5 - Ways to help you spend your retirement savings - Wisely

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fishandgolf
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5 - Ways to help you spend your retirement savings - Wisely

Post by fishandgolf » Tue Jan 21, 2020 8:39 pm

A recent article published by Jonatan Clements in Market Watch......as titled below.

https://www.marketwatch.com/story/5-way ... 1xfrEsl30k

I've read a few articles about this topic. We spend years and years scrimping and scraping to save for retirement...….then when we reach that golden moment of retirement...and guess what.......we continue to scrimp and scrape. Unfortunately, this is happening to us.

My DW is planning to retire in June of this year...…….she is scared.....yes....she is scared stiff! The fear of not having that weekly check is troubling for her. For me...….I've been retired for 11 years.....not a big deal for me.....but seriously.....I am having a tough time convincing her that we are financially in great shape....and we are.

Is this a real dilemma for others or am I alone in this conundrum..…….???

Edit: She is 100% aware of our retirement portfolio, savings, SS, expenses etc. No secrets here...….never has been.

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alec
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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by alec » Tue Jan 21, 2020 9:51 pm

No, my parents were like this before my dad retired from part time work in his late 70s. They just bought a life annuity to make up the “lost” income they wanted over and above Social Security.

Another way I’ve heard people deal with this is to just have 2 years or so of expenses in a MM fund, and then transfer some money to a checking account every month. Viola, a paycheck coming in.
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" - Upton Sinclair

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by Royal Blue » Tue Jan 21, 2020 9:59 pm

Jonathan Clements blog humbledollar.com is a great place to pop in each day and snack on a nice tidbit of personal finance.

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by fishandgolf » Wed Jan 22, 2020 8:07 am

alec wrote:
Tue Jan 21, 2020 9:51 pm
No, my parents were like this before my dad retired from part time work in his late 70s. They just bought a life annuity to make up the “lost” income they wanted over and above Social Security.

Another way I’ve heard people deal with this is to just have 2 years or so of expenses in a MM fund, and then transfer some money to a checking account every month. Viola, a paycheck coming in.
We have one year expenses in an Ally saving and MM account. I think what is contributing to her concerns is that we just finished building a new, smaller house...it was time to down size. The sale of our former house didn't yield enough to cover the cost of the new house, so we ended up spending more than we planned. Everything is paid for....we didn't have to take out a mortgage. We are debt free....no credit card, auto, etc.

DW is very frugal....this runs in her family. Her mom has a very sizable retirement account but continues to live primarily off SS.

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by Cyclesafe » Wed Jan 22, 2020 8:52 am

Once ingrained, frugality is for life. It helped get you where you are and no matter how much you have accumulated, it gnaws away at the supposed joy of buying new things and experiences. Nevertheless, it must be respected as it is too much a part of whom many of us are.

Having an "income" helps. But do not overpay for the "peace of mind" an annuity allegedly provides. Too many hidden costs, inflation a major one if purchased too early or for too long a period. Instead a tax-savvy monthly transfer of investments to your most liquid account and a commitment of both of you to slowly improve your standard of living as this account grows. I've characterized this to my wife as "cracking open the spigot just a little bit more".

For example. If you are taking a vacation, consider upgrading accommodations, transportation, and/or dining options and view the increment over the "base case" as your incremental expense, not the total. If buying a car, if otherwise happy with a Camry, think about whether the increment of getting the equivalent Lexus model might be sufficiently satisfying. Maybe yes, maybe no, but at least have the conversation.

For a frugal person, spending the nest egg can be traumatic. Usually, those with a legacy and/or charitable intent dodge the problem and continue to restrict themselves unnecessarily in this life.
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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by Dandy » Wed Jan 22, 2020 8:56 am

Depending on your ages, health and assets you might consider an immediate annuity to provide some paycheck-like monthly income. Also, you might want to have 2 or so years worth of expenses in a high yielding Savings account and 2X a month transfer money approximating your desired monthly drawdown into your checking account to mimic a paycheck.

I have my 2 pensions and SS sent to savings and do the 2 X a month transfers outlined above. It seems to act like a gentle budget - if I have money in our checking account at the end of the month -- we are living within our means if not -- for several months - maybe we should do some analysis.

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by dbr » Wed Jan 22, 2020 9:03 am

Is the problem spending or is the problem not understanding money and investments. The reason I ask is that when the issue becomes things like the difference between a paycheck and spending savings I don't think that is about spending but rather about the nature of savings. The obvious issue is the idea that you really can have negative savings rate, aka withdrawal from savings, and it is not a slippery slope to perdition.

Perhaps a shorter and more direct approach is to ask the question "If you aren't going to spend the money, what did you save it for?"

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by JoeRetire » Wed Jan 22, 2020 9:59 am

fishandgolf wrote:
Tue Jan 21, 2020 8:39 pm
My DW is planning to retire in June of this year...…….she is scared.....yes....she is scared stiff! The fear of not having that weekly check is troubling for her. For me...….I've been retired for 11 years.....not a big deal for me.....but seriously.....I am having a tough time convincing her that we are financially in great shape....and we are.

Is this a real dilemma for others or am I alone in this conundrum..…….???
When I retired at 60, my wife was scared. We have (and had at that time) more than enough money to live well on for the rest of our lives. If I were to die, she would have no financial problems. I ran all the numbers and walked through them with her. I brought her with me to visit our financial planner who explained it all to her. Still, it took a long time for her to wrap her head around the idea of retirement.

Her dad worked until he died in his 70s. Her brothers have worked while in retirement. She and I both grew up not having much money. We are both very frugal. I suspect all of this made her fearful. She can't seem to account for the fact that we had far more income than anyone in her family ever did, and are thus financially secure.

I've been retired for most of the past 5 years. She is working part time to "keep busy". Still, she asks "can we afford it" for the smallest things.

Sometimes, spouses have to learn to live with a situation, even if it worries them. Time will help.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by fishandgolf » Wed Jan 22, 2020 10:15 am

Cyclesafe wrote:
Wed Jan 22, 2020 8:52 am
Once ingrained, frugality is for life. It helped get you where you are and no matter how much you have accumulated, it gnaws away at the supposed joy of buying new things and experiences. Nevertheless, it must be respected as it is too much a part of whom many of us are.
Thanks BH's...very much appreciate your input. Yes...Cyclesafe…..you are absolutely correct! Her frugality is what got us to this point. I mentioned that her mother is very frugal....father-in-law was the same way. Her younger sister and her DH are that way also. What's interesting is observing some of the things they save. My DW will eat a 1/2 of a banana, fold the peel over, then save it and maybe eat it a day or two later......drives me crazy.

What's interesting is that I'm not really a frugal person, she is.....but we don't really argue about money. Been married 40+ years and that's never really been an issue. I wouldn't say I'm a spender …...but if I need or want something.....I get.

Back to the retirement thing. dbr…….she does not understand the investment side of things....but she does trusts me in what I'm doing. I think her fear is not getting that pay check and being able to stash a part of it away. She works in accounting so she understands money. She pays all our bills....so she sees the expenses.

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by Texanbybirth » Wed Jan 22, 2020 10:22 am

I recently introduced my parents to the "4% rule". I'm not sure how much they'll read up on it, but I gave them the gist because they were anxious about a 2-3% withdrawal for 2020. They have so much money it isn't funny, either will be fine if the other passes, but they continue to follow each other turning off lights, complaining when fruit is $0.50 more than they paid last week, etc. I'm so thankful to them I just laugh to myself, but I really wish they'd loosen the purse strings on themselves.

Frugality is a virtue, IMO, so I know it's a good problem to have. (The only place they're extravagant in is spoiling their grandchildren. :oops: )
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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by BarbBrooklyn » Wed Jan 22, 2020 10:55 am

Get a copy of Jane Bryant Quinn's How to Make Your Money Last in Retirement from the library for her.

It put my mind at ease. Perhaps it will do the same for her.
BarbBrooklyn | "The enemy of a good plan is the dream of a perfect plan."

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by fishandgolf » Wed Jan 22, 2020 11:51 am

Texanbybirth wrote:
Wed Jan 22, 2020 10:22 am
I recently introduced my parents to the "4% rule". I'm not sure how much they'll read up on it, but I gave them the gist because they were anxious about a 2-3% withdrawal for 2020. They have so much money it isn't funny, either will be fine if the other passes, but they continue to follow each other turning off lights, complaining when fruit is $0.50 more than they paid last week, etc. I'm so thankful to them I just laugh to myself, but I really wish they'd loosen the purse strings on themselves.

Frugality is a virtue, IMO, so I know it's a good problem to have. (The only place they're extravagant in is spoiling their grandchildren. :oops: )


+1000

Grand kids......there is very little frugality in practice when it comes to the grand kids! :)

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by fishandgolf » Wed Jan 22, 2020 11:57 am

BarbBrooklyn wrote:
Wed Jan 22, 2020 10:55 am
Get a copy of Jane Bryant Quinn's How to Make Your Money Last in Retirement from the library for her.

It put my mind at ease. Perhaps it will do the same for her.
I appreciate the suggestion but I doubt that she'd read it. I've tried to get her to read articles relative to this topic and she usually ignore them. She likes to read, but it's only fictional novels of some sort.

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by MathWizard » Wed Jan 22, 2020 12:01 pm

Dandy wrote:
Wed Jan 22, 2020 8:56 am
Depending on your ages, health and assets you might consider an immediate annuity to provide some paycheck-like monthly income. Also, you might want to have 2 or so years worth of expenses in a high yielding Savings account and 2X a month transfer money approximating your desired monthly drawdown into your checking account to mimic a paycheck.

I have my 2 pensions and SS sent to savings and do the 2 X a month transfers outlined above. It seems to act like a gentle budget - if I have money in our checking account at the end of the month -- we are living within our means if not -- for several months - maybe we should do some analysis.
In this case, I think that an annuity that would cover base expenses along with your other guaranteed income sources (SS, pensions, etc.)
would likely go a long way to increasing her income level. That way, she can know that you won't be starving and will have a roof over your head,
and that the investments can be used for discretionary expenses.

This is likely not optimal, but if it helps her sleep at night, it might be a good solution.

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by Sandtrap » Wed Jan 22, 2020 12:02 pm

JoeRetire wrote:
Wed Jan 22, 2020 9:59 am
fishandgolf wrote:
Tue Jan 21, 2020 8:39 pm
My DW is planning to retire in June of this year...…….she is scared.....yes....she is scared stiff! The fear of not having that weekly check is troubling for her. For me...….I've been retired for 11 years.....not a big deal for me.....but seriously.....I am having a tough time convincing her that we are financially in great shape....and we are.

Is this a real dilemma for others or am I alone in this conundrum..…….???
When I retired at 60, my wife was scared. We have (and had at that time) more than enough money to live well on for the rest of our lives. If I were to die, she would have no financial problems. I ran all the numbers and walked through them with her. I brought her with me to visit our financial planner who explained it all to her. Still, it took a long time for her to wrap her head around the idea of retirement.

Her dad worked until he died in his 70s. Her brothers have worked while in retirement. She and I both grew up not having much money. We are both very frugal. I suspect all of this made her fearful. She can't seem to account for the fact that we had far more income than anyone in her family ever did, and are thus financially secure.

I've been retired for most of the past 5 years. She is working part time to "keep busy". Still, she asks "can we afford it" for the smallest things.

Sometimes, spouses have to learn to live with a situation, even if it worries them. Time will help.
+1
Well said!
DW and I in a similar position. Frugal, retired.
Same conversations.
"Can we afford it'?"

Slowly, it's dawning on both of us. . . and the sunshine feels great!
j :D
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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by fishandgolf » Wed Jan 22, 2020 7:23 pm

JoeRetire wrote:
Wed Jan 22, 2020 9:59 am
fishandgolf wrote:
Tue Jan 21, 2020 8:39 pm
My DW is planning to retire in June of this year...…….she is scared.....yes....she is scared stiff! The fear of not having that weekly check is troubling for her. For me...….I've been retired for 11 years.....not a big deal for me.....but seriously.....I am having a tough time convincing her that we are financially in great shape....and we are.

Is this a real dilemma for others or am I alone in this conundrum..…….???
When I retired at 60, my wife was scared. We have (and had at that time) more than enough money to live well on for the rest of our lives. If I were to die, she would have no financial problems. I ran all the numbers and walked through them with her. I brought her with me to visit our financial planner who explained it all to her. Still, it took a long time for her to wrap her head around the idea of retirement.

Her dad worked until he died in his 70s. Her brothers have worked while in retirement. She and I both grew up not having much money. We are both very frugal. I suspect all of this made her fearful. She can't seem to account for the fact that we had far more income than anyone in her family ever did, and are thus financially secure.

I've been retired for most of the past 5 years. She is working part time to "keep busy". Still, she asks "can we afford it" for the smallest things.

Sometimes, spouses have to learn to live with a situation, even if it worries them. Time will help.
Thanks for the encouragement JoeRetire. I'm pretty certain my DW will come around....eventually. I think the added expenses of the new house caused her a little consternation. We're still not done with all the expenses for the house. Builder suggested that we not cement the driveway until spring......ground has to go through a freeze and thaw cycle (Wisconsin). That, along with landscaping will add to the final cost....which is more than we planned but....IMO....no problem. In her eyes.....she thinks she has to work until the end of the year to cover this cost. She doesn't....but she's still has yet to absorbed this. My push on her to retire in June is this...…..we have three grand kids....a 5 yo grand daughter...her mom travels much for her job....and two grand sons.....2 and 4. Their mom runs her own business and could really use some help. So.....I am trying to recruit my daughters to convince DW....it is time...………. :beer

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by fishandgolf » Wed Jan 22, 2020 7:43 pm

Royal Blue wrote:
Tue Jan 21, 2020 9:59 pm
Jonathan Clements blog humbledollar.com is a great place to pop in each day and snack on a nice tidbit of personal finance.
+1000

I enjoy Jonathan Clements' work.....always have. He has a keen perspective on this subject and......quite frankly......not too many other scribblers have it. I really liked his columns in the WSJ as well. He is a real scholar and I have a great respect for his work...…..

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by More Please » Wed Jan 22, 2020 8:44 pm

Jonathan Clemants definitely has his hand on the pulse of those decumulators who are struggling with ...decumulation. It is hard to reverse your thinking that may have been 50 years in the making. Spend on legitimate charities, grandchildren’s college educations, family vacations. These are more valuable than expensive cars you may have wanted in your 30’s but definitely don’t need in your 60’s. Life is an IQ test, spend wisely.

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by notPatience » Thu Jan 23, 2020 2:18 am

You said she pays the bills, so she's watching the money go out.

You do the investments, so you're watching the money build.

No wonder she's worried and you're not. <wg> Perhaps have her review that month's investment statement after each bill-paying session will help.

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by JoeRetire » Thu Jan 23, 2020 8:09 am

fishandgolf wrote:
Wed Jan 22, 2020 7:23 pm
My push on her to retire in June is this...…..we have three grand kids....a 5 yo grand daughter...her mom travels much for her job....and two grand sons.....2 and 4. Their mom runs her own business and could really use some help. So.....I am trying to recruit my daughters to convince DW....it is time...………. :beer
IMHO, it's best not to "push" someone to retire. That has the potential to raise resentment. She will get there when she is ready.

Maybe you could help with your grandchildren? Then your wife could see how much fun you are having and want to join you. (Grandchildren are the best!)

Envy is more powerful than resentment.

Good luck.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by HokeyPokey2020 » Thu Jan 23, 2020 8:38 am

Is this a real dilemma for others or am I alone in this conundrum..…….???
She is not alone. Many of us "savers" and "pay check" earners love saving and earning money. As Jonathan mentioned, more pleasure saving and earning by doing the things we love to do is a "good life". We do not need to spend to enjoy life.

Of course, "balance" is a good thing but our habits have been formed over the years. Fear is a motivator and demotivated for all of us and each of us handle in our own terms. Extreme fear is not a good thing and a social worker or psychologist may be helpful.

Working part time or as a volunteer may be part of the solution.

Reassurance with the net worth and the issues of change is important.

I understand her mental/emotional/financial needs and we want to avoid the "poor house" at all cost. Hope of our financials can overcome the fear of loss.

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by Rus In Urbe » Thu Jan 23, 2020 8:59 am

Two thoughts:

1. To everyone, let's keep clear the difference between Frugality and Cheapness.
Once ingrained, frugality is for life. It helped get you where you are and no matter how much you have accumulated, it gnaws away at the supposed joy of buying new things and experiences.
I disagree here: frugality should not take away the joy of spending----that is being cheap. Frugality does however make spending resources mindful and strategic. The mindless wasting of resources (and the resulting hedonic adaptation) is what most of our society seems to be addicted to, and for wasteful folks (not necessarily our fellow BH who posted this) it is in their best interests to call any efforts at conservation or mindful spending as taking away joy. Let's not let the virtue of frugality be so mischaracterized as joyless! Cheapness leads to misery; so does profligacy. I happen to be frugal----and utterly joyful; for me, the two go hand in hand.

2. To the OP, have you tried comparing your resources and outlook with the average American's? If you run those numbers for her and plot your own financial situation on a graph of how the rest of our country (or world) is doing, she might realize that you two are as safe as you can reasonably be. There's no guarantee of course, given the state of things (can't go into that here), that the whole house of cards might collapse into a heap----but presumably you would find yourselves along with the rest of the BH's somewhat near the top of that heap. The psychology of feeling economic "safety" and even "abundance" is that it tends to be relative to those around you, but that can be a selected group. Therefore, it's always worth considering to whom you are comparing yourself to economically----the choice can have great impact on how "safe" or "rich" one feels.

Countering fear is complicated.

Good luck in this! :sharebeer Rus
I'd like to live as a poor man with lots of money. ~Pablo Picasso

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by fishandgolf » Thu Jan 23, 2020 11:28 am

JoeRetire wrote:
Thu Jan 23, 2020 8:09 am
IMHO, it's best not to "push" someone to retire. That has the potential to raise resentment. She will get there when she is ready.

Good luck.
Thanks for the comment. I probably misstated that I am trying to "push" her into retirement. She really does want to retire....I'm just going to take it very slow and let her decide when it is time to pull the pin. A few of her friends recently retired and I think that's an impetus for her to want to join the ranks. She really wants to spend time with the grandkids....she knows that if she waits too long, she's gonna a miss a lot of being with them while they grow up.

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Re: 5 - Ways to help you spend your retirement savings - Wisely

Post by fishandgolf » Thu Jan 23, 2020 11:41 am

notPatience wrote:
Thu Jan 23, 2020 2:18 am
You said she pays the bills, so she's watching the money go out.

You do the investments, so you're watching the money build.

No wonder she's worried and you're not. <wg> Perhaps have her review that month's investment statement after each bill-paying session will help.
+1

Excellent point!

She keeps telling me that if only "I" was the one paying the bills, I might have a different perspective on our expenses. I would not be good at this.....she does an outstanding job with this and I would be the one to mess it up. She is like a pit bull if some how we got over charged for something....even if it's our fault. Every once it a great while she'll forget to enter payment for something.....doesn't happen often, but it does. :oops: If we get charged $5.00 for the late fee, she will call and pester them to get the $5.00 back.....and she always gets it back. For me....I'd just let it go. So I do appreciate her tenacity with bill paying......not my cup of tea though..... 8-)

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