of stable value assets then there will be little or no risk of down years. If your income needs are covered by SS, pensions and annuities then there would be no need to withdraw anything from the portfolio.
If there is no need to draw anything from the portfolio then one could have it aggressively invested, tolerate down years, and live on reliable income.
While it is not my particular bent, I do somewhat admire the conviction of most BH not to increase spending just because they can afford to. That said after watching my parents who had sufficient pension and SS income plus covered healthcare not spend any of their modest nest egg to do any of their bucket list because seeing the number gave them an additional sense of security I hope not to follow that path.
It's fairly common that maintaining the "portfolio/pile/number" becomes the end and not the means to enhancing retirement income. This phenomena also injects a lot of bias into overall investment planning. I think the race to the bottom on what constitutes a safe withdrawal rate, ultra-low expectations of future returns and the chaining together of other numerous negative assumptions in calculating how long to work and how much to save are all related to a desire to never stop growing ones portfolio and certainly never see it diminish even a little bit. The portfolio, which should be a servant to enhance ones retirement has become the master for many.
With all due respect, this reflects a distinctly narrow view of the world. It starts by assuming that everyone shares the goal of spending up to their capacity and saves money only to guard against running out. It ignores the possibility that a growing portfolio can be a consequence of careful saving and investing while spending below ones means.

Growing the portfolio may be a goal in itself, but the above quote implies that this can never be a legitimate goal.

I spend the money I need to live a comfortable life. Yet some assume I should spend much more money, on things I don't want, simply because I could. My retirement will be just fine at a level of spending below what the portfolio will support. I should spend more anyway? Why?

Imagine for a moment that not everyone shares your goals. Once you realize this, you see how absurd it is to state that everyone's portfolio "should" be for the same purpose.
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Re: Do you plan to actually spend down your portfolio?

Post by willthrill81 »

afan wrote: Wed Jan 15, 2020 2:39 pm Imagine for a moment that not everyone shares your goals. Once you realize this, you see how absurd it is to state that everyone's portfolio "should" be for the same purpose.
I agree that different people have different values and different goals. That being said, I'm not convinced that there aren't a significant number of people who are strictly focused on building up a big pile of money to just have a big pile of money. That seems to be pretty illogical unless the individual's values are frankly really messed up. Now if they're building the big pile of money in order to leave a bequest to their children, charity, etc., that's one thing, but I don't think that that is always what's driving the proverbial bus.
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Re: Do you plan to actually spend down your portfolio?

Post by unclescrooge »

willthrill81 wrote: Wed Jan 15, 2020 11:26 am
unclescrooge wrote: Tue Jan 14, 2020 11:28 pm
stoptothink wrote: Tue Jan 14, 2020 4:30 pm
unclescrooge wrote: Tue Jan 14, 2020 11:36 am
Meg77 wrote: Thu Oct 24, 2019 2:32 pm
Yep, this is very normal and should be expected for most retirees. Studies show even those who retire with "only" $100K or $200K (and live off social security or pensions, etc.) rarely actually spend down their assets.
On the flip side, we don't really hear about the people who end up living off cat food in their retirement.

A mentor of mine told me a story about his aunt. She was living in a paid off home, but had no money for food and was literally eating canned cat food.

He put a reverse mortgage on it (he carried the note) and helped her live out her remaining years in dignity.
There are so many avenues in this country for people of limited means to get food (without any cost to them) that this should never be a thing. I think the bigger issue is not that this individual had such limited financial resources, but maybe they did not have knowledge of all the programs that could provide them food or simply the ability to physically go and get it.
Yes. And, they're not widely advertised.

Also, as you age your mental faculties decline. It's not like we have a good health care system to address this issue either.
Canned cat food is a lot pricier than rice, beans, flour, etc. in our area at least.
I think I've seen them sold as low as 39 cents, but I can't recall whether that was last year or 20 years ago. :mrgreen:
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Re: Do you plan to actually spend down your portfolio?

Post by El Greco »

Freefun wrote: Tue Jan 14, 2020 7:55 pm
TN_Boy wrote: Tue Jan 14, 2020 6:35 pm
Freefun wrote: Tue Jan 14, 2020 6:23 pm I will spend it. Last $ is for the coffin.
How do you know when you will need the coffin?
When I’m down to my last $ then that’s when I’ll need the coffin.
Heres a Boglehead perspective. Consider cremation. Urns are a lot cheaper than coffins.
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Re: Do you plan to actually spend down your portfolio?

Post by TheTimeLord »

afan wrote: Wed Jan 15, 2020 2:39 pm
Growing the portfolio may be a goal in itself, but the above quote implies that this can never be a legitimate goal.
I don't see how accumulating just to accumulate is a legitimate goal. What is the value of money without purpose? What is the difference in having something you will never use and not having it in the first place? All that said there is nothing that saying you can't accumulate while finding a purpose for the assets. So maybe I am making a distinction without a difference.
Last edited by TheTimeLord on Wed Jan 15, 2020 3:22 pm, edited 1 time in total.
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Re: Do you plan to actually spend down your portfolio?

Post by Unladen_Swallow »

unclescrooge wrote: Tue Jan 14, 2020 11:36 am
Meg77 wrote: Thu Oct 24, 2019 2:32 pm
Yep, this is very normal and should be expected for most retirees. Studies show even those who retire with "only" $100K or $200K (and live off social security or pensions, etc.) rarely actually spend down their assets.
On the flip side, we don't really hear about the people who end up living off cat food in their retirement.

A mentor of mine told me a story about his aunt. She was living in a paid off home, but had no money for food and was literally eating canned cat food.

He put a reverse mortgage on it (he carried the note) and helped her live out her remaining years in dignity.
Alpo and cat food seem to be favourite BH bogeyman. I never quite understood this. Before the aunt resorted to cat food, my question is:

- Why didn't the nephew take care of her food needs? Is that too much to expect?
- At the cost of cat food, one could get human food. Cat food isn't cheap that I know of.
- There are many social systems that address exactly this. Making sure the elderly are fed. At no cost.
- A reverse mortgage? Sure. That is a solution. I still wonder why the nephew just didn't take over her food needs. Get a food plan in place for her. The expense is certainly affordable. $75-$100 a month for an elderly woman? I think that is even a generous estimate.
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Re: Do you plan to actually spend down your portfolio?

Post by HomeStretch »

willthrill81 wrote: Tue Jan 14, 2020 11:38 am In general, those with at least $2 million of invested assets can pretty easily self-insure LTC risk. The lion's share of those needing LTC need it for no more than five years, and even in a nursing home (typically the highest cost LTC setting), that would cost about $500k in most places today. That would leave the surviving spouse with a still very significant $1.5 million of assets. Depending on how much non-portfolio income a couple has, they might be able to self-insure the risk of LTC with well under $2 million.
What a difference geography makes. 5 years of nursing home care is at least $1.2 million in my parents’ area for one person (and more expensive in my area about an hour away). Very sobering. Not an option to move parent to a LCOL U.S. area/ex-U.S. facility.

I live in a HCOL area, no CCRC’s available in immediate area due to land prices. Going through the process now of evaluating memory care facilities for a parent with Alzheimer’s who lives an hour away and for whom current in-home care is rapidly becoming a non-option for various reasons. “Nice” private-pay facilities (many that will not accept Medicaid after a period of private-pay) start at ~$13k/month for basic memory care up to $20k/month for skilled nursing care. Other parent (spouse) has serious health issues and is a candidate for Assisted Living which starts at $7k/mo. No LTC policies. Savings will cover 2-3 years for both.
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Re: Do you plan to actually spend down your portfolio?

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

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TheTimeLord wrote: Wed Jan 15, 2020 1:41 pmJoyfully. The first step to being able to spend down your portfolio is accepting you are mortal and in all likelihood your health will decline years before your demise (so even if you have the money you might not be able to do what you want). That said it is probably much easier for people who retire with a buffer or other income streams (SS, pensions or annuities) than it is for someone who is counting on a 25x portfolio alone to support them.
Actually I realised that today when I met a 87yo client. She talked about her travelling and that she had to stop at 70 due to health reasons. Later her husband and the rest of the family died (no kids). Now she is just living through the day. Money will be worthless when you can't enjoy life anymore, doesn't matter if it's 1 million or 1 billion. That's why my goal is to reach FIRE when I'm 50. Hopefully I get another 20-30 years of enjoyable life and spend everything in that time. I probably won't care if I die as poor man.
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Re: Do you plan to actually spend down your portfolio?

Post by AerialWombat »

Stef wrote: Wed Jan 15, 2020 12:55 pm Do you know exactly when you're going to die? What if it's 10 years sooner than expected or 20 years later?
I don’t know exactly when I’m going to die, but I have a prognosis. I have built my plan to last that long. If I live longer, Social Security will kick in shortly thereafter and I will live on that and the one or two paid off rental properties that I will keep.

If I succumb sooner, then a scholarship fund and some US world team athletes get a surge in financial support.

So yes, it can be planned for.
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Re: Do you plan to actually spend down your portfolio?

Post by randomguy »

HomeStretch wrote: Wed Jan 15, 2020 3:17 pm
willthrill81 wrote: Tue Jan 14, 2020 11:38 am In general, those with at least $2 million of invested assets can pretty easily self-insure LTC risk. The lion's share of those needing LTC need it for no more than five years, and even in a nursing home (typically the highest cost LTC setting), that would cost about $500k in most places today. That would leave the surviving spouse with a still very significant $1.5 million of assets. Depending on how much non-portfolio income a couple has, they might be able to self-insure the risk of LTC with well under $2 million.
What a difference geography makes. 5 years of nursing home care is at least $1.2 million in my parents’ area for one person (and more expensive in my area about an hour away). Very sobering. Not an option to move parent to a LCOL U.S. area/ex-U.S. facility.

I live in a HCOL area, no CCRC’s available in immediate area due to land prices. Going through the process now of evaluating memory care facilities for a parent with Alzheimer’s who lives an hour away and for whom current in-home care is rapidly becoming a non-option for various reasons. “Nice” private-pay facilities (many that will not accept Medicaid after a period of private-pay) start at ~$13k/month for basic memory care up to $20k/month for skilled nursing care. Other parent (spouse) has serious health issues and is a candidate for Assisted Living which starts at $7k/mo. No LTC policies. Savings will cover 2-3 years for both.
Where is this place that cost almost 50% more than the median place in NYC or SF and where moving 20 miles doesn't get you some cheaper care options? 240k/year is a lot of money. Personally I worry about being a bit more of an outlier on the duration but that is based on a couple of grandparents who have made it to almost 100 and spend close to 15 years needing help and almost a decade with noticeable cognitive impairment.

LTC is one of the few reasons I can see spending down my portfolio. In all but the worst (bottom 10-15% cases) of market returns, historically a portfolio grows over time with a conservative 4% SWR. I don't imagine I will bump up spending with more money and am more likely to see expense drop as I age like most people do until the uptick at the end. If I wanted to buy more stuff I would have worked another decade. That leaves expenses out of my control (i.e. LTC) or donations (either kids or charity) to prevent portfolio growth. How things actually work out? Who knows.
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Re: Do you plan to actually spend down your portfolio?

Post by TheTimeLord »

Stef wrote: Wed Jan 15, 2020 3:40 pm
TheTimeLord wrote: Wed Jan 15, 2020 1:41 pmJoyfully. The first step to being able to spend down your portfolio is accepting you are mortal and in all likelihood your health will decline years before your demise (so even if you have the money you might not be able to do what you want). That said it is probably much easier for people who retire with a buffer or other income streams (SS, pensions or annuities) than it is for someone who is counting on a 25x portfolio alone to support them.
Actually I realised that today when I met a 87yo client. She talked about her travelling and that she had to stop at 70 due to health reasons. Later her husband and the rest of the family died (no kids). Now she is just living through the day. Money will be worthless when you can't enjoy life anymore, doesn't matter if it's 1 million or 1 billion. That's why my goal is to reach FIRE when I'm 50. Hopefully I get another 20-30 years of enjoyable life and spend everything in that time. I probably won't care if I die as poor man.
I spent decades of my life planning to retire at a certain age. I got there and decided to work another 3 years. That passed and I am still working even though we are finically independent. Give some thought on how you can enjoy you life between today and 50, even if you have to work a little longer. There are likely a few things you could do today that you won't in your 50s and 60s. Nothing wrong with life starting before 50. Find the balance that is right for you and your life.
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Re: Do you plan to actually spend down your portfolio?

Post by afan »

El Greco wrote: Wed Jan 15, 2020 3:07 pm
Freefun wrote: Tue Jan 14, 2020 7:55 pm
TN_Boy wrote: Tue Jan 14, 2020 6:35 pm
Freefun wrote: Tue Jan 14, 2020 6:23 pm I will spend it. Last $ is for the coffin.
How do you know when you will need the coffin?
When I’m down to my last $ then that’s when I’ll need the coffin.
Heres a Boglehead perspective. Consider cremation. Urns are a lot cheaper than coffins.
That is what I have left instructions to do. Cremation is cheaper than burial for several reasons but the urn is not among them. An urn is completely optional and I have told my heirs that I will come back and haunt them if they spend so much as a thin dime on funeral arrangements for my remains.
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Re: Do you plan to actually spend down your portfolio?

Post by afan »

TheTimeLord wrote: Wed Jan 15, 2020 3:11 pm
afan wrote: Wed Jan 15, 2020 2:39 pm
Growing the portfolio may be a goal in itself, but the above quote implies that this can never be a legitimate goal.

I don't see how accumulating just to accumulate is a legitimate goal
. What is the value of money without purpose? What is the difference in having something you will never use and not having it in the first place? All that said there is nothing that saying you can't accumulate while finding a purpose for the assets. So maybe I am making a distinction without a difference.
I and don't see how anyone would want to fly to Paris.

I may not share their interest in travel. However, I don't claim that, because it is not something I want, then it cannot be a legitimate goal.

There are many people in the world and not all of them have the same goals. Even without traveling, that is obvious to me.

I don't see how so many people have trouble with the concept that not everyone wants what they want.
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Re: Do you plan to actually spend down your portfolio?

Post by TheTimeLord »

afan wrote: Wed Jan 15, 2020 4:31 pm
TheTimeLord wrote: Wed Jan 15, 2020 3:11 pm
afan wrote: Wed Jan 15, 2020 2:39 pm
Growing the portfolio may be a goal in itself, but the above quote implies that this can never be a legitimate goal.

I don't see how accumulating just to accumulate is a legitimate goal
. What is the value of money without purpose? What is the difference in having something you will never use and not having it in the first place? All that said there is nothing that saying you can't accumulate while finding a purpose for the assets. So maybe I am making a distinction without a difference.
I and don't see how anyone would want to fly to Paris.

I may not share their interest in travel. However, I don't claim that, because it is not something I want, then it cannot be a legitimate goal.

There are many people in the world and not all of them have the same goals. Even without traveling, that is obvious to me.

I don't see how so many people have trouble with the concept that not everyone wants what they want.
I have no trouble with the concept that everyone wants what they want. I just have trouble understanding how wanting something you have no use for and have no intention to use is a valid pursuit since I don't see how that differs from not ever having it in the first place.
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Re: Do you plan to actually spend down your portfolio?

Post by afan »

Stef wrote: Wed Jan 15, 2020 3:40 pm
TheTimeLord wrote: Wed Jan 15, 2020 1:41 pmJoyfully. The first step to being able to spend down your portfolio is accepting you are mortal and in all likelihood your health will decline years before your demise (so even if you have the money you might not be able to do what you want). That said it is probably much easier for people who retire with a buffer or other income streams (SS, pensions or annuities) than it is for someone who is counting on a 25x portfolio alone to support them.
Actually I realised that today when I met a 87yo client. She talked about her travelling and that she had to stop at 70 due to health reasons. Later her husband and the rest of the family died (no kids). Now she is just living through the day. Money will be worthless when you can't enjoy life anymore, doesn't matter if it's 1 million or 1 billion. That's why my goal is to reach FIRE when I'm 50. Hopefully I get another 20-30 years of enjoyable life and spend everything in that time. I probably won't care if I die as poor man.
That is a said story if she is unhappy.

However, I would not equate her situation to "just living through the day." Many older people continue their less strenuous interests throughout their lives. Many engage with those people who are still around, in their retirement homes, at senior centers, at work if they are still up to it. They read, write, walk, think, play chess or computer games, go to concerts or listen to music at home, play if they were musical earlier... Seeing all one's family die off is not my idea of fun, but it happens to a lot of people. Not sure how having LESS money at the time would make that any better. Quite the contrary, I would think.

This again comes back to the assumption that
happiness=spending money.

That the only way to be happy is to spend ever larger amounts of money on something,. Apparently does not matter what, as long as cash is going out the door, one is happy..

A corollary, apparently, is that there are no free or inexpensive things that could be enjoyable. Reading out of copyright books cannot be enjoyable because they are inexpensive or free. Taking a walk cannot be gratifying unless you can find someone.to pay for the privilege.

Finally, it is apparently obvious to many people but not to me that having fun is not merely the primary goal in life, it is the only goal. No one could possibly seek to accomplish anything other than having fun and blowing as much money as possible. Of course, having fun and spending money are synonymous.

Or maybe, just maybe, not everyone sees life that way.
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Re: Do you plan to actually spend down your portfolio?

Post by afan »

TheTimeLord wrote: Wed Jan 15, 2020 4:45 pm
afan wrote: Wed Jan 15, 2020 4:31 pm
TheTimeLord wrote: Wed Jan 15, 2020 3:11 pm
afan wrote: Wed Jan 15, 2020 2:39 pm
Growing the portfolio may be a goal in itself, but the above quote implies that this can never be a legitimate goal.

I don't see how accumulating just to accumulate is a legitimate goal
. What is the value of money without purpose? What is the difference in having something you will never use and not having it in the first place? All that said there is nothing that saying you can't accumulate while finding a purpose for the assets. So maybe I am making a distinction without a difference.
I and don't see how anyone would want to fly to Paris.

I may not share their interest in travel. However, I don't claim that, because it is not something I want, then it cannot be a legitimate goal.

There are many people in the world and not all of them have the same goals. Even without traveling, that is obvious to me.

I don't see how so many people have trouble with the concept that not everyone wants what they want.
I have no trouble with the concept that everyone wants what they want. I just have trouble understanding how wanting something you have no use for and have no intention to use is a valid pursuit since I don't see how that differs from not ever having it in the first place.
And again, seeking something you don't want cannot be a "legitimate" or "valid" pursuit. Everyone in the world wants what you want, or they are wrong.

If one has the possessions one wants, why buy something one does not want? THAT would make no sense to me. But I gather my view must be invalid, since everyone wants to spend as much as they can. Just as EVERYONE wants to eat as much food as they can cram down their throats. Satiety and nutrition are unimportant. Eating more food is always better. One stops eating when one runs out of money. That is the only valid reason to stop guzzling.

Same, or course, for alcohol, cigarettes, gambling, travel, whatever. EVERYONE always wants more. That is the only legitimate goal.

Or maybe not everyone sees their lives that way.
Last edited by afan on Wed Jan 15, 2020 4:55 pm, edited 1 time in total.
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Re: Do you plan to actually spend down your portfolio?

Post by TheTimeLord »

afan wrote: Wed Jan 15, 2020 4:49 pm
TheTimeLord wrote: Wed Jan 15, 2020 4:45 pm
afan wrote: Wed Jan 15, 2020 4:31 pm
TheTimeLord wrote: Wed Jan 15, 2020 3:11 pm
afan wrote: Wed Jan 15, 2020 2:39 pm
Growing the portfolio may be a goal in itself, but the above quote implies that this can never be a legitimate goal.

I don't see how accumulating just to accumulate is a legitimate goal
. What is the value of money without purpose? What is the difference in having something you will never use and not having it in the first place? All that said there is nothing that saying you can't accumulate while finding a purpose for the assets. So maybe I am making a distinction without a difference.
I and don't see how anyone would want to fly to Paris.

I may not share their interest in travel. However, I don't claim that, because it is not something I want, then it cannot be a legitimate goal.

There are many people in the world and not all of them have the same goals. Even without traveling, that is obvious to me.

I don't see how so many people have trouble with the concept that not everyone wants what they want.
I have no trouble with the concept that everyone wants what they want. I just have trouble understanding how wanting something you have no use for and have no intention to use is a valid pursuit since I don't see how that differs from not ever having it in the first place.
And again, seeking something you don't want cannot be a "legitimate" or "valid" pursuit. Everyone in the world wants what you want, or they are wrong.

If one has the possessions one wants, why but something one does not want. THAT makes no sense to me.
Which is exactly my point. Why have a goal to accumulate more of something you have no intention or desire to use.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
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Re: Do you plan to actually spend down your portfolio?

Post by Unladen_Swallow »

HomeStretch wrote: Wed Jan 15, 2020 3:17 pm
willthrill81 wrote: Tue Jan 14, 2020 11:38 am In general, those with at least $2 million of invested assets can pretty easily self-insure LTC risk. The lion's share of those needing LTC need it for no more than five years, and even in a nursing home (typically the highest cost LTC setting), that would cost about $500k in most places today. That would leave the surviving spouse with a still very significant $1.5 million of assets. Depending on how much non-portfolio income a couple has, they might be able to self-insure the risk of LTC with well under $2 million.
What a difference geography makes. 5 years of nursing home care is at least $1.2 million in my parents’ area for one person (and more expensive in my area about an hour away). Very sobering. Not an option to move parent to a LCOL U.S. area/ex-U.S. facility.

I live in a HCOL area, no CCRC’s available in immediate area due to land prices. Going through the process now of evaluating memory care facilities for a parent with Alzheimer’s who lives an hour away and for whom current in-home care is rapidly becoming a non-option for various reasons. “Nice” private-pay facilities (many that will not accept Medicaid after a period of private-pay) start at ~$13k/month for basic memory care up to $20k/month for skilled nursing care. Other parent (spouse) has serious health issues and is a candidate for Assisted Living which starts at $7k/mo. No LTC policies. Savings will cover 2-3 years for both.
This astounds me. How are most of the elderly surviving in the US without $20M in retirement? Are they just on the streets? Dying? Is this an epidemic? :confused

- Moving to a LCOL area is not an option.
- Moving an hour away still has a cost of $1.2M for 5 yrs for ONE parent?
- There is no other solution that doesn't cost millions


This is a rich first world problem. And I certainly am not minimizing it. I am only pointing out that our problems are reflective of our affordability. Someone with $1M total retirement is not considering your options. They will relocate in a hurry.


If your family option is between:

1. Paying $1.2M for one, or $2.4M for two
2. Moving to a LCOL area
3. Just saying **** it, and dying


Looks like you are leaning towards Option 1. Certainly that is not outside the financial purview. That is good.
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman
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Re: Do you plan to actually spend down your portfolio?

Post by NearlyRetired »

Yes! Current plan is to spend it down to zero around time we expect to shake off our mortal coils
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Re: Do you plan to actually spend down your portfolio?

Post by wrongfunds »

This again comes back to the assumption that
happiness=spending money.
Corollary to that is "happiness=having money"

Aren't both concepts really tied at the hips? How do you have one without the other?

This assumes that you do subscribe to the notion that having (adequate) money is necessary. But if you don't want to spend it, then why do you need it? You just need to answer that to yourself.
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