It’s Time To Live Like No One Else

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Love him or hate him, you can’t argue that Dave Ramsey’s quote is one of the best-known quotes in the world of personal finance.  “Live like no one else, so later you can live like no one else.”  Pretty catchy, actually.

But What Does It Mean?

The first part is pretty obvious (live below your means), but how does one go about the “So Later, You Can Live Like No One Else” side of the equation?

As you read these words, we’ll be living in OUR SECOND WEEK OF RETIREMENT.  Wow, that was a fun sentence to write.  I think I’ll write it again.  We’ll be living in our second week of retirement.  Yep, still a fun sentence to write.

Like many of you, we’ve been living like no one else for a long time.  We’ve Made It To Retirement!

Now, It’s Finally Time to Live Like No One Else, right?

But, what does that mean??

It’s Time To Live Like No One Else

After focusing for the past 33 years on “Living Like No One Else”, the shift to “So Later You Can Live Like No One Else” doesn’t happen automatically.  It’s time to think about the transition, because…

…Later Has Arrived.

It's time for an attitude adjustment. It's time to Live Like No One Else! Click To Tweet

We’ve been living below our means for 33 years, with an average savings rate during my career of ~20-25%.  We’ve been frugal, and we’ve put ourselves in a position to retire early.  Modest frugality has become a habit, and it’s served us well.  I know from your comments that many of you have been doing the same.

Starting with our retirement date, however, we should think about changing things up.

Later Has Arrived.

Life Without Savings?! 

Scary stuff, this.  After following the Steps To Financial Wealth and dutifully building our investment portfolio over the past few decades, we’re suddenly faced with the reality that we’re no longer contributing to our savings.  Even worse, we may actually spend some of our savings to cover our expenses!  Yikes, huh, what??

You know what? That’s OK.

We’ve built a conservative Retirement Drawdown Strategy, and we know how much we can safely spend.  We don’t need to save anymore.  In fact…

…We’re Free To Spend It.

It’s time to live like no one else, and that means we’re now free to spend money (within our pre-defined limits).  The reality is that our years of “Living like no one else” should start paying dividends, right?  “So Later” has arrived, and it’s time to enjoy those dividends we’ve worked so hard to secure.

The dividends of a frugal life are the ability to spend without worry in retirement. Enjoy The Dividends, you've earned them. Click To Tweet

I wonder how difficult it will be to transition from a lifelong saver to a retirement spender. One thing I know, we’re going to do our best to spend what we’re “safe” to spend. We’re only two weeks into this retirement thing, and time will tell, but (as my regular readers would suspect) we have a plan, and we’re planning to spend (within our limits).

Spending In Retirement

We’ve been lifelong savers, but it’s time to change that habit.  It’s time to spend! Old habits die hard, but we’re going to do all we can to put this old habit to rest.  We want to avoid the under-spending dilemma faced by so many retirees.  We’re going to spend!


BTW, I suspect some of you are shaking your heads at this post.  SPEND?  In Retirement?  Has poor old Fritz lost his mind now that he’s retired?  Bear with me, folks, there’s a point to be made.

For folks who have been frugal throughout their life, spending in retirement doesn’t come naturally.  Kiplinger’s recently wrote a great article about the phenomenon, titled Retirees, It’s Ok To Spend.  The unfortunate reality is that many retirees UNDER-spend in their retirement.  In a quote from the article:

“The wealthier the retiree, the bigger the gap between income and spending, and the more the savings pile up.”

Avoiding Under-Spending In Retirement (“Automated Spending”)

I have no idea how things are going to work out in retirement, but I a plan.  I’ve been studying this “under-spending problem”, and I want to make every effort to avoid it in our retirement.  Therefore, we’re going to…

Automate Our Spending


After years of Automating Our Savings, It's Time to Automate our Spending In Retirement. Click To Tweet

In an attempt to break our frugal habits, we’ve decided to take a different approach.  It’s Time To Live Like No One Else.  So, we’re going to attempt an “Automated Spending Plan”.  Allow me to explain.

We’ve recently topped off of our “Bucket One” in our Retirement Bucket Strategy, and have 3 years of cash tucked safely away at CapitalOne.  Starting in July, we’ll have Automatic “Paychecks” transferred from CapitalOne to our local checking account every month.  The amount has been pre-determined based on our safe withdrawal rate, and should be sufficient to cover our basic necessities as well as a few “wants”.  The beauty of the number, once it’s been carefully calculated, is that…

…We Can Spend Every Dime.  And We Will.

If we overspend, our checking account balance will fall below our pre-determined redline, and we’ll cut back in the following months.

If we underspend, and our checking account balance begins to grow, we’ll go ahead and take that month-long trip to New Zealand that we’re thinking about.  Or we’ll let it build for a while and replace my wife’s 2011 Hyundai a year earlier than planned (she’s been eyeing a Subaru Outback, I agree it’d be a great car for our mountain lifestyle).

Or we’ll increase our giving.

However we do it, we’ll automatically increase or decrease our spending to consume what’s in our checking account.  We intend to consume all of it.

Every December, we’ll revisit our Automated Spending Plan for the following year, and adjust those monthly transfers from CapitalOne based on how well the market has performed, our safe withdrawal rate and our updated year-end Net Worth Statement.

Our Maintenance Reserve

We’ll also keep a “Maintenance Reserve”, which equals two years of estimated “Oops expenses” (Hot Water Heater died?  No problem, we’ve built our reserve).  We’ve built an initial $24k reserve, using the following estimates:

We’re not going to keep a budget, and we don’t have to track our spending.  Our checking account will do that for us.  Automatically.

Ah, retirement.  The life of Easy.

Spending Vs. Saving Mentality

In my opinion, The key to “So Later, You Can Live Like No One Else” is to reverse the lifelong habit of minimizing your spending and maximizing your savings.  There was a reason for living that way back when we were “Living Like No One Else”.  There was a goal in mind that drove us to live that way.

BUT:  That goal has been achieved.  Congratulations! You’ve retired.  You’ve reached the starting line.  Mission Accomplished!  It’s time to start living like no one else.

Retirement is a time to allow yourself to spend (within limits) and not feel guilty. Click To Tweet

Challenge yourself to find a way to break your Saving Mentality.  It’s ok, really, to Spend.  Just set up some pre-defined guard rails, and keep yourself in the middle of the road.

Automate your spending, and update your pre-defined spending limits every year.

It’s Later.

It’s Time To Live Like No One Else.


I hope you were conflicted when you read this post because that was my objective as I wrote these words.  The natural tendency of folks who read personal finance blogs is to save their money, and to live below their means.  That tendency is so strong that we tend to UNDER-spend, especially after we’ve reached retirement.

I’m hoping to change that in our lives, and in the lives of you readers who may be struggling with the same dilemma.  Underspending is a common problem for retirees, and we should talk about it.

Retirement should be different.  It should be about designing your life to be the life you want it to be, and then going about getting it done.  You’ve worried about money your entire life, and you’ve built the funds necessary to retire.  If you’ve done your homework, and you’re confident in your safe withdrawal rate, it’s time to Live Like No One Else, and enjoy spending a few of those hard earned dollars.

Retirement is not a time to save.  Been there, done that.

It’s time to enjoy the fruits of your labor.

It’s Time To Live Like No One Else.

Am I Nuts?  Chime in with your thoughts in the comments, I love the exchange of ideas that happens there.  Is it ok to spend without guilt in retirement, so long as you’re within your pre-defined limits?  If you’re retired, have you found yourself “under-spending”?  If so, what are you doing about it?  Am I missing anything with my “Automated Spending” approach to the problem?  Let’s chat…

PS:  This is the second post I’ve written in the new HQ Location Of The Retirement Manifesto!  I couldn’t help but share the excitement with a pic, taken as I wrote these words!   Yep, I’m really retired!  (still a fun sentence to write!)


  1. You forgot to calculate and include “in sickness and in health”
    Hate to break the news to you, but the two of you will become ill.
    Your body will fail you, through no fault of your own.
    And you will watch your money get sucked out to pay medical bills.
    That’s a given.
    Think you’re going to spend time enjoying your retirement?
    All I can say is “Ha!”

    1. Not sure what I’m missing here, but I watched my parents incur huge medical bills at the end of their lives, and other than their Medicare, Supplement and Part D premiums, VERY little was actually out-of-pocket. Nursing home stays were another story, which is why I have LTC insurance.

      1. Can Mr. Groovy and I join you? We’ll have a contest. Winner dies last.

        You’re not nuts, friend. This is what living life to the fullest (like no one else) is all about. This is what you worked for. Enjoy the ride.

      2. There are so many things to be concerned of. Life is all about flexiblity. One cannot anticipate all circumstance. The best approach is to be flexible and handle the uncertainty with stride.

        My two cents worth of views.


  2. Nice RM HQ. I always feel better with a plan. The transition from saver to spender is a big leap it seems for many – I think it will for me. Hopefully, your investments will do well – and you will have an even bigger spending problem. Congrats again.

  3. Yikes Fritz, or newest car is a 2011. It’s the 2006 one we are thinking about replacing some day. And after three years we haven’t withdrawn anything, side gigs make everything we spend. If we automated our spending we would have to double it. I can’t imagine doing that, we are currently spending right at what we spent while I was working and we were not minimalist frugal ever. We don’t really enjoy spending, we have too much money because I enjoyed work and continue to enjoy side hustles. You’re giving me some good for thought and it is making my head hurt!

    1. Ah, but it’s making your head hurt in a good way! It’s a very common problem, Steve. We’re not going to spend just for the sake of spending, but I’m trying to build something that encourages us to spend freely up to the level that we know we’re “safe”.

  4. LOVE IT!

    I have actually thought about how I would fund/budget my first couple of years in retirement, and it is almost exactly the same as yours! I was going to just transfer a pre-determined set of $$$ in our checking accounts every month from our high yield savings account, and have that as our “budget.” The good thing now is that I get to see that strategy in action with YOU!

    I can’t wait to see how you guys get to “live like nobody else”:)

    1. Sean – my wife and I do the same strategy (3 years savings, monthly transfer to checking). Its been 2.5 years and its working AWESOME. I stole this one from Fritz before I retired ;).

  5. Love the topic of the post .. and it is indeed time to “Live Like No One Else”. We are going to enjoy watching you guys while you are “out and about” and perhaps we’ll even pickup some new things to try out. Am really enjoying watching other early retiree’s who are in “Younger Next Year” physical conditioning and mindset to get the most out of their retirement.

  6. I have to agree that when I worked I was careful with maxing out 401k plan and also saving (investing) in taxable accounts. I also invested in 2 rental properties that are paid off. I retired at 46 in 2013 and now just work a part time job 1 day a week. Since I retired 5 years ago I still have not used any withdrawals from my portfolio because rentals and that little earnings cover more than I made working and saving for early retirement. I have travel out of country and do what I want and am still accumulating savings. I keep cash flow from rentals and work separate from investments and I do contemplate what to spend on and not just waste money from my investment portfolio. I made a commitment to go away monthly somewhere as a get away. I have no children and my friend that I travel with said heirs will spend it so I told her than we need to travel more. I will monitor the markets and by my nature I wouldn’t chance having to work for for a living again.
    Best of luck

  7. One of Dave’s classic quotes. 🙂 It’s certainly a shift in mentality. From years of saving, and steady income earning, to no earned income, and just cash going out. But just like the accumulation phase as long as you have a plan for your money, you’ll do fine. Enjoy the ride, and the waffles on Wednesday!

  8. Great post. It is a Major shift in mentally. I really like your idea of adding automation to your spending. That will help to insure that you are not denying yourself any spending in retirement. It is time to go and enjoy the fruits of your labor.

  9. Wow, you’ve made the mind bending transition from a 33 year saver to functional retiree spender in two weeks. That’s quite a feat. Have you written your first Cobra check yet? Now that one puts a pretty big dent in the monthly spend allocation.
    I didn’t know that you could set up automated Capitol One to transfers out to your checking account. Thanks for that tip. That automated “paycheck” just might help with my transition and will look into it….today!

    1. I wouldn’t say we’re there yet, Francis, just trying to build a system to support the change.

      I’ll be on employer insurance thru July, COBRA starts in August. No worries, it’s all in the spending plan.

  10. Hi Fritz,
    Love the picture! Great article as well. I am currently in the opposite mode of you, but I have my eyes on the prize. Let me explain further what I mean…..I am literally broke at the end of every month….by that I mean, I have no money left in my checking account. You see I am making all the regular monthly investment contributions, 401k, taxable low cost mutuals etc., and then any leftover money goes to alternative investments of some kind. My strategy is to make every dollar not allocated to expenses to be put to work to try to achieve additional returns.

    Emergencies or unexpected expenses can come out of a money market account. My philosophy is let the checking account do its job and the other accounts can do their respective jobs.

    1. Great approach, MAI. I’ve heard it referred to as “forced scarcity”, and it’s the same approach we used during our investment building years. It works well, which is why I thought I’d try to “reverse engineer” the concept for retirement spending!

  11. Love the post, Fritz. Good plan. We have 18 months in cash on hand for living expenses (my wife is still working) and next year I’ll sell some equities from our taxable brokerage accounts when the capital gain so wont be too onerous on our tax bill… and that will keep us around 2 years of living expenses in cash while everything else remains invested and growing. We’re comfortable with that plan.

    Good luck with yours.

  12. Boy did I need to read this! This spending thing is keeping me up nights – I like your thinking and will ponder how this fits with our plans. Funny how you seem to write about things I am currently worring about. 🙂 We’re just a couple of months out – cannot wait!

      1. EXCELLENT link, Lou. Thanks for adding to the discussion.

        BTW, don’t let this stuff keep you up at nights, life’s too short to sweat the small stuff. And most of this is small stuff! Congrats on only being a few months out, glad my words are helping you along your journey!

  13. YES! This is exactly what I need — a big picture spending plan that gives me the freedom to enjoy spending (and not think about my complicated finances as much as I have been for the past 5 years). Now, just to adapt it to our situation and put it into action. Thank you & happy spending.

  14. This is just the article I’ve been needing. Thank you! We are a month away from husband’s retirement, and I’ve been preparing myself to agonize over each and every draw-down.
    You will keep several thousand in the checking as a comfort margin so that the “red-line” won’t incur bank fees. So when the water heater goes out, you may dip below the comfort margin. Then how will you handle it?
    Thanks! And all best wishes for your THIRD week of retirement.
    This was an awesome post.

    1. No agony required. Automate it, and forget it!

      You’re correct on the “several thousand” margin for red-line in checking. If we need to replace a water heater, we’ll transfer that over from a separate account at CaptialOne (we have one account for “Retirement Paycheck” and one for “Retirement Emergency Fund”).

      BTW, this was an awesome comment, too! 🙂

  15. So awesome to see you transition to retirement successfully Fritz. My goal is to retire in 8 years, which will get me past my youngest of three daughters graduating college. Looking forward to learning more from you and your transition and things you learned that you may not have expected. Enjoy!!!

  16. Love this post Fritz. I especially like the automated “paycheck” approach. It’s a natural next step from many years of managing a regularly scheduled paycheck. And it works in your favor to have a high level of healthy optimism. You don’t know what tomorrow will bring, but you can optimize your planning to be best situated for the not-yet unknowns. You’re a great example of this type of attitude; I apprecite your positive outlook.

    Btw, we live in Suwanne, would love to get closer to the mountains in the future. Thanks!

  17. it’s a homemade annuity! without the fee some charlatan might charge. i like that maint. fund. it all sounds like a good plan. you know what we did a few years ago? we had around 9k in an after-tax index fund my wife had owned for years. it must have been a year with some unexpected expense. well, we went ahead and spent a few thousand of that “retirement” money and enjoyed it. the world didn’t end and everything stayed on track. i’m glad to see somebody drawing down funds.

  18. I’m in my 8th year retired and my husband at 5. We actually have a drawdown of zero. ZERO. We didn’t expect that with all the spreadsheets, but his modest pension plus 2 rentals has become enough living expenses. We are in the category of not drawing enough.

    But, it is mostly because of Obamacare subsidies. If we were to actually draw even 2.5% of our net worth, we would be over the line. It has made us still very frugal. Yet as we use our trailer, the lifestyle has influenced us to pare down more and we love it. I think what I’d like to pass to others is that they might be able to retire even earlier if they see this dilemma. That you actually have more than you need if you’ve developed various habits of savings to get there in the first place.

    1. Interesting point about Obamacare subsidies, Susan. Maybe you can “double up” one year and withdrawal two years of pre-tax in one year? You’d lose subsidy in year 1, but get it back in year 2?

      Good point about folks likely being able to retire earlier than planned, given the commonality of the under-spending problem. Since we endured the “One More Year Syndrome”, I want to make sure we spend what we’re safe spending now that we’ve achieved retirement.

  19. Thank you Fritz, our Financial planner had this exact conversation with my husband and I just prior to my retirement six months ago. My husband is still working so we are in a slightly different position and I am taking a minimum retirement draw from our post-tax savings and living off mostly his income. However, we failed to put home projects into our budget and also the surprise home and car maintenance needs-which we ended up using our emergency fund to pay. We will address this need when we meet again to do our first year retirement budget review.
    One question I have is related to budget planning during the gogo years. We find we are traveling more despite the fact my husband is working because he has a flexible job. Did you consider a higher budget for your go-go years? We built in a annual travel budget and are using it, however , I am wondering if we should increase that for about the first 10 years. I’d love to hear your thoughts

    1. Susanne, we built a retirement cash flow through Age 95. In it, we did add extra spending for travel, etc. through Age 70. That’ll give us 15 years of “GoGo”, with the money to support it. I think it’s fine to add a bit of discretionary spending in your early years, but I’d suggest you review it once per year and cut back in the event the markets under-perform in any given year. That’s our plan, anyway…

  20. Thanks for this, Fritz! I retired January 1, 2018 and have been grappling with this issue. I’ve continued to be a “saver” out of my SSA check, and this article showed me the problem. When we sold our house and paid off a smaller house we tucked away lots of money for various future needs (I have a fund of $50,000 for “Vacations”, $30,000 for house repairs, and $35,000 for health issues, as an example. I also have funds set aside for “car”, “clothes”, “pet care” and “Learning”, too). Still, it is hard to know I can be a spender!

  21. Seven years in, we haven’t started spending our reserves yet. Our savings grow faster than we spend… Long may that continue! We spend what we want, when we want, but still hard to spend after years of saving! Old habits die hard!

    1. “We spend what we want”. I’m envious of your extended summer travels, Erith, and know you do travel well. Perhaps next year you can add an extra month onto your travels, time to start spending some of those reserves!!

  22. I enjoyed reading this. I’m probably 5 years away from pulling the pin on teaching, but I’ve already started to set up an account for three years of expenses, my Emergency Fund and my investments outside super.
    However, my blood still runs cold when I think about spending all of that money…
    I like the way you’ve factored in flexibility with spending by reassessing every year what your ‘budget’ will be.

  23. Very interesting, Fritz! Could you explain the maintenance reserve fund in more detail? For example, after you have initially funded it, if you spend any of those funds for the listed expenses, do you start replenishing it from your monthly paycheck? Is that fund totally separate from your three buckets?

    1. Sure thing, BC. Every January, we’ll calculate how much we’re “safe” to spend that year (e.g., Retirement Savings X 3.25%). Then, we’ll transfer $12k of that amount into our Emergency Fund in Personal Capital (from our Vanguard bond accounts, most likely). We’ll then set up the remaining “safe spending amount” to be transferred monthly into our checking account. We include the emergency fund total in our Bucket 1 calculation. In theory, we should spend ~$12k “emergency” every year from that account, it’s just “hard to plan” spending so it’s likely to be “chunky”. Hope that makes sense.

      1. Thanks for a response. If your fund isn’t down the $12k because you only had a $5k expense, would you still transfer the entire $12k that year and allow that fund to surpass your initial $24k? Have you set a limit on how high this this emergency fund can be? Guess a new car wipes out the whole reserve in one swing. Thanks for your details as I struggle with including the surprises in our monthly spending or just having a reserve fund. But then I feel the need to have $50-75k set aside to begin with, and that is a huge chunk for us. Your blog is great for helping me see outside the box. Hope you are ready to enjoy week three!!

        1. Good question, BC. We plan on adding a “new” $12k every January, regardless of the 12/31 balance. The logic is that, over time, your spending on “maintenance” items should average $1k per month. If we have a “good” few years (lower than normal spending), it’s likely they’ll be followed by a few “bad” years (higher than normal spending). As you mention, just a car purchase will wipe out several years of the fund, so I don’t think we’ll have to worry about setting a “ceiling” on the account.

  24. Love your picture Fritz. You look so HAPPY and RELAXED. YAYYYYY. My husband and financial advisor remind me of this subject often. It is a bit difficult to go from saving every penny to spending what our budget allows…however sure is fun too! Congrats on your EARLY retirement. LOVE your posts.

  25. Dear Fritz, I am so very happy that you have reached this stage in your life. Very few people do. This is my dream but I have about 18 more years to go! Your blog is one of the most important in personal finance since the major personal finance magazines will never deep-dive into retirement to the level that you have. Please keep going. You are helping us young ones!

  26. I haven’t reached full retirement yet but I see this transition as one of the harder ones to make. Saving is more than just ingrained in me, it IS me.

    Please keep us updated as this progresses. I want to know how seeing your account balances go down from voluntary spending makes you feel!

    1. This is a terrifically difficult transition. I think about going back to work in the future although by my calculations currently I should be fine. What worries me most is becoming “stale” in the marketplace after a couple of years and losing my ability to earn a high income. I’m very nervous about spending money which is why I plan (for now) to spend most of my time in very inexpensive counties spending less than in the US for a few years. Then, I have to make the decision about PT work to keep myself marketable in healthcare.

    2. We’ll keep you posted, AF. For the record, I don’t expect our balances will go down with a 3 – 3.25% Safe Withdrawal Rate. Regardless, discontinuing the contributions and spending some of the principle will be a big adjustment, for sure!

  27. Great idea Fritz. I’m not retired yet but I can totally relate to the mental challenge it can be for a saver to draw down on the savings.

    It’s still very early to know the exact amount you have to spend so that you can “die broke” but I think your plan is certainly in the right direction.

    Enjoy this early part of your retirement. You’ve earned it!

  28. Great post as usual. I like the concept of the maintenance reserve. I’m always thinking about just piling up cash but I prefer knowing “specifically” why I’m piling it up. You even had a couple things on the list I hadn’t thought about. Additionally, I had a friend retire a year ago and I think moving from saving to spending has been one of her biggest hurdles.

    1. Your friend is not alone, seems more is being written about the “under-spending problem” (or, more likely, I’m simply paying more attention now that I’m retired!). Glad my maintenance reserve concept was useful for you!

  29. Classic DR quote. I’ve also heard him say, “live like no one else so later you can live and give like no one else.” Sounds like you’ve got it down.

    How much travel do you intend to do annually?

    1. Ms. F, we’re going to be a bit flexible on the travel. For the first few years, we can’t travel too far/too long from home since we’re the only family close to my mother-in-law (in a local nursing home with Alzheimer’s). We’re expecting some family support in the coming years (sibling moving to the area after they retire), which will free us up for longer term extended travel. We’re remaining flexible, and enjoying each day. (And yes, I actually prefer the “and give” quote, didn’t realize DR also said that version).

  30. Man Fritz, you really thought and researched everything before embarking on this journey of early retirement. I am curious though, what, if anything, has been a surprise to you over the past 2 weeks? BTW, forgive me for being a little behind on your posts. I like to take some time to read them and unfortunately I haven’t had much time the past couple of weeks.

    1. Good question, Mrs. WoW. Probably my inability to find much time to be on my computer. I guess that’s a great problem to have (#GetOutside), but I do worry a bit that I may not keep up my weekly cadence on The Retirement Manifesto. I trust the readers will understand if I miss a week every now and then…

      1. I had a feeling it was something like that. Definitely not a bad problem to have. It will be rough for us readers, but I think eventually we were understand ;o)

  31. Hi,
    Very much enjoy the blog.
    I’m not sure under which article to ask this question, so here we go …
    I’m 64 targeting to retire when I turn 65 next year. I don’t plan on tapping my 401k until I turn 70 1/2.
    Interest rate estimates on my 401k range from 8.8% from my financial advisor (FA) to 7.3% from my 401k plan.
    I was wondering – what are others FA’s suggesting as a rate of return on retirement investments?
    Just trying to compare notes.

    1. Hey Tex, here’s as good a place to ask as any. The best forecast I’ve seen on “Returns” (I suspect this is what you mean vs. “interest”) are the projections from Research Affilliates, which I referenced in this article.

      The projections you’re receiving seem abnormally high, but it’s hard to know since there’s no reference to asset class. Following are the Research Affiliate annual return projections by a few of the major asset classes, real return (after inflation) over the next 10 years:

      Emerging Markets 6%
      REITS 2%
      Intermediate Bonds 1%
      US Small Cap equities 0.5%
      US Large Cap Equities 0.3%

      1. Thanks Fritz.
        I indeed meant “returns”.
        So, if the Research Affiliates projections hold, its going to be an uncomfortable ride.
        I too am truly struggling to make sense of the widely diverging forecasts I have seen – with the Research Affiliates article being one of the more pessimistic forecasts.
        If my ongoing studies shed any light on the topic – especially more optimistic forecast(s) – I will revert back to you.
        Thanks again.

  32. First off, congratulations on your retirement done right. I notice before you retired you have done quite a lot of retirement preparations spending changing the home from good to great, new RV, new truck and New kitchen . So do you consider these part of retirement expenditures when you are calculating your first year drawdown percentage?
    Having been retired for twenty years I find the maintenance budget items prices way to low for what I have paid in the Northeast. A nd Having last month a ten minute tornado devastate my town and my property, made me realize just how quickly you can go through money from circumstances you never expected. So I would probably add an additional five thousand. Five years ago I got my full pension and having been living below my means for all my life , my SIL challenge me to spend it all, which I had a blast doing.. I continue to select big ticket items or adventures or creative endeavors or gift each year since to use it all , I let the investment s increase and do what ever maintenance from their gains. I stopped budgeting at 60 too because I automated bill paying out of my checking and it was so easy to set up an overdraft protection from savings. Turning 65 with the medical decisions for Medicare having only one time without underwriting and precondition exemption , I decided to go for Medicare Plan F and pay more in premiums but no more hidden surprises with the exception of the medicine not covered by the prescription plan. Having been in a high deductible plan and a HSA , I am withdrawing from the HSA for these premiums since if I die the HSA is treated as a traditional IRA and taxable to my beneficiaries. It also doesn’t add any more to my taxable income, which is good because….
    Fritz, I decided to max my Roth conversions to the upper limit of the 22% tax bracket like you the next five years before RMDS and invest it more aggressively in high yielding choices .instead of ladder CDs. This should help with the added taxes. I am curious if you will set a specific amount aside for long care needs that is not in your spend down everything mode. Sincerely, Lara

  33. Lara, nice to see you here again! The “pre-retirement” spending did not count toward the first year’s withdrawal rate. Rather, I’ve been keeping a “Projected Starting Balance” spreadsheet which showed all of the inflows (e.g., Bonus from work) and outflows (e.g., RV, Kitchen) prior to retirement, and a resulting forecast for “starting balance”.

    As for maintenance spending (sorry to hear about your tornado!), we’ll monitor and adjust if necessary. The important thing in my mind is that we have a process built into our retirement spending plan to accommodate it, we can adjust the details annually.

    As usual, you’re on top of your game with this stuff, the Plan F, HSA and Roth conversions are all sound strategies. You should write a retirement blog! 🙂

    Finally, on LTC, we’re not really in a “spend down everything” mode. Rather, we’re using a 3 – 3.25% SWR, and assuming that our investment balance will be sufficient to cover LTC, if necessary (the alternative would be a higher SWR if we were going to pay the extremely high premiums for LTC insurance).

  34. My wife and I just retired at 61 and 58. Although we don’t have a lavish lifestyle by any means, we are also not frugal, although we were disciplined about saving. We wanted to maintain our lifestyle in retirement and not down or upsize so we did work “one more year”. In our case, the spending risk is both too much and too little. We also wanted to take market risk off the table so we did not have to worry about downside risk, volatility or making annual adjustments (although we can if needed). So to solve this challenge we bought our annual income in advance with TIPs and recently with CDs, which will continue. The annual income is calibrated by recent spending, plus inflation and allowance for big ticket expenses so basically it is 2x our recent annual expenses. We are certainly enjoying our new freedom! Best of luck to all

    1. Rob, nice to meet a fellow “One More Year-er”! Good strategy to build a TIPS/CD ladder, certainly a viable approach to creating a retirement income stream. Well done. Congrats on your retirement, and thanks for being a reader of my blog!

  35. Your new HQ is much nicer than the old one. That’s great.
    I like your spending strategy. That’s similar to ours. We have a monthly budget and adjust whenever we spend too much. We usually tend to underspend, but that’s okay. We’re still young and that’s good. Once we’re a bit older, we’ll spend more.
    Actually, this year is a high expense year for us. We just got a new HVAC and went on a trip to Iceland. Those two things really increased our expense.

    1. I agree on the upgrade in my Headquarter Office! 🙂

      I’m honored to have a strategy similar to yours. Congrats on your trip to Iceland, it was fun to follow your adventure, and I’d encourage folks to read your post on the experience here. Thanks for being a regular reader, I love your work!

  36. Congrats Fritz, you have achieved one goal and can now move on to more important goals in your life!

    I am a Dave Ramsey apologist…even if I don’t follow his approach to the T anymore. And this quote is something that keeps me motivated to keep increasing my savings.

    I love your automated spending and am curious the process you went through to plan your retirement budget. I’ll dig through some additional articles because I assume that you documented here.

    Anyway, great blog and I’m so happy you have retired! Keep up the good work

  37. Nice! And Congrats! I retired about a year ago with a similar set up financially. I have one twist on the spending thing. I have a monthly spending budget and If I get to the end of the month and I’ve not spent it all, I move the balance to a savings account that is not tracked as part of my net worth. I consider this money as spent. This is separate from my emergency account. So if I overspend one month, I can go into this savings and cover the overage. Or if the account starts to add up I go find something to spend it on since in my mind it’s already gone 🙂

  38. Well that is beautiful thing about what you have been doing. You get to decide what living like no one else looks like. Congrats on your success and now your first month of retirement.

  39. I love it. think a lot of this true for any goal. You pour all your energy into achieving such a monumental goal that sometimes you get there and think, well what now? As you said the answer is now you get to reap the benefits. Enjoy retirement and spend that money!

    1. “Enjoy retirement and spend that money”.

      I am, and I am. We just bought my wife her own kayak, and we’re leaving tomorrow on a 2 week camping tour through the Midwest to visit family. It is, indeed, time to live like no one else!

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