CPA here. I too have a bunch of spreadsheets and, most recently, replaced Quicken with a spreadsheet that better meets my needs with pivot tables for reporting net worth and spending. My long term spreadsheet allows me to look behind the curtain - I know what assumptions are being made because I made them. I've never been comfortable not knowing the assumptions Vanguard, Schwab or Fidelity use in their projections. I can easily change spending, return and inflation percentages to see how long my money will last. My model can reflect decreased spending as I age until it increases drastically when I may need long term care. Excel is magical.
Thanks for starting the discussion on this great topic. I have so many thoughts. My Grandmother passed when I was 35, her estate was split among each of her living children and grandchildren. Already a frugal CPA, I was on the path to financial independence but inheriting 190k at 35 provided security and peace I didn’t have before. I’ve not used much of the money but it helped make retirement at 51 possible. The money was helpful but less impactful to my Father, he was already in excellent financial shape. Last year, my Mother passed away, her estate was split among me, my brother and his daughter. This money will add some luxuries to my life but was not that impactful at 57. However, for my 39 year old Niece, it allowed her to purchase her first home and, if used wisely will be a huge help preparing for retirement. With my own estate plan, the bulk goes to “kids” currently in their 30’s. If I have a long life, I’ll likely take that down a generation to the kids of these kids. I’m also toying with the idea of creating an educational trust for the descendants of my Grandparents siblings. Those family lines have been prolific where my line is likely to end with my Niece. I read an article recently about giving with a warm hand rather than a cold one. Giving gifts when alive bring much pleasure while giving after death does not. I don’t think of this only in terms of financial support. Using your resources to create memories with your loved ones can be the most impactful of all. My Grandmother died with plenty of money but very few great memories with her family. I wish she and my Grandfather had taken us on a trip and left us a bit less when she died.
Did you say Pickleball?! It satisfies most of my retirement needs: allows me to make new friends, stay active and healthy, fill time and have something to work on. We have a 94 year old (he gets 2 bounces) and kids under 20 at our courts. I end up visiting with folks I wouldn’t encounter in real life and my unofficial survey shows there are far fewer jerks on the court than in real life.
Cheers to the boring! Wait, is that a contradiction? I led a similar, boring life but it led me to early retirement with lots of time on Pickleball courts and beautiful trails. It doesn’t seem so boring now.
Bob I’ve done the same. I also assumed a 35% drop in the market and made sure I could adjust my spending to match. I had additional fallback plans if things got more dire. I retired 6 years ago at 51 so investment results have been much better than expected. My tax burden and spending have been much lower than I forecasted. I don’t have to be so careful with money now and am allowing myself to spend more on things that really enhance my life. So plan for the worst and adjust upward if you get good/lucky investment results. That was my plan and it is working well.
For me, working in retirement provides some fun money but my work teaching financial wellness also provides purpose and allows me to help others. I'm not built for 100% leisure; I need purpose and a reason to continue to learn and grow. I think Mike is spot on. The extra money is great but meaningful work provides many more benefits beyond the money.
How do you sit out market downturns? My husband and I invest our money separately - he's great at getting out before a downturn but terrible at getting back in before a recovery. I've done much better over our 32 year marriage by letting it ride. I earned less, spent more and now match his net worth.
Years ago, my (now 83 year old) father said Social Security was his bond fund. I've followed his lead on this. It's a series of guaranteed future payments that holds the same role in my portfolio as a bond fund would. The returns on bonds don't justify the risk of rates going down and I'm not comfortable holding individual bonds due to the lack of diversification. So I'm retired at 56 and don't own bonds. I do hold about six years of my spending in smallish certificates of deposit. When the market drops 10% or more from it's all time highs, I'll fund my spending with one of those CD's, pay the small early withdrawal penalty, and give my stock index funds time to recover. When the market is within 10% of its highs, I sell some index funds to cover my spending needs and replenish my CD safety net.
This article is spot on Adam. I'm five years into retirement and this summarizes advice I give to future retirees. I would expand the time allocation discussion - too many people retire from something but fail to figure out what they will be retiring to. How you are going to spend your time is important not only for the impact on your finances but on your life. How will you stay active, engaged, valuable and vibrant when you're no longer working? That's often the most difficult question for a retiree to answer.
Same - SS really operates as a big bond. I so rarely hear of others thinking of it this way (other than my Dad who suggested it to me first), I had to comment. I do hold about 6 years of expenses in cash, primarily in CD's so it shouldn't be necessary to sell stocks when the market is significantly down. I'm a 56 year old retiree living on my portfolio.
Comments
CPA here. I too have a bunch of spreadsheets and, most recently, replaced Quicken with a spreadsheet that better meets my needs with pivot tables for reporting net worth and spending. My long term spreadsheet allows me to look behind the curtain - I know what assumptions are being made because I made them. I've never been comfortable not knowing the assumptions Vanguard, Schwab or Fidelity use in their projections. I can easily change spending, return and inflation percentages to see how long my money will last. My model can reflect decreased spending as I age until it increases drastically when I may need long term care. Excel is magical.
Post: Driven by Data
Link to comment from September 23, 2023
Thanks for starting the discussion on this great topic. I have so many thoughts. My Grandmother passed when I was 35, her estate was split among each of her living children and grandchildren. Already a frugal CPA, I was on the path to financial independence but inheriting 190k at 35 provided security and peace I didn’t have before. I’ve not used much of the money but it helped make retirement at 51 possible. The money was helpful but less impactful to my Father, he was already in excellent financial shape. Last year, my Mother passed away, her estate was split among me, my brother and his daughter. This money will add some luxuries to my life but was not that impactful at 57. However, for my 39 year old Niece, it allowed her to purchase her first home and, if used wisely will be a huge help preparing for retirement. With my own estate plan, the bulk goes to “kids” currently in their 30’s. If I have a long life, I’ll likely take that down a generation to the kids of these kids. I’m also toying with the idea of creating an educational trust for the descendants of my Grandparents siblings. Those family lines have been prolific where my line is likely to end with my Niece. I read an article recently about giving with a warm hand rather than a cold one. Giving gifts when alive bring much pleasure while giving after death does not. I don’t think of this only in terms of financial support. Using your resources to create memories with your loved ones can be the most impactful of all. My Grandmother died with plenty of money but very few great memories with her family. I wish she and my Grandfather had taken us on a trip and left us a bit less when she died.
Post: When to Give
Link to comment from July 29, 2023
Did you say Pickleball?! It satisfies most of my retirement needs: allows me to make new friends, stay active and healthy, fill time and have something to work on. We have a 94 year old (he gets 2 bounces) and kids under 20 at our courts. I end up visiting with folks I wouldn’t encounter in real life and my unofficial survey shows there are far fewer jerks on the court than in real life.
Post: Pay to Play
Link to comment from March 3, 2023
Cheers to the boring! Wait, is that a contradiction? I led a similar, boring life but it led me to early retirement with lots of time on Pickleball courts and beautiful trails. It doesn’t seem so boring now.
Post: My Superpower
Link to comment from March 3, 2023
Bob I’ve done the same. I also assumed a 35% drop in the market and made sure I could adjust my spending to match. I had additional fallback plans if things got more dire. I retired 6 years ago at 51 so investment results have been much better than expected. My tax burden and spending have been much lower than I forecasted. I don’t have to be so careful with money now and am allowing myself to spend more on things that really enhance my life. So plan for the worst and adjust upward if you get good/lucky investment results. That was my plan and it is working well.
Post: Should retirees use a 4% portfolio withdrawal rate?
Link to comment from February 5, 2022
For me, working in retirement provides some fun money but my work teaching financial wellness also provides purpose and allows me to help others. I'm not built for 100% leisure; I need purpose and a reason to continue to learn and grow. I think Mike is spot on. The extra money is great but meaningful work provides many more benefits beyond the money.
Post: Winning Retirement
Link to comment from November 27, 2021
How do you sit out market downturns? My husband and I invest our money separately - he's great at getting out before a downturn but terrible at getting back in before a recovery. I've done much better over our 32 year marriage by letting it ride. I earned less, spent more and now match his net worth.
Post: No Bonds for Me
Link to comment from October 31, 2021
Years ago, my (now 83 year old) father said Social Security was his bond fund. I've followed his lead on this. It's a series of guaranteed future payments that holds the same role in my portfolio as a bond fund would. The returns on bonds don't justify the risk of rates going down and I'm not comfortable holding individual bonds due to the lack of diversification. So I'm retired at 56 and don't own bonds. I do hold about six years of my spending in smallish certificates of deposit. When the market drops 10% or more from it's all time highs, I'll fund my spending with one of those CD's, pay the small early withdrawal penalty, and give my stock index funds time to recover. When the market is within 10% of its highs, I sell some index funds to cover my spending needs and replenish my CD safety net.
Post: No Bonds for Me
Link to comment from October 30, 2021
This article is spot on Adam. I'm five years into retirement and this summarizes advice I give to future retirees. I would expand the time allocation discussion - too many people retire from something but fail to figure out what they will be retiring to. How you are going to spend your time is important not only for the impact on your finances but on your life. How will you stay active, engaged, valuable and vibrant when you're no longer working? That's often the most difficult question for a retiree to answer.
Post: Often Overlooked
Link to comment from September 25, 2021
Same - SS really operates as a big bond. I so rarely hear of others thinking of it this way (other than my Dad who suggested it to me first), I had to comment. I do hold about 6 years of expenses in cash, primarily in CD's so it shouldn't be necessary to sell stocks when the market is significantly down. I'm a 56 year old retiree living on my portfolio.
Post: Playground Taunts
Link to comment from July 25, 2021