Simple rule to not become a miser?

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Topic Author
ThankYouJack
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Re: Simple rule to not become a miser?

Post by ThankYouJack »

After reading the replies, it may mostly come down to comfort level. Some may feel comfortable once they hit 25x, others may not feel comfort until 50x. No right or wrong answer there.

Sandtrap wrote: Thu Nov 24, 2022 7:43 am
Question for you (op):
1
How much will you have on your retirement and/or at age 65?
100X?

2
What is a "miser" vs "frugal" vs "thrifty" etc, to you?
3
Does being more "spendy" satisfy what needs?

1. Probably 100x or more if I minimize spending, keep working and collect social security. That is not my goal.

2. For me, I would start to feel like a miser if I start hoarding wealth when I could easily help others...and never reaching the feeling of having enough.

3. Being more spendy would add some comfort. Maybe I should start with turning the thermostat up one degree in the winter :D
praxis wrote: Thu Nov 24, 2022 9:50 am Make a personal list. Call it "Cheap Riches", or "Things I'm Grateful For". Make it real long. Fill it with things that make you happy.
Great list :beer I'm a pretty grateful person so not sure I need a daily reminder of life's small pleasures. I don't think it needs to be "Cheap Riches" because on the "Things I'm Grateful For" list would be being having a great amount of wealth, my job, the most expensive purchase of my life (my house), my car, my health.
Marseille07
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Re: Simple rule to not become a miser?

Post by Marseille07 »

ThankYouJack wrote: Thu Nov 24, 2022 10:41 am After reading the replies, it may mostly come down to comfort level. Some may feel comfortable once they hit 25x, others may not feel comfort until 50x. No right or wrong answer there.
It has little to do with feeling comfortable. I feel comfortable at 25x but I do not donate every dollar to use up 4% in full, let alone 5%. However I do carry a donation budget irrespective of 25x.

In fact if you really want to Die with Zero then you want to explore VPW, as it'd go a lot higher than mere 5%.
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JPM
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Re: Simple rule to not become a miser?

Post by JPM »

Has helped DW and me to donate to educational institutions for equipment that enriches the educational offerings ofthe institutions. We were besieged by an endless traffic of fund-raising efforts and now we just say that we are limiting our gifts to educational institutions.
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TheTimeLord
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Re: Simple rule to not become a miser?

Post by TheTimeLord »

Marseille07 wrote: Thu Nov 24, 2022 11:34 am
ThankYouJack wrote: Thu Nov 24, 2022 10:41 am After reading the replies, it may mostly come down to comfort level. Some may feel comfortable once they hit 25x, others may not feel comfort until 50x. No right or wrong answer there.
It has little to do with feeling comfortable. I feel comfortable at 25x but I do not donate every dollar to use up 4% in full, let alone 5%. However I do carry a donation budget irrespective of 25x.

In fact if you really want to Die with Zero then you want to explore VPW, as it'd go a lot higher than mere 5%.
In all honesty I need to read the Wiki on VPW because from my very rudimentary understanding of VPW it does the opposite of what I aspire to which is maximizing my early retirement years when I am most active and healthy.
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ThankYouJack
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Re: Simple rule to not become a miser?

Post by ThankYouJack »

Marseille07 wrote: Thu Nov 24, 2022 11:34 am
ThankYouJack wrote: Thu Nov 24, 2022 10:41 am After reading the replies, it may mostly come down to comfort level. Some may feel comfortable once they hit 25x, others may not feel comfort until 50x. No right or wrong answer there.
It has little to do with feeling comfortable.
I don’t mean day to day comfort but comfort that you won’t run out of money at some point in your life.

Eventually one either has to spend it or give it away and I’m ok with spending/giving more than I have in the past.
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Re: Simple rule to not become a miser?

Post by Marseille07 »

TheTimeLord wrote: Thu Nov 24, 2022 2:51 pm In all honesty I need to read the Wiki on VPW because from my very rudimentary understanding of VPW it does the opposite of what I aspire to which is maximizing my early retirement years when I am most active and healthy.
That's exactly what it does. It starts off with 5% WR (this depends on your age and AA) and goes *higher*. It means it'd front-load your spending early, your portfolio goes sideways nominally then eventually depletes.

It's not my cup of tea but it fits well for those front-loaders.
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Marseille07
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Re: Simple rule to not become a miser?

Post by Marseille07 »

ThankYouJack wrote: Thu Nov 24, 2022 2:58 pm I don’t mean day to day comfort but comfort that you won’t run out of money at some point in your life.

Eventually one either has to spend it or give it away and I’m ok with spending/giving more than I have in the past.
Then I'm not sure if 5% is your answer. Yes, you technically do not run out of money, but 5% spent in full every year could lower your portfolio to the point of not generating enough withdrawals.

Personally I'd feel a lot more comfortable using 4% in full or 3% in full, and there's no rational reason why your WR has to be above 4%.
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TheTimeLord
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Re: Simple rule to not become a miser?

Post by TheTimeLord »

Marseille07 wrote: Thu Nov 24, 2022 2:59 pm
TheTimeLord wrote: Thu Nov 24, 2022 2:51 pm In all honesty I need to read the Wiki on VPW because from my very rudimentary understanding of VPW it does the opposite of what I aspire to which is maximizing my early retirement years when I am most active and healthy.
That's exactly what it does. It starts off with 5% WR (this depends on your age and AA) and goes *higher*. It means it'd front-load your spending early, your portfolio goes sideways nominally then eventually depletes.

It's not my cup of tea but it fits well for those front-loaders.
I don't see that way, especially if you are someone delaying SS for several years and know the WR you will need will drop substantially once you start receiving your benefit. Are looking at the table in the Wiki?

https://www.bogleheads.org/wiki/Variabl ... withdrawal
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Marseille07
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Re: Simple rule to not become a miser?

Post by Marseille07 »

TheTimeLord wrote: Thu Nov 24, 2022 3:07 pm I don't see that way, especially if you are someone delaying SS for several years and know the WR you will need will drop substantially once you start receiving your benefit. Are looking at the table in the Wiki?

https://www.bogleheads.org/wiki/Variabl ... withdrawal
Yes that's the table I'm talking about.

Front-loading means you spend a high percentage of your portfolio early on. I don't see how else you can front-load spending.

Also, when you're using VPW, your "WR need" doesn't really drop much because your portfolio doesn't grow and can even shrink as you take out 6%~8%/year. You can't just drop your WR to 2% when you receive SS; you likely have to draw 5% instead of 8%, for example. But that's just unavoidable when you front-load your spending early on.
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SnowBog
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Re: Simple rule to not become a miser?

Post by SnowBog »

Marseille07 wrote: Thu Nov 24, 2022 3:16 pm
TheTimeLord wrote: Thu Nov 24, 2022 3:07 pm I don't see that way, especially if you are someone delaying SS for several years and know the WR you will need will drop substantially once you start receiving your benefit. Are looking at the table in the Wiki?

https://www.bogleheads.org/wiki/Variabl ... withdrawal
Yes that's the table I'm talking about.

Front-loading means you spend a high percentage of your portfolio early on. I don't see how else you can front-load spending.

Also, when you're using VPW, your "WR need" doesn't really drop much because your portfolio doesn't grow and can even shrink as you take out 6%~8%/year. This person can't just drop their WR to 2% when they receive SS (though they can certainly *lower* WR, it might not be a big drop). But that's just unavoidable when you front-load your spending early on.
Couple of clarifying points...

Specifically, one shouldn't "compare" the WR of SWR and VPW.

The typical 4% WR of SWR applies only to the initial withdrawal, after which it is updated with inflation - and as a % of portfolio could be significantly more - or less - than VPW. It's goal is to attempt to "normalize" spending, such as spend the inflation adjusted equivalent of $x each year. Most likely, you'll leave behind a large portfolio when you die, but if you catch a bad sequence of returns and don't adjust you could end up broke.

The variable WR of VPW can change every year (based on age), but is applied every withdrawal against the portfolio - this the withdrawal amount will vary as the portfolio balance varies. It's designed to not prematurely deplete the portfolio (although it will reduce the amount available to spend if needed) but also to avoid leaving you with a large unspent balance.

As a gross generalization, under "normal" conditions VPW will let you spend more annually and have a smaller ending balance.

The VPW spreadsheet simplifies the process, and accounts for things like social security - where you'll need to "replace" the social security money during earlier years with withdrawals from the portfolio, which will be balanced by smaller withdrawals when social security kicks in.

But I'm not sure I'd call this "front loading". Again, it's likely more than SWR, but it's still a reflection of the portfolio with the intent of "lifetime" spending. There's nothing inherent in VPW that will force a "higher" early spend (for more travel/etc. while younger/healthier) and a "reduced" later spend (when you reduce travel). VPW can guide your withdrawals and be used per OP as a "rule" to prevent being a "miser", as you could spend (inclusive of taxes) or gift/donate the suggested withdrawal amount. But if you want to budget for and spend "more" in your early retirement years, VPW alone isn't going to give you a good view of how that works for your plan.
Last edited by SnowBog on Thu Nov 24, 2022 4:24 pm, edited 1 time in total.
shess
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Re: Simple rule to not become a miser?

Post by shess »

bh1 wrote: Wed Nov 23, 2022 7:38 pm My rule is that there are two kinds of problems: those that can be solved with money and the other kind. Is you encounter a problem that can be solved with money, just do it. Mechanic says the car needs five random repairs? Just fix it! Ordered the wrong thing in a restaurant? Just order what you wanted and pay for both! Hotel $400 a night? Whatevs! Waist thickening up? Fly business class. No reservation? Here's a $100 bill! Just get the unlimited phone plan. This is what spare money buys.
To me, this is the way. Don't look for ways to spend your money, look for things already in your life you can improve by applying money. For instance, as some point I decided to just buy gas at the station near the house. The prices are not great, I could definitely do better by going to Costco or wherever, but I decided that the monetary gain wasn't worth the mental accounting. In exchange for spending more money, I don't waste any mental effort on planning gas purchases. Likewise, at some point I told my wife to stop trying to save a bit of money on hotels, because I got tired of having every fourth or fifth outing end up at a semi-nasty place. I'd rather spend an extra $50 or $100 per night to not have to worry about it.

Of course, gauge this to your spending habits. We don't really enjoy eating at super expensive restaurants in the first place, so when we decided to be less concerned about money when eating out, we were in no danger of spending ourselves into penury. But if you're the kind of person who really enjoys $250 meals, an anything-goes approach might not be great!
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Re: Simple rule to not become a miser?

Post by Marseille07 »

SnowBog wrote: Thu Nov 24, 2022 3:55 pm Couple of clarifying points...

Specifically, one shouldn't "compare" the WR of SWR and VPW.

The typical 4% WR of SWR applies only to the initial withdrawal, after which it is updated with inflation - and as a % of portfolio could be significantly more - or less - than VPW. It's goal is to attempt to "normalize" spending, such as spend the inflation adjusted equivalent of $x each year. Most likely, you'll leave behind a large portfolio when you die, but if you catch a bad sequence of returns and don't adjust you could end up broke.

The variable WR of VPW can change every year (based on age), but is applied every withdrawal against the portfolio - this the withdrawal amount will vary as the portfolio balance varies. It's designed to not prematurely deplete the portfolio (although it will reduce the amount available to spend if needed) but also to avoid leaving you with a large unspent balance.

As a gross generalization, under "normal" conditions VPW will let you spend more annually and have a smaller ending balance.

The VPW spreadsheet simplifies the process, and accounts for things like social security - where you'll need to "replace" the social security money during earlier years with withdrawals from the portfolio, which will be balanced by smaller withdrawals when social security kicks in.

But I'm not sure I'd call this "front loading". Again, it's likely more than SWR, but it's still a reflection of the portfolio with the intent of "lifetime" spending. There's nothing inherent in VPW that will force a "higher" early spend (for more travel/etc. while younger/healthier) and a "reduced" later spend (when you reduce travel). VPW can guide your withdrawals and be used per OP as a "rule" to prevent being a "miser", as you could spend (inclusive of taxes) or gift/donate the suggested withdrawal amount. But if you want to budget for and spend "more" in your early retirement years, VPW alone isn't going to give you a good view of how that works for your plan.
I don't want to get into the definition of what is front-loading and what isn't, but "it's likely more than SWR" is basically the idea of front-loading. I'm aware there's no assurance that would end up happening, but VPW makes its best effort to make it happen.

I actually wonder why ABW doesn't receive more attention. Instead of depleting in the end like VPW, I believe it allows you to specify how much legacy you want to leave behind, which seems more flexible to me.
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Re: Simple rule to not become a miser?

Post by SnowBog »

Marseille07 wrote: Thu Nov 24, 2022 4:12 pm
SnowBog wrote: Thu Nov 24, 2022 3:55 pm Couple of clarifying points...

Specifically, one shouldn't "compare" the WR of SWR and VPW.

The typical 4% WR of SWR applies only to the initial withdrawal, after which it is updated with inflation - and as a % of portfolio could be significantly more - or less - than VPW. It's goal is to attempt to "normalize" spending, such as spend the inflation adjusted equivalent of $x each year. Most likely, you'll leave behind a large portfolio when you die, but if you catch a bad sequence of returns and don't adjust you could end up broke.

The variable WR of VPW can change every year (based on age), but is applied every withdrawal against the portfolio - this the withdrawal amount will vary as the portfolio balance varies. It's designed to not prematurely deplete the portfolio (although it will reduce the amount available to spend if needed) but also to avoid leaving you with a large unspent balance.

As a gross generalization, under "normal" conditions VPW will let you spend more annually and have a smaller ending balance.

The VPW spreadsheet simplifies the process, and accounts for things like social security - where you'll need to "replace" the social security money during earlier years with withdrawals from the portfolio, which will be balanced by smaller withdrawals when social security kicks in.

But I'm not sure I'd call this "front loading". Again, it's likely more than SWR, but it's still a reflection of the portfolio with the intent of "lifetime" spending. There's nothing inherent in VPW that will force a "higher" early spend (for more travel/etc. while younger/healthier) and a "reduced" later spend (when you reduce travel). VPW can guide your withdrawals and be used per OP as a "rule" to prevent being a "miser", as you could spend (inclusive of taxes) or gift/donate the suggested withdrawal amount. But if you want to budget for and spend "more" in your early retirement years, VPW alone isn't going to give you a good view of how that works for your plan.
I don't want to get into the definition of what is front-loading and what isn't, but "it's likely more than SWR" is basically the idea of front-loading. I'm aware there's no assurance that would end up happening, but VPW makes its best effort to make it happen.

I actually wonder why ABW doesn't receive more attention. Instead of depleting in the end like VPW, I believe it allows you to specify how much legacy you want to leave behind, which seems more flexible to me.
Agreed - VPW is likely to better meet the stated goal here versus SWR. But there's nothing inherent about VPW to "front load" expenses... It's just that VPW will show a higher withdrawal if your portfolio supports it (and conversely a lower withdrawal in bad times).

As for ABW, as I understated it, it's "newer" and last I looked, less mature/developed. But that last point is highly subjective based on the elegant and powerful VPW spreadsheet vs. the ABW alternative. I could see my spouse following VPW - I couldn't see them following ABW. But there is a thread on it, and several people who like the extra "flexibility" and intend on using it.

As far as leaving a "legacy" behind, that's not incompatibile with VPW. Quite the opposite, it would be very easy to do. Just exclude what you intend to give from your portfolio. For example, if you have $1.5M - but intend to leave behind say $250k, then just use $1.25M for your portfolio balance in VPW. You could even add this to the spreadsheet, one or two new cells and maybe a quick formula (such as add a "legacy" field and a "pre-legacy portfolio" field then replace the current portfolio value with a formula "=pre-legacy - legacy" using the cell references). Personally, I'm not concerned by this. The reality is most of us will die before the end of our plans (as most of us likely plan to 95+, well beyond our life expectancies). Combine that with the VPW spreadsheet capping withdrawals at 10% and our minimal portfolio withdrawals after retirement "income" kicks in, and it's highly likely our heir(s) will have a sizable balance left to them without any further action on our part.
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Re: Simple rule to not become a miser?

Post by Marseille07 »

SnowBog wrote: Thu Nov 24, 2022 4:46 pm Agreed - VPW is likely to better meet the stated goal here versus SWR. But there's nothing inherent about VPW to "front load" expenses... It's just that VPW will show a higher withdrawal if your portfolio supports it (and conversely a lower withdrawal in bad times).

As for ABW, as I understated it, it's "newer" and last I looked, less mature/developed. But that last point is highly subjective based on the elegant and powerful VPW spreadsheet vs. the ABW alternative. I could see my spouse following VPW - I couldn't see them following ABW. But there is a thread on it, and several people who like the extra "flexibility" and intend on using it.

As far as leaving a "legacy" behind, that's not incompatibile with VPW. Quite the opposite, it would be very easy to do. Just exclude what you intend to give from your portfolio. For example, if you have $1.5M - but intend to leave behind say $250k, then just use $1.25M for your portfolio balance in VPW. You could even add this to the spreadsheet, one or two new cells and maybe a quick formula (such as add a "legacy" field and a "pre-legacy portfolio" field then replace the current portfolio value with a formula "=pre-legacy - legacy" using the cell references). Personally, I'm not concerned by this. The reality is most of us will die before the end of our plans (as most of us likely plan to 95+, well beyond our life expectancies). Combine that with the VPW spreadsheet capping withdrawals at 10% and our minimal portfolio withdrawals after retirement "income" kicks in, and it's highly likely our heir(s) will have a sizable balance left to them without any further action on our part.
Yeah, I suppose one could exclude the legacy upfront. Of course, the challenge is to keep it inflation-adjusted, as maintaining the same 250K would depreciate over time.
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AnnetteLouisan
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Re: Simple rule to not become a miser?

Post by AnnetteLouisan »

I’ve actually been thinking too, with all the investing I’m doing of large amounts ($5-20k per month in taxable alone)- hey, what if I actually spent some of this too? I doubt I could spend $5-10k if I tried. Except on travel.

When I buy stuff it’s usually around $150-180 for like ten items. I guess fancy jewelry would be $5-10k. Or a massive wardrobe. But I don’t feel any pressure to spend until I need or want something.
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Re: Simple rule to not become a miser?

Post by baconavocado »

I haven't read all the comments but I disagree with the premise, that you have to spend a certain amount per year. This is like forced consumption. What the planet needs now is less consumption. Spend what you need to spend to live a happy life, no more and no less.
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Re: Simple rule to not become a miser quasi

Post by Parkinglotracer »

dknightd wrote: Thu Nov 24, 2022 9:02 am You've seen those people with cardboard signs at intersections. I once offered one a job helping me clean up the yard. I offered $20/hour. And lunch. They said sorry, I make more money doing this. I admit. This has soured my willingness to donate money. I still donate to PBS and local food bank. Spouse donates through the church.
Perhaps my offer was too miserly?
I bought a street side beggers sign for $20 dollars once. It was a neat souvenir to have.
Last edited by Parkinglotracer on Thu Nov 24, 2022 9:29 pm, edited 1 time in total.
Topic Author
ThankYouJack
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Re: Simple rule to not become a miser?

Post by ThankYouJack »

baconavocado wrote: Thu Nov 24, 2022 5:46 pm I haven't read all the comments but I disagree with the premise, that you have to spend a certain amount per year. This is like forced consumption. What the planet needs now is less consumption. Spend what you need to spend to live a happy life, no more and no less.
I don't think spending more means consuming more. In fact, it could mean consuming less. Simplest example is my next car may be a more expensive EV compared to an ICE. I could also look into installing solar panels, buy quality over quantity (especially toys and food), spend on memberships and services, give more generously...
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Re: Simple rule to not become a miser?

Post by Parkinglotracer »

I try to always buy the first round.
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Re: Simple rule to not become a miser?

Post by Marseille07 »

ThankYouJack wrote: Thu Nov 24, 2022 8:51 pm I don't think spending more means consuming more. In fact, it could mean consuming less. Simplest example is my next car may be a more expensive EV compared to an ICE. I could also look into installing solar panels, buy quality over quantity (especially toys and food), spend on memberships and services, give more generously...
The issue is that you think low WR% = a miser and have to spend a higher % not to be a miser.

I think this mentality not only misses a point but risks your portfolio. If Person A spends 3% on 5M, arguably Person A is more generous than Person B spending 5% on 2M.
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ThankYouJack
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Re: Simple rule to not become a miser?

Post by ThankYouJack »

Marseille07 wrote: Fri Nov 25, 2022 2:20 pm
ThankYouJack wrote: Thu Nov 24, 2022 8:51 pm I don't think spending more means consuming more. In fact, it could mean consuming less. Simplest example is my next car may be a more expensive EV compared to an ICE. I could also look into installing solar panels, buy quality over quantity (especially toys and food), spend on memberships and services, give more generously...
The issue is that you think low WR% = a miser and have to spend a higher % not to be a miser.

I think this mentality not only misses a point but risks your portfolio. If someone's spending 3% on 5M, they're more generous than someone spending 5% on 2M.
I think you're taking it too literally. I don't think everyone with a low WR% = miser. I'm just creating a guideline for myself to feel comfortable spending more.

I'm not as concerned about portfolio risk especially with a 5% fixed withdrawal spending rate. I say spending rate because I'm still in accumulation phase so not withdrawing from my portfolio.

We just look at things differently. It's against your philosophy to die with zero, but it wouldn't both me as much. If I die with millions great. But if I can give away the same amount while alive - even better.
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Re: Simple rule to not become a miser?

Post by Marseille07 »

ThankYouJack wrote: Fri Nov 25, 2022 3:43 pm I think you're taking it too literally. I don't think everyone with a low WR% = miser. I'm just creating a guideline for myself to feel comfortable spending more.

I'm not as concerned about portfolio risk especially with a 5% fixed withdrawal spending rate. I say spending rate because I'm still in accumulation phase so not withdrawing from my portfolio.

We just look at things differently. It's against your philosophy to die with zero, but it wouldn't both me as much. If I die with millions great. But if I can give away the same amount while alive - even better.
If you're really looking to die with zero then you might want to look at VPW or a flavor of 1/N methods. These methods ensure that you will deplete your portfolio at age X of your choice. The WR% goes much higher than 5% also.
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ThankYouJack
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Re: Simple rule to not become a miser?

Post by ThankYouJack »

Marseille07 wrote: Fri Nov 25, 2022 3:56 pm
ThankYouJack wrote: Fri Nov 25, 2022 3:43 pm I think you're taking it too literally. I don't think everyone with a low WR% = miser. I'm just creating a guideline for myself to feel comfortable spending more.

I'm not as concerned about portfolio risk especially with a 5% fixed withdrawal spending rate. I say spending rate because I'm still in accumulation phase so not withdrawing from my portfolio.

We just look at things differently. It's against your philosophy to die with zero, but it wouldn't both me as much. If I die with millions great. But if I can give away the same amount while alive - even better.
If you're really looking to die with zero then you might want to look at VPW or a flavor of 1/N methods. These methods ensure that you will deplete your portfolio at age X of your choice. The WR% goes much higher than 5% also.
Dying with zero isn't a goal, but maybe it would be if I knew how long I was going to live.

I don't like how VPW starts low and ramps up. And of course not knowing when I'll die those methods don't ensure I would die with zero. I'm not a fan of annuities either.
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Re: Simple rule to not become a miser?

Post by Marseille07 »

ThankYouJack wrote: Fri Nov 25, 2022 5:17 pm Dying with zero isn't a goal, but maybe it would be if I knew how long I was going to live.

I don't like how VPW starts low and ramps up. And of course not knowing when I'll die those methods don't ensure I would die with zero. I'm not a fan of annuities either.
Just be careful with 5% WR. You might feel like you're being generous but it might just mean that you retired too early. 100K/year of expenses only require 2M saved up at 5%.
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Re: Simple rule to not become a miser?

Post by michaeljc70 »

It is hard to say whether 5% is a good rule not knowing at what age you plan to start doing this and how much you will have saved. If you have 50x-100x expenses saved, 5% is not going to make a dent in it. I think having a goal to shift your mindset is not a bad idea, but as others said if you are just spending to spend and not getting any enjoyment out of it, you probably need to rethink things.

Old habits are hard to break, but start small. Consider getting the next level or two better when you buy something if you think you will get some comfort or enjoyment out of it. Add a day or two onto a vacation.` Try a better scotch or wine. Try a better hotel. Buy a better computer or cell phone when time to replace them. Take people whose company you enjoy out for a nice dinner. Try a better restaurant than you might normally go to. You don't have to go from driving a 1993 Accord to driving a Ferrari.
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Re: Simple rule to not become a miser?

Post by pennywise »

bh1 wrote: Wed Nov 23, 2022 7:38 pm My rule is that there are two kinds of problems: those that can be solved with money and the other kind. Is you encounter a problem that can be solved with money, just do it. Mechanic says the car needs five random repairs? Just fix it! Ordered the wrong thing in a restaurant? Just order what you wanted and pay for both! Hotel $400 a night? Whatevs! Waist thickening up? Fly business class. No reservation? Here's a $100 bill! Just get the unlimited phone plan. This is what spare money buys.
I can’t take credit for originating this, but my rule is if money can fix it, it’s not a problem. Over the past few years life has definitely reinforced this for me, especially the loss of my brother-in-law.

A frugal engineer for his entire 40+ year career, he finally retired and moved to his dream house in a beautiful community, remodeled it to perfection for him and his wife and then was diagnosed with a terminal illness.

Money couldn’t do anything to help him enjoy his life for one day longer then five years almost to the day from when he retired. And his widow would give everything he left to her to have just one more of those days back with him.

So for me it is so important to keep in mind that money itself means nothing.

OP, resolve how you will use money to enrich your life and those of the people you care about, or the causes you believe in, and you can solve the problem of being a miser.
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Re: Simple rule to not become a miser?

Post by Charon »

Marseille07 wrote: Thu Nov 24, 2022 2:59 pm
TheTimeLord wrote: Thu Nov 24, 2022 2:51 pm In all honesty I need to read the Wiki on VPW because from my very rudimentary understanding of VPW it does the opposite of what I aspire to which is maximizing my early retirement years when I am most active and healthy.
That's exactly what it does. It starts off with 5% WR (this depends on your age and AA) and goes *higher*. It means it'd front-load your spending early, your portfolio goes sideways nominally then eventually depletes.

It's not my cup of tea but it fits well for those front-loaders.
No... VPW might front load - if the market does worse than expected long term. If the market does better long term, than VPW back loads. Run some cFIREsim calculations if this doesn't make sense you you - you can adjust the rate of return and see how VPW responds. (VPW doesn't incorporate a variable rate of return like ABW does, so what you're doing is setting the actual return to higher or lower than is built into VPW.)

It's a good approach to determine "permission to spend" for those who have no interest in leaving a sizable legacy.
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Re: Simple rule to not become a miser?

Post by joe8d »

rich126 wrote: Wed Nov 23, 2022 10:47 am Some people are spenders, some are savers and some are in between. This idea of rules to change behaviors don't work IMO. It is like the poster who wanted to prevent themselves from streaming videos while they are supposed to be working. Unless someone else is enforcing the behavior it doesn't work.
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Re: Simple rule to not become a miser?

Post by Marseille07 »

Charon wrote: Fri Nov 25, 2022 9:40 pm No... VPW might front load - if the market does worse than expected long term. If the market does better long term, than VPW back loads. Run some cFIREsim calculations if this doesn't make sense you you - you can adjust the rate of return and see how VPW responds. (VPW doesn't incorporate a variable rate of return like ABW does, so what you're doing is setting the actual return to higher or lower than is built into VPW.)

It's a good approach to determine "permission to spend" for those who have no interest in leaving a sizable legacy.
I'm not going to cover all the possibilities every time I discuss VPW. VPW is likely to front-load but it is not a guarantee.
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Re: Simple rule to not become a miser?

Post by Charon »

Marseille07 wrote: Sat Nov 26, 2022 1:10 am I'm not going to cover all the possibilities every time I discuss VPW. VPW is likely to front-load but it is not a guarantee.
Nope. Only under your particular market assumptions. Using something very close to historical averages, it's designed to be flat: https://www.cfiresim.com/2669e121-8b0f- ... 7199d4d2d9
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Re: Simple rule to not become a miser?

Post by Marseille07 »

Charon wrote: Sat Nov 26, 2022 12:08 pm Nope. Only under your particular market assumptions. Using something very close to historical averages, it's designed to be flat: https://www.cfiresim.com/2669e121-8b0f- ... 7199d4d2d9
:oops: I'm fully aware of that (nice images btw). And that's front-loading, *relative to other sound withdrawal methods*.

Front-loading doesn't mean you go ahead and splash 1M out of 2M in year 1.
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Re: Simple rule to not become a miser?

Post by SnowBog »

Marseille07 wrote: Sat Nov 26, 2022 12:14 pm
Charon wrote: Sat Nov 26, 2022 12:08 pm Nope. Only under your particular market assumptions. Using something very close to historical averages, it's designed to be flat: https://www.cfiresim.com/2669e121-8b0f- ... 7199d4d2d9
:oops: I'm fully aware of that (nice images btw). And that's front-loading, *relative to other sound withdrawal methods*.

Front-loading doesn't mean you go ahead and splash 1M out of 2M in year 1.
I think many of us must have a different opinion of what "front loading" means. And VPW does not fit that definition.

But if you limit your definition to "potentially spend more than SWR" - then sure, under "normal" conditions VPW will have a higher withdrawal than SWR.

But that happens the first year, and all subsequent years (again under normal conditions) - no "front loading" (which generally implies "more early on and less later").

The tradeoff of course, is that if the markets (your particular sequence of returns) do poorly, you are required to spend less - potentially less than SWR would have suggested.

If someone truly wants to "front load", in the sense of increasing their expenses (and thus withdrawals) in their early retirement years, and then decreasing them later in life, neither SWR or VPW alone will help them accomplish this, as neither are designed for this sort of scenario.
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Re: Simple rule to not become a miser?

Post by Marseille07 »

SnowBog wrote: Sat Nov 26, 2022 1:24 pm I think many of us must have a different opinion of what "front loading" means. And VPW does not fit that definition.

But if you limit your definition to "potentially spend more than SWR" - then sure, under "normal" conditions VPW will have a higher withdrawal than SWR.

But that happens the first year, and all subsequent years (again under normal conditions) - no "front loading" (which generally implies "more early on and less later").

The tradeoff of course, is that if the markets (your particular sequence of returns) do poorly, you are required to spend less - potentially less than SWR would have suggested.

If someone truly wants to "front load", in the sense of increasing their expenses (and thus withdrawals) in their early retirement years, and then decreasing them later in life, neither SWR or VPW alone will help them accomplish this, as neither are designed for this sort of scenario.
I think we're on the same page.

I'm just using common sense in the perspective of discussing retirement planning. We both probably know that no sane withdrawal method starts off with 10%/year and goes lower. Not that it's impossible, but it is a bad idea in terms of facing SORR and all that jazz.

Therefore, when we actually discuss front-loading, we're discussing *relatively* with respect to other withdrawal methods.

And I'm fully aware VPW doesn't guarantee the front-loading behavior, it's just that that's what's likely to end up happening.
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Re: Simple rule to not become a miser?

Post by michaeljc70 »

I don't see how a VPW is going to help much in this situation. If you are in the habit of spending very little you probably aren't going to suddenly start spending like crazy because a spreadsheet says you can. I don't think this is a math problem.
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Re: Simple rule to not become a miser?

Post by delamer »

michaeljc70 wrote: Sat Nov 26, 2022 1:46 pm I don't see how a VPW is going to help much in this situation. If you are in the habit of spending very little you probably aren't going to suddenly start spending like crazy because a spreadsheet says you can. I don't think this is a math problem.
To a large extent, it isn’t a math problem.

However, one mental exercise that I’ve found helpful when considering buying something that is priced out of my normal comfort zone is asking:

1. What percentage of my net worth is this?
2. What percentage of my annual income is this?

Looking back to my younger days, I realized my frugality caused me to have anxiety about some purchases to the point that I denied myself small pleasures unnecessarily.

Doing the math allays that anxiety for me.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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Re: Simple rule to not become a miser?

Post by TheTimeLord »

SnowBog wrote: Sat Nov 26, 2022 1:24 pm
Marseille07 wrote: Sat Nov 26, 2022 12:14 pm
Charon wrote: Sat Nov 26, 2022 12:08 pm Nope. Only under your particular market assumptions. Using something very close to historical averages, it's designed to be flat: https://www.cfiresim.com/2669e121-8b0f- ... 7199d4d2d9
:oops: I'm fully aware of that (nice images btw). And that's front-loading, *relative to other sound withdrawal methods*.

Front-loading doesn't mean you go ahead and splash 1M out of 2M in year 1.
I think many of us must have a different opinion of what "front loading" means. And VPW does not fit that definition.

But if you limit your definition to "potentially spend more than SWR" - then sure, under "normal" conditions VPW will have a higher withdrawal than SWR.

But that happens the first year, and all subsequent years (again under normal conditions) - no "front loading" (which generally implies "more early on and less later").

The tradeoff of course, is that if the markets (your particular sequence of returns) do poorly, you are required to spend less - potentially less than SWR would have suggested.

If someone truly wants to "front load", in the sense of increasing their expenses (and thus withdrawals) in their early retirement years, and then decreasing them later in life, neither SWR or VPW alone will help them accomplish this, as neither are designed for this sort of scenario.
Exactly, then add into that early retirees or retirees that delay SS until 70 and it quickly becomes obvious the early year withdrawal rates will likely need be significantly higher than the later year rates when various income streams become available. All that is before any effort at front loading to enjoy your early retiree years. I just don't see how this all fits into one simple methodology. I finally decided to implement separate portfolios in an effort to address the issues plus make sure I was taking steps to protect our early years from SORR.

Pretty sure I have seen several posts from BH who say SS cover most or all of their expenses. Also, don't forget about over savers or people who just enjoyed a 10+ year bull market.
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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