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THIS HAS BEEN A YEAR of living large in the Kerr household.
I just finished adding up the numbers for 2024, and between my son’s wedding in Colorado in June, my own wedding in October, our honeymoon afterward, a vacation to Key West, a new car for my new wife, and various long-overdue repairs to Rachael’s townhouse, I spent upwards of $60,000 on items I hadn’t budgeted for in 2024.
The tally doesn’t include the $9,000 I spent on a hot tub for the mountain house. That purchase was financed by the last of my restricted stock grants that I took with me when I retired from my former employer three years ago.
Those are hefty expenses for a 65-year-old who is no longer employed full-time. All I can say is, thank goodness for my part-time gig as a writer for corporate executives. If I didn’t have that money coming in, I would have burned through most of my liquid cash and had to tap my retirement savings earlier than planned. As it stands, I was able to cover my financial splurges, while ending 2024 with roughly the same amount of cash as I started.
More to the point, if I didn’t have the work income, I wouldn’t have done all the things I did over the past year. Rachael and I would have had a much simpler and less expensive wedding. We would have put down less and financed more of the cost of her new car. We would have skipped the Key West trip and put off the house repairs a little longer.
But that’s why I continue to work part-time—to fund experiences and other discretionary items during the early part of my golden years, while I hold off drawing down my retirement savings. Those savings are sufficient (knock on wood) to provide a comfortable, albeit not cushy, income over the course of a 20- to 25-year retirement. I figure the longer I can delay tapping retirement savings, the longer they’ll last me in my later years.
The same is true for Social Security benefits. While I could begin drawing benefits now, I’d take a hefty haircut compared to what I could get if I wait until my full retirement age of 66 years and 10 months. On top of that, I’d have to pay higher taxes on my Social Security benefits because of my earned income, and I might lose much or all of my benefit to the Social Security earnings test. So, why not wait another year and a half and thereby avoid the haircut?
In the meantime, I’m acutely aware of time’s winged chariot at my back and I have no interest in postponing trips and experiences I’ve long wanted to do. As Jonathan’s recent cancer diagnosis has brought home to HumbleDollar readers, life is fragile and we best live it now.
That’s what I’m doing with my current income. I could try to sock some of it away. But frankly, I’m done with the accumulation phase of my life. As long as I can maintain a healthy emergency fund in my money market account, I intend to spend every after-tax penny I make on trips, gifts and, yes, occasional luxuries. I’ve worked hard all my life. Why not enjoy it while I can?
Take our wedding celebration in mid-October. Yes, we could have made a trip to the courthouse and saved more than $15,000. But what an event it was. We had 90 relatives and friends from as far away as Hawaii and England. How often does that happen—other than at wakes and funerals?
Likewise on getting a hot tub. I’ve always wanted one, and soaking in that tub for 20 minutes does wonders for my aching neck and joints.
Interestingly, retirement has taught me a few things about myself that I didn’t fully appreciate before. All my working life, I’ve avoided spending money on extravagances that others in my income bracket might have had no trouble with, such as going on expensive trips or shelling out tens of thousands of dollars for a country club membership.
I told myself I was being responsible, thrifty, frugal. How could I spend on extravagances when I had three kids to put through college and a retirement fund to build?
But you know what? I like the finer things in life as much as anyone else. To enjoy those luxuries, I just needed the psychological comfort of a solid financial cushion.
Now, I’m there and I’m opening the valve on my spending. I am, I hope, doing it responsibly. Only time will tell.
Author and blogger James Kerr is a former corporate public relations and investor relations officer who now runs his own agency, Boy Blue Communications. His debut book, “The Long Walk Home: How I Lost My Job as a Corporate Remora Fish and Rediscovered My Life’s Purpose,” was published in 2022 by Blydyn Square Books. Jim blogs at PeaceableMan.com. Follow him on Twitter @JamesBKerr and check out his previous articles.
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A $9,000 hot tub for the mountain house financed by restricted stock grants. My that does sound nice!
I so identified with your emotional connections about your splurges in the wake of a relatively frugal life! As an arts administrator, I never made as much as many of my friends in the corporate world. And I saved as much as I could. I stopped working completely 4 years ago with as big a nest egg as I could muster. And we launched our life of full-time travel.
I’m easing into not worrying so much about our budget and enjoying some luxuries. This year we took the COVID-delayed world cruise we’ve dreamed about since 2015. We ate at 7 Michelin-starred restaurants. We rented a 5-bedroom ski condo for a family T-Day in Copper Mountain. And I sprang for first-class airfare! We head to Lima on the pricey Oceania Marina next week. Experiences that have no price tag.
Our combined social security payments of $70K annually (I waited until I was 70, living off investments for 3 years) plus an additional $30-$50K of investments make for a good life. And, miracle of miracles, my nest egg is actually LARGER than it was when I quit in August 2020. We are die-with-zero people and I can’t seem to spend enough money to make that happen.
Live your life. Live your life.
OMG, that world cruise sounds fantastic. What line did you use? I’m all up for that! 🙂
Halliday, your Die with zero reference was exactly what I was thinking about reading James Kerr’s story! I don’t know if he read the book, but ever since I read it a couple of years ago before I retired, it has been my Mantra for enjoying our life and the accumulated wealth my wife and I enjoy. And like James and you both noted, spending our money on Experiences such as weddings, travel, times with family etc. is the best way to fulfill that objective! I love it! And as you made reference to….If we don’t fly first-class, our kids will! 🤣
Congrats, we spent an extra $180K (2 new vehicles and home remodeling) in the last 2 years. We also are not going to downsize because we have a big portfolio (it’s 50 times our annual expense, not including SS). We were frugal, managed our money well, and made great investment choices. It’s time to spend. Many can’t do it; we started doing it.
That’s awesome. Good for you. Frugality and consistent investing pays off. Now it’s time to reap the rewards. Enjoy.
Congrats on the wedding and honeymoon and vacation, the son’s marriage, the new car, and everything else. In addition, you’ve spurred another (yet another) discussion on the “when to take Social Security” discussion! That’s extra credit.
Haha, yes, I guess I did. 🙂
Congratulations to you and Rachael!
Great way to start this next chapter in your life! Less stress with the townhouse, peace of mind with Rachael’s new car, and so many great memories with the weddings and vacations.
Thank you, Cheryl!
I am struggling with spending money in retirement. I guess it goes back to growing up dirt poor, with my parents strugging to make ends meet. I always just wanted to be in a position where i could buy a new refrigerator, furnace, car or what not if it needed to be replaced. I am thankfully in that postion and don’t stress over those expenditures. My wife and I are 64 and both retired. Thru prudent saving/investing starting around 18 y/o, we now have a “liquid” net worth around $4MM and other real estate investments worth around $1.5MM in equity. (no debt) Some of the RE spins off cash. We both decided to go ahead and start SS a few months ago. I may not make it to 80, but my wite may make it to 100.. We currently spend about 75% of the cash our investments spin off and SS. We do not have to draw down on the capital, and will not need to for the foreseable future. If i need to replace something/spend money on something needed, it’s not a problem psychologically.. We are home bodies with 4 dogs, and don’t care to travel much. I have a problem actually spending money on frills, such as an upgraged tv, back up generator to have on hand “just in caser it is needed”, nicer clothes etc. My wifes car is fairly new, but my primary driver is her hand me down 2007 Honda, but I do a have a couple older sports cars..Bottom line is I do not want to spend money unless absolutly need to. I do want to leave some money for our daugher to ensure her retitement is financially sound. I am just wondering why I afraid of spending more money and loosen up.
Charles I think it’s very rare to see someone buckle down by beginning to save at age 18, old habits die hard. At only 75% you could probably loosen up, but it seems to me like you guys are happy. To me that seems like the secret of life.
Mazel tov on your very recent nuptials, James!
Money and trips and cars are nice, but they pale by comparison to the good fortune of finding love at this stage of your life.
“(If I took Social Security now),I’d take a hefty haircut compared to what I could get if I wait until my full retirement age of 66 years and 10 months.”
I don’t get why smart people adopt that misleading “full retirement age” label as if it described the 32% higher real full-retirement benefit that comes from waiting until age 70.
Per Google’s experimental AI search result: “The maximum Social Security benefit at age 70 is $4,873 per month, while the maximum at full retirement age is $3,822 per month.”
That’s $1,051/month left lying on the table – if you live long enough.
A Congressional Research Service report finds “a 70-year-old man has a 54% chance of reaching the age of 90 if he does not smoke or have diabetes, has healthy weight and blood pressure, and exercises.”
In my own case arithmetic on waiting until 70 shows I break even if I live to 83. I fit those CRS qualifications – exercise, right weight, no diabetes, no smoking – so there’s a good chance I make it there.
Family history also suggests 83 is not a bad bet for me. Frankly it’s my “target,” the age beyond which increasingly bad health makes the game not worth the candle.
Of course the arithmetic is different for every individual, but since if I can afford it, I would have been foolish to start benefits at 66.
The bottom line is, the decision to wait until 70 involves several factors, of which the simple benefits arithmetic is only one. Basing the decision on that single factor seems inadequate.
Finally, in my own head I look on living to 83 as “winning the game.” <grin>
I couldn’t agree with you more Jack. I too, did the math and my “break even” age was 78. I took SS the day I turned 62 and haven’t ever looked back. I’m enjoying first class travel, renovations to the house, and the new Toyota Highlander hybrid my wife now enjoys. “Penny wise and dollar foolish” my mother used to say.
“– if you live long enough.” Isn’t that the key consideration? I hope all who wait are healthy and live a long life, but some of us have health issues that make that “delay decision” a poor one.
I never worried about breaking even. Having lived through the “great inflation” of the 70s I was much more interested in getting the largest possible base for future COLAs. If I die without “breaking even” I won’t know and I won’t care. However, I’m now 77, and the SSA tells me I should be good for another 11 years.
Everyone has their own reason regarding when to begin SS, but for me FRA never showed up on my radar. All I knew was that I’d score the minimum benefit at 62, and the max at 70. FRA was just some random point in between the two.
It’s also the point at which benefits accelerate to 8% per year the longer you wait to claim.
It’s funny, Jack, I looked at a very similar set of facts and came to exactly the opposite conclusion from you (and most here, from what I’ve read). I took my benefits just shy of full retirement age rather than waiting to age 70 because it made no sense to me to wait until 83 to break even, and my benefit precisely covered the monthly payment on my new home. I do have type 1 diabetes as a result of cancer treatment (I’m otherwise healthy now), but I didn’t even really figure that in. I just decided I wanted to get that money invested and working for me now. And it has, quite well.
I’ve continued to do consulting work, and it’s been lucrative well beyond my expectations, so if I were to weigh the same decision today, I might well come to a different conclusion. But no regrets.
Good points, Jack. I am weighing whether to wait until 70 to begin SS benefits vs. starting them at my FRA. Mathematically, it makes sense, and I am in good health at the moment. We’ll see …
Great post, James. Re SSA, have you played around with the numbers using https://opensocialsecurity.com/? It basically does a sensitivity analysis on the full range of claiming dates for both you and your spouse’s SSA, and gives you a nice visualization and the numbers related to the results. Obviously if longevity is in your genes then both waiting until 70 nets the highest payment total. I like to hedge my bet, so I give myself 5% leeway on maximum, worth an NPV of about $100k on the total amount of payments for both of us in constant dollars. Using this I can see that I can start as early as now, at 65, and my much younger wife can be the one to wait until 70, and we’ll only leave 5% on the table.
Now it becomes a matter of tax minimization, and also cash needs for the coming year. In our case, I need neither the cash due to bond ladder rungs maturing nor the tax hit that claiming now would create, so I’ve changed our claiming plan to 2026. Nice to have options.
Jim, congratulations on having a really great year.
I think young people need to know that being in such a position doesn’t just happen. Many years spent working, saving, having good luck, and a living below your means are paramount.
We had a year similar to yours in 2023, and although I was already retired, it was savings we accumulated from a part-time business that made it possible.
Thank you, Dan. Agree completely. Years of hard work and sacrifice went into getting me where I’m at. You as well. Enjoy!
Congratulations! On the marriage, the wedding, the trip and the extra income. As I’ve written here before, carpe diem.
Thank you. Carpe diem indeed!
This is awesome. Congratulations on your marriage, and much happiness to you and your wife. I love hearing how you’re using your decades of hard work to enjoy your life now.
Thank you!
I’m a couple years behind you, Jim, with the same plan to work part-time, both because I’m not ready to fully quit and to take pressure off my savings. It sounds like you’re happy with your present course—I hope it lasts as long as you want it to.
I’m with you, Edmund. I do enjoy working–just not too much of it. 🙂
Jim, congratulations on your wedding. I wish you many years of happiness. I think your “phased” retirement plan is a great idea. I was able to do some significant consulting for a number of years after stopping full-time work and it worked out well. The income was both financially and psychologically beneficial. Nine of this years out-of-plan purchases seem extravagant to me. Enjoy
Thank you, Rick. Yes, it’s an eventful–and very positive–year for us. The side gig has really helped.
I agree, one of my Facebook retirement groups favorite things to repeat is “if you don’t fly first class, your kids will.”
I do have friends and relatives still pushing it at retirement age and beyond, they love what they do, the “thrill of the kill” etc.
For me I’ve learned to enjoy slowing down and watch them fly by while our concerns revolve around what movie to see and where to eat dinner.
I love that saying, Tom. I still haven’t gotten to the point where I’m comfortable flying first class, but I’m getting there!
Business class is great, too.
”I told myself I was being responsible, thrifty, frugal. How could I spend on extravagances..?
I am of same mind Jim. We limited our expenses earlier in our lives in order to prepare for retirement. The scary part was not knowing what our financial circumstances would be when we entered retirement (four years ago at 62). Now that the data is in, and we know where we stand expensive trips and paying cash for top of the line Toyotas (quality, reliability, and value still count) are the norm.
We are expecting to have, as they call it, a fairly unbalanced retirement spending smile”, hopefully steeper on the left side and shallower on the right side.
Well put, David. I guess I needed to see the data as well. My wife loves that Toyota! 🙂