I found this article informative and interesting.

Spending money in retirement that you spent a good portion of your live amassing should be a component of enjoying your life in retirement.

A strong and inherent part of ones personality is to not spend for fear of not having anything or enough. I think those that do not have a pension and must rely on what we have acquired on our own feel this the strongest. Which is understandable.

But using what you have saved to enjoy your retirement is something we should consider before it is too late.

https://www.kiplinger.com/reti...-worry-in-retirement

I'm neutral on the spending money. But one thing I learned recently is that you have to be on top of the Required Minimum Distribution law on your tax deferred retirement plans.

After 70 or 72, you may be forced to withdraw more money than you need; worse, the required minimum withdrawals may trigger more onerous tax liabilities such as having to pay more for medicare on top of getting you into a higher tax bracket.

One solution is to get ahead by withdrawing ahead of the requirements and converting it into a Roth IRA.

I'm in the process of creating an Excel file to model the decision points for myself.

I agree with the main thrust of the article that some people may underspend based on the fear of running out of money.

I don't agree with the suggestion to buy annuities to spend more confidently. Think of an annuity as a bond. With interest rates as low as they are now, you just don't get any return. You get some small benefit from life insurance type credits but your return is still very low and most of what you receive is return of your principal.

The annuity takes a chunk of your money and returns it in small amounts over a long time.

The alternatives are few at this time. This is why the stock market keeps going up. It is called TINA .. There is no alternative

I try to invest in assets that benefit from inflation and are an essential good or service. An example is the health care industry.

Interesting.

When we first transferred the bulk of my 401K into a retirement IRA, about a year before my retirement, my wife said something about leaving something behind when we shuffle off this mortal coil. I told her, bluntly: "I did not work and save my entire life to leave a windfall for your brothers, their wives, and their children."

She was a bit taken aback, but she eventually saw the sense in what I said.

But still her innate sense of wanting to ensure we'd have enough to see us to the end of our days resulted in her being reluctant to spend it, or allow me to spend it.

Two-three years following my retirement, after the mortgage was paid-off with what had remained of my 401K, the retirement account continued to gain value, and our on-hand savings continued to increase, one day I said to her "Look, we're XX years old. I worked, and we scrimped and saved, all those years for this. I want to enjoy the fruits of those efforts while we still can."

She eventually saw the sense in that, too.

As a result: Within reason we pretty much buy what we want, when we want.

We can't take it with us, and I don't plan to leave any more behind than I have too

I grew up knowing only 2 different conditions: Affluence and poverty. My parents went back and forth between the two every 3 or 4 years.

So, when I got out of the Army and got married I started putting money away, or attempting to because my first wife was spending it faster than we were making it.

After the divorce, I started in again, but this time was putting money away and investing it as I now had the right wife.

Fast forward to retirement, and I found it very difficult to take any of that money and spend it and finally decided to start spending some and having fun.

Flying first class, staying in first class places, eating at first class restaurants (some of the time), eating more steaks, buying any gun I took a liking to and so on.

It took a while but I finally got to where I could spend some money without feeling guilty about it. I knew I was mentally okay when I bought our last vehicle in March for $41K and paid cash for it.

Mrs. Flash is finally there, too, but it was probably harder for her as she grew up in poverty, then married a compulsive gambler so she stayed in poverty right up to when we got together.

While healthcare spending will also likely increase with age, other spending, travel, etc. probably trails off along the same timeline. We're still a few years away from this retirement dilemma, but won't be scrimping in the early years out of fear of the unlikely outcome of us both living to 100 and still wanting to spend money like we are 63.

It won't suck for my kids for us to leave some behind, likely far more than either my wife or I ever saw, but I don't need to make them rich by their standards!

quote:

Originally posted by Flash-LB:
I grew up knowing only 2 different conditions: Affluence and poverty. My parents went back and forth between the two every 3 or 4 years.

I too have seen this behavior. I think it's fairly common, sadly.

quote:

Originally posted by Rey HRH:
Required Minimum Distribution law on your tax deferred retirement plans.

What new hell is this? Why does our govt make retirement so complicated?

Few things I learned retiring :

1) Medical insurance is expensive until reach 65 and Medicare.

2) I do spent less in retirement than working along with less payroll deductions. (Everyday costs not counting medical premiums).

3) And the importance of staying on top of RMDs ... learned this a few years ago when my mother-in-law passed and my wife was required to take an RMD from the inherited IRA.

If I work six more years and retire, I will have two pensions plus full medical for life. I will need to get medical for my wife.

If Social Security is still around, there will be that as well so my income will be about what it is today and this is without touching my IRAs.

The house will be paid for by then. The large amount in IRAs will be the fun money and contingency.

Already familiar with RMD as I draw that now from an inherited IRA and roll into a Roth for my wife.

quote:

One solution is to get ahead by withdrawing ahead of the requirements and converting it into a Roth IRA.

^^^^^^^
Seems like a great idea. I am always cautious about these things and consult with my CPA first. Several years back the IRS decided to audit our retirment plans. She said it was a demonstration project. It tied up my CPA for several days and cost me four Grand. Nothing was amiss, they were just checking to see whether all documents were in order. One year they sent my a bill for eight grand because the 5500 Form was late. {They apparently forgot that we had been given extra time due to Hurricane Katrina.} That took a year to fix and again we owed nothing.

quote:

Originally posted by konata88:

quote:

Originally posted by Rey HRH:
Required Minimum Distribution law on your tax deferred retirement plans.

What new hell is this? Why does our govt make retirement so complicated?

I have to take these required minimum distributions on two different accounts I have. I set them up so I get a direct deposit from each of them once a year on the date I specified. This is the thing that got me started on flying First Class.

https://www.irs.gov/retirement...70%C2%BD%20in%202019.

The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) became law on December 20, 2019. The Secure Act made major changes to the RMD rules. If you reached the age of 70½ in 2019 the prior rule applies, and you must take your first RMD by April 1, 2020. If you reach age 70 ½ in 2020 or later you must take your first RMD by April 1 of the year after you reach 72.

So the gist as I skim it: before retirement, put money into retirement account (401k). after retirement, take it on a govt determined schedule (anticipating death by a certain age).

I should do this because why? RMD doesn't seem like it benefits me. Who benefits and why should I support that? Or is this actually beneficial to me (in ways that are not obvious to me)?

Why the hell is non-RMD compliant withdrawals taxed so heavily? That seems ridiculous.

What happens if I live much longer than anticipated and I run out of money? I guess what I could be doing is taking RMD out on 401k and then investing it in a personal equity or bond fund. But why do I need to do this?

I don't get it. And how does one go about learning about this kind of stuff? Is there some retirement class we're supposed to take?

I think the story is a little flawed. Most retires now and over the last 20 years have pensions so their 401K/IRAs are additional saving they don't need to withdraw. Wait till the Gen Xs in 12 years or so - we got nothing except what we save ourselves.

quote:

I don't get it. And how does one go about learning about this kind of stuff? Is there some retirement class we're supposed to take?

^^^^^^^^^^^^^
I have never had a business class in my life. The Wall Street Journal covers these issues. Having a trusted CPA helps as well.

quote:

Originally posted by ZSMICHAEL:
I have never had a business class in my life. The Wall Street Journal covers these issues. Having a trusted CPA helps as well.

I guess I'm SOL - i have neither the WSJ nor a CPA.

quote:

Originally posted by stuffgeek:
I think the story is a little flawed. Most retires now and over the last 20 years have pensions so their 401K/IRAs are additional saving they don't need to withdraw. Wait till the Gen Xs in 12 years or so - we got nothing except what we save ourselves.

I wouldn’t be so sure about that….

quote:

I guess I'm SOL - i have neither the WSJ nor a CPA.

^^^^^^^^^^^^
I am paying four dollars per month for the WSJ. They have those deals for Black Friday. It is worth it.

quote:

Originally posted by konata88:
I should do this because why?

Because the law says you have to?

quote:

Originally posted by konata88:
RMD doesn't seem like it benefits me. ...

Why the hell is non-RMD compliant withdrawals taxed so heavily? ...

I suspect you misunderstand what RMD is. RMD: Required Minimum Distribution. It's simply a minimum distribution you must take from retirement accounts after a certain age. There's nothing special about the RMD amount, except that it is the RMD amount. The RMD amount is taxed no differently than anything over the RMD.

quote:

Originally posted by konata88:
What happens if I live much longer than anticipated and I run out of money?

You planned poorly?

What happens if you meet unexpected expenses and have to take out more than you planned?

quote:

Originally posted by konata88:
I guess what I could be doing is taking RMD out on 401k and then investing it in a personal equity or bond fund. But why do I need to do this?

Because you must take the RMD. It's the law.

quote:

Originally posted by konata88:
I don't get it. And how does one go about learning about this kind of stuff?

There's always the World Wide Web. E.g.: Required Minimum Distribution (RMD)

The RMD really isn't all that big a number. See the example at the URL above.

Ever since my retirement my wife and I have been taking over 1-1/2 times approximately what our RMD will eventually be, to make up the difference between SS and what I used to earn. Our retirement investment is up nearly 25% from when we began it nonetheless.

quote:

I'm in the process of creating an Excel file to model the decision points for myself.

I need to re-do my spreadsheet when we find out how the Dems are going to finance their spending spree from my savings and investments. Which they are.

Up until now my financial advisors have said "If your kids are going to be in a lower tax bracket, it doesn't make sense to convert your 401k/IRA to a Roth IRA.

Now I'm not so sure. You know they are drooling like the Big Bad Wolf to get their grubby hands on the trillions in tax-deferred accounts.

I just hope I don't die when the Dems are still in control. My kids and grand-kids will get half of what they would have gotten otherwise.

And yes, we're hoping to leave them a substantial estate, because life is going to be hell for anyone between poor and upper middle class over the next twenty years.