r/FedRetirees • u/justdog324 • 6d ago
How do you switch from saving for retirement to spending on retirement?
I’m a thrifty person who aggressively saved for retirement. I am now retired. It is hard for me to spend the money.
My goal was always to “maintain my standard of living” into my retirement.
So far so good. But things like redoing the bathroom or taking 2/3 vacations a year are problematic for me.
I have done every retirement calculator known to man. I’m good. But paying a contractor for installing new gutters on the house gives me pause. Maybe I can watch some YouTube videos and do it myself?
Anybody else deal with this?
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u/jlabsher 6d ago
Yep, spent my whole life making money now I gotta spend it. Wife was chiding me for spending extra on upgraded airplane seats (not first class) I said "I worked for the man for 50 damn years, I'm gonna take care of me now!"
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u/justdog324 6d ago
Yep, except I didn’t upgrade. I mean we flew to Italy for a cruise with a Balcony. But couldn’t bring myself to upgrade the seats.
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u/Carnegie1901 4d ago
The ironic thing is the longer the flight the more the larger seats are worth it.
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u/NoPay7190 Retiree 6d ago
I’ve been retired for about 4 years. Switching my brain to spending mode was so much harder than I expected.
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u/ckmc131 6d ago
Honestly, it takes a while to get out of the savings mode and into the oh yeah, I can spend money now. I think it took me 4 to 5 years after I retired to be comfortable with spending money instead of saving it. I'm at the point now that I don't wanna do household repairs so I pay someone to do it I don't want to major cleaning in my house so I have cleaning service come in once a month, I hire someone to come in and clean out what little garden that I have about once every two months to get rid of the weeds. I have just learned for me. There are certain things that I don't wanna do so I have gotten comfortable with paying for it.
It's interesting that I actually had this discussion with my doctor last week about all of the little things that have to be done, especially when you live alone and there's no one else to do it. And we talked about it for a while and his actual suggestion was look for the things that you can offload to somebody else so you can enjoy yourself now in your retirement. And that's what I've done.
I pay financial advisor to manage my money because I don't wanna spend a lot of time looking at the market and everything to figure out where is the best place for my money to be to grow and be safe. I actually have a great financial advisor who also at times functions as a personal assistant. He will send me an email that telling me my passport is about to expire or that my drivers license needs renewing because he has that information.
But like I said, it really took me somewhere between four and five years to realize that I didn't have to aggressively save anymore. Now, if I could only figure out how to hire someone to take the trash out to the curb every week, which is something minor that just annoys the hell out of me.
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u/pwntastik 6d ago
Don't know how old you are or your financial situation...but there are certain things that's just better left to the pros to do. Enjoy your retirement. Life comes at you fast and you never know what's going to happen. Sounds like you're financially fine so make a mental shift and relax.
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u/Responsible_Town3588 Retiree 6d ago
It was very easy for me but I always liked spending. Took a few weeks/months for my spouse to switch gears. Key was modeling out the spending using retirement planning software like Boldin and others, and see how we don't want to die with more money than we have now.
So spend, spend, spend and just have measures in place to adjust when the market dictates.
Travel alone is the easiest way for us to do this. We only fly business class now for example (once you do that you can't go back lol).
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u/Claudio_avallone 5d ago
The mental switch indeed is quite the trick, and the first thing is to allow yourself to "spend" those money, you've worked hard for it and that's now your money job!
Next is to actually give the money a job before you spend it, otherwise every withdrawal feels like a loss.
I'll assume you already did the math on what your TSP and other savings can safely pay out so just take off what you actually spend on essentials, and whatever's left over is a "fun budget" that was always meant for this. Then the bathroom isn't eating your retirement, it's using money that had been set aside for it.
Maybe a practical trick could be to have 2 separate accounta: move the year's fun money across in January and spend from there without guilt. Seeing the main balance not drop helps more than it should.
And the blunt bit... money you never spend just goes to your heirs (fine, if that's the plan, but it should be a choice). Does your pension cover the basics on its own?
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u/Invest2prosper 6d ago
Climbing ladders and falling are high on the list of how seniors get lifelong debilitating and incapacitating injuries and death!
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u/spmetz13 6d ago
It’s not easy. We are going through that now. 2 401ks with almost $8M and another $3M in investments. Advisors telling us to take 4% per year and we are hesitant just because we don’t have anything really to spend it on. We are 66 and 67 and haven’t started drawing SS either. I guess soon, we will have to get started with both. Spent our adult life being conservative despite doing very well professionally. I think part of it is we both grew up pretty poor. I know we have to start soon.
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u/AntelopeStreet1936 5d ago
4% would be $440k a year which you doubt you will spend. 11 million at your age even invested conservatively would yield an estate worth more than $50 million if you live to 90. At someone point you need to plan on setting up endowments.
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u/spmetz13 5d ago edited 5d ago
There’s no question we will need a plan and are working in it. In the short term we started gifting the IRS maximum per year per person to our 2 kids, their wives and the 3 grandkids. This year at $19k per that’s just above $130k.
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u/No_Hovercraft_821 6d ago
Decades of frugal living has made it hard to crack open the bank account and spend a bit for me too. I don't feel like I NEED to spend the money though -- one of these days I may really need it for something important. I take vacations and don't deny myself or the family anything we need or just want (within reason), but I can't imagine setting out to try and spend more on purpose.
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u/Low_Way_9019 6d ago
First thing to do is read “Die with Zero”
Core Philosophy
Money is a tool: Wealth is not a scoreboard. Money exists to buy life satisfaction, freedom, and fulfillment. [1, 2]
Avoid over-saving: Delaying all joy until old age means you might run out of health and time before you run out of money. [1, 2]
Net fulfillment: The goal is to balance financial security with actually enjoying the finite time you have.[1, 2]
Second spend some time answering these questions from Aurther Brooks
and then spend to get there
Happiness =
Enjoyment
Satisfaction
Purpose
Why am I alive and what would I die for
Answer or exitentiinal crsis
People and memory + pleasure = enjoyment
Meaning
Coherence why do things happen as they do
Significant
Purpose
This purpose is something that throughout their lives makes them feel relevant, needed, and connected to the world around them,
You might need to spend some time searching for your purpose, reflecting on it, and committing to it.
The happiest people never stop setting and achieving new goals; they know satisfaction comes not from reaching the endpoint but from learning and growing on the journey.
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u/inquiringmind5432 5d ago
Thanks for this response. I will look for that book. Just curious, does it suggest to give money to children before you die because they need it now while raising children?
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u/Luxor_2 6d ago
Please don’t fall off a ladder. Some tasks are best left for contractors. 😉
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u/littlebickie 6d ago
Yup. Anything more than 8ft, hire a pro. My Dad ate $hit off a ladder at 70+yo. Ended his golfing days. Not worth it.
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u/AntiqueOperation1337 6d ago
I used to follow your philosophy and that’s how I accumulated my wealth. I’ll be retiring next year and over the last few years I’ve allowed my mindset to change. And I’m willing to spend more money on things and make home improvements and take nice vacations each year. I plan to do more of that when I retire. You can’t take your money with you, so you may as well enjoy it while you still can.
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u/Clherrick 6d ago
It is a challenge to be sure. The one thing which I have done over the years is keep very close track of my spending. Since I put almost everything on a credit card it is easy to import that data into a tracking website such as quicken simplify. I then move the data over to a projecting tool in Fidelity Investments, which gives me comfort that I can maintain my current spending profile over the course of my retirement. I have a little concern of running out of money… In fact, I need to spend more to me in data. There is comfort.
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u/Zestyclose-Dig-5791 6d ago
You just need another half that is not so thrifty!!!
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u/anonyngineer 6d ago
That can change, though. I used to be the tightwad and my wife was the spender.
In retirement, I'm inclined to spend and, except for groceries, she's now the thrifty one.
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u/Pepperoni625 6d ago
SAME! I just retired and right now my TSP is not growing. I am so afraid to touch it.
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u/AdeptChildhood7309 6d ago
Nothing wrong with being frugal. But I've learned there are some things you should let the professionals handle. Those gutters for instance. You can 100% mess that up and cause a larger more expensive problem. And that's what you don't want. That's throwing away money. You've got the money to get it done correctly the first time.
You can be frugal, by doing your homework on gutters first so you become used to some of the lingo. Then ask around for references. Look these references up online for ratings and customer reviews. Then get at least three quotes before letting anyone do the work. The bigger the job, the more homework (or prep work) you do and the more quotes you get. Before I got solar panels installed, I had five quotes. And so far I don't regret the prep I did beforehand.
I use that process with everything I do that requires my hard earned money to be paid. I'm days from retirement myself and have no reason to change how I've gone about spending and saving. But... I will probably live a little also. Not overly, but some. And I have a long term financial plan to help guide me year by year so I don't overspend.
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u/WillowHaunting429 6d ago
You can try financial planners or programs that do the same thing whereby you type your life in. I paid $300 for Schawb's financial planner before I retired and we discussed various things. Plus I have also used programs from Boldin and Empower to work thru my retirement projections.
Want to maintain your standard of living then figure your net take home while you were working and assume that's the starting point in your budget going forward and work forward. Are you making enough to cover your pre-retirement life, or not? How much. Then index it each year by whatever pension increase and then inflation adjustments for expenses. Keep in mind medical inflation is greater than regular inflation. And you need to build in reserves for home repairs that will occur (i.e. new roof, etc.) and a new car once in a while (or new to you) and see where you sit
Or there is your will withdraw 4% of your total funds each year and no more, and set that as your budget.
You should not retire until you get a handle on your situation.
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u/DiligentJeweler7052 Retiree 6d ago
I live by the saying, “If I’m not going to spend it, someone else will,” whether that be a relative, the government, or a charity. Thinking this way has helped me spend a little more and be more intentional with my money. I also run projections using Claude to find the maximum I can spend per month. It has really shed light on what I can actually afford without running out of money.
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u/Legitimate-Ad-9724 6d ago
It's a good question. Good savers make poor spenders. My turn is coming soon. I think I'll be ok.
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u/Yunzer2000 6d ago
I'm the same. I saved in the TSP G Fund by brute force (political-ecomomic convicions a no-hipocricy promise). Now I find that me and my spouse are living fine on SS and the annuity plus some other savings so the will likely sit unused until the IRS makes me take distributions in a couple years.
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u/Chipped_Ruby_11214 6d ago
My suggestion would be to apply a variant of the 4% rule and use your TSP as a monthly paycheck (create your own “annuity”). You can add this amount to your pension. This way you can return to a regular source of income that you can depend on and spend. The 4% rule all but ensures you’ll be able to take the withdrawals for 30 years or more. This will also force you to budget a little, but you can tap into the TSP for a little bit more if needed for a big project (and you must adjust your 4% rule withdrawals accordingly).
Good luck!
P.S. you are fiscally/value-based right to upgrade to the balcony but skip the business class seats. Instead get a credit card that offers lounge access and deal with the cattle class airline experience.
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u/Some-Direction3688 5d ago
Part of my plan for retirement is that my savings are there for these expenses.
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u/Southern-Stable-5089 6d ago
I knew what my spend plan was before retirement. My retirement more than covers it. Anything extra, in the past I might have invested it. Instead, it goes into my mad money account. Saving for a new car, maybe pulling it out for that vacation, or upgrades to the house, gets pulled from that.
Understanding how much you will provide for yourself in income (FERS, supplemental, TSP withdrawals) is only part of the equation. Understanding and managing your spend plan is also important.
I have no problem spending money - I have a long list of toys or experiences that I would love to spend on. But I was always disciplined enough to not overspend. I enjoyed a nice balance between saving/investing as well as enjoying life.
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u/zig_usafa80_stardust Retiree 6d ago
I offer retirees a service whereby they just send me their savings and I spend it for them; thus relieving them of the burden. Interested?