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Dreary rainy day that lends itself to thinking

January 18th, 2015 at 01:59 pm

Ahh, retirement....It will be strange to arrive at some day in the not-too-distant future when I am no longer earning an income, but spending down savings to live on.

After spending a lifetime saving/earning/saving, my fear is that I'll be overly frugal like my mother is and not really enjoy my life as I could.

I try to imagine how it will feel to be officially, fully retired. How will it feel to have the knowledge that, aside from Social Security, I have no source of income? How will it feel to know that whatever pot of money I have to live on is all I'll have for the rest of my life to support my standard of living, and that I may never earn income again?
It will feel like the die is cast and there is no changing that.

Of course there is p/t work, but p/t work is often low-paid work and might not make a material difference in one's standard of living.

Will I feel comfortable making discretionary spending purchases if I am no longer earning an income?

For instance, I have really wanted to get a new couch for a long time. I have a 19-year old couch I bought used, believe it or not, and while it's in okay shape, the colors are kind of bright and hard to match things too.

I've been putting off the purchase because, well, I still have my 2 cats, and I'd freak if they got in the habit of scratching it. They don't really scratch the current couch now, but if they happen to jump on it, they do dig their claws into it.

So I'd rather defer the couch purchase for as long as possible, because each passing year is that much less scratching.

I have already made up my mind that once these cats go, I will not be getting more animals. (Of course, that's what I said when Sitka died 5 years ago but I was so miserable that 3 days later, I was at the cat shelter...it was the only way I knew I could console myself.)

But I've gotten tired of lugging home cases of canned cat food, cleaning out messy/smelly litter boxes and then lugging heavy bags of dirty cat litter to the transfer station. Not to mention the constant hair all over my clothes and the house, and my inability to have nice drapes, rugs, furniture, etc. And let's see, last year I spent $900 on the cats, a not inconsiderable expense.

I absolutely love my cats but I really feel my sense of obligation toward them ties me down and prevents me from being more social and doing other things. This is a really terrible thing to say. I haven't traveled much in the past 19 years because I always worry about them being on their own. Luther is often bored silly as it is, and then he gets destructive.

So, back to the couch....while I feel very comfortable buying a possibly $1,000 couch now because I'm working and making what I consider good money, I wonder if I still would want to spend such a large wad of cash once I am "retired?"

Hmm. I don't know. It's just a different mental outlook.

Today is a dreary, rainy day. It was icy this morning and I heard there were lots of accidents on the roads. I finally ventured out around 3 to the local supermarket as I've decided on 3 recipes to try out tonight and tomorrow for my workweek lunches. Tonight I'll be making a pesto pizza with leeks and mushrooms and tomorrow it's a sweet potato casserole and something else.

The only other things I'm doing tomorrow, which I have off due to MLK Day, is

1. Getting my physical results at the doctor's (how low is my cholesterol now that I've gone vegan?)

2. I want to use up a movie gift card and see The Imitation Game at a matinee

3. Go for a long walk, hopefully

4. Wash the salt off my car.

5. Dream of spring.



9 Responses to “Dreary rainy day that lends itself to thinking”

  1. rob62521 Says:

    I have the same concern when I retire...will I try to pinch every penny and not enjoy what I have and live it up a little. Maybe knowing we have those worries will make us more mindful.

  2. FrugalTexan75 Says:

    I read an article on yahoo finance last week (different website, but linked to from yahoo) about having three pots for retirement savings.

    One pot for immediate needs (about 2 years cash needs)
    One pot for intermediate savings (about ten years worth invested in fairly safe things)
    One pot for long term (invested in slightly riskier investments)

    You refill the first pot from the intermediate pot and so on. This way if the stock market fluctuates a lot, you can still have the assurance of pot 1 and pot 2 and not worry too much about pot 3's fluctuations.

    (The article goes into a bit more detail, but this is the jist of what I got from it.)

  3. Carol Says:

    Money concerns in retirement can pass away after awhile as you get used to it and if you are fortunate enough to basically have a reasonable plan. I did crack up one of my friends, however, by confessing that I now wash out plastic bags and was given a dryer with wooden "sticks" to dry them!

  4. Dido Says:

    Enjoy The Imitation Game tomorrow. I really thought it was excellent.

    Two thoughts about retirement: 1. In terms of your comfort level, it's useful to know about the concept of a growing perpetuity--that is, an income amount that gets inflation adjusted and which can pay out forever (theoretically). The calculation is really amazingly simple: the payout amount over the difference between your investment earnings rate and inflation. So if you think that 40K in current dollars would be enough to live on forever, you expect inflation to be about 3% and your investments to earn about 5% on average, then you learn that 2 million is enough to give you the equivalent of 40K in today's dollars for good (40K/(.05-.03)). Or, alternatively, using your predicted savings at retirement of 1,087,000, that yields 21K per year for good. Then look at your social security statement and the projected benefit. While the chances are that *something* will change with social security, the probability that the program will disappear is very low, and even if the program runs into financial trouble in 2033 (the current projection), they *still* have enough money to pay 75% of benefits. So look at your statement and take 75% of that and add it to the 21K. That will be inflation adjusted, too. So that's the amount you can feel reasonably secure about.

    The second thought is to look into a longevity annuity. This is something that is used to cover the risk of living to be quite old...they typically don't pay out until age 85. The younger you are when you buy one, the less it would cost. The downside is that that money is then tied up and if you don't use the benefit, the money is lost to the insurance company, but as a single person without children you want to leave money to, it might be an appropriate factor in providing additional peace of mind.

  5. Dido Says:

    Also...and perhaps the dreariness if the day contributed to the steadiness of the mindset expressed....it's NOT a fixed pot where you only have so much and have to make it last an unknown period of time. Rather, it's a pail with a hole in the bottom, yes, so that no n e.g. flows out, but it's under a spigot as well....income will flow IN from earnings on investments and Social Security. As long as the pace of the flow from the spigots exceeds the flow out of the hole, the pail won't empty. Yes, prudence and planning is a virtue. But don't fall prey to the scarcity mindset. It can rob you of enjoying what you do have and limits your thinking.

  6. Dido Says:

    I don't know why my edits won't stick. That should say "dreariness," not "steadiness." Damn auto-correct.

  7. Dido Says:

    And auto correct also bungled my flowing out sentence....money flows out, but also in. It's not a fixed pie, it's a series of flows with feedback....these days dynamic behavior analyses are superseding the Monte Carlo analysis in financial planning. Monte Carlo looks at the range of possible outcomes and is an advance over set assumptions. Dynamic behavior analyses go one step further and assume you will adjust your behavior to changing market conditions, cutting back on spending on "elastic" expenses and making substitutions during a downturn. That's why having sufficient protection against the "inelastic" expenses such as medical care is so important. That's where you have less control.

  8. Dido Says:

    One last comment....no matter what you imagine you will feel, you are likely to be at best only partially or momentarily right. People, it turns out, are notoriously bad at predicting their own feelings in response to a situation. The past 15 years have produced a whole literature on this in social psychology.

  9. snafu Says:

    You might jot brief notes of your mom's spending sticky points so that you don't replicate those decisions. There are a lot of retirees in our condo complex who discuss and compare issues. The last two years they've been surprised at the income from investments. The process seems to be to draw down a specific amount bi annually or quarterly depending on how they organize their affairs. The majority have sold their house and opted for a condo so that they have less to look after. They order mail 'hold,' lock the door, leave the key with a neighbour and tour around visiting grandkids or their bucket list to escape our ghastly winter. I don't think they use Capital, just income earned on that capital plus SS, and our OAS , service clubs rushing in to fill the void etc.

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