From my experience and observations, I've formed a similar belief that many people over saved for retirement and then spent less than they could have. Studies have shown that there is an increasing number of people passing away with a larger net worth than the day they retired decades before. A minority for sure, but increasing. We will be in that group even after retiring in our mid-fifties; 7.5 years after retirement our net worth is double the day I retired. We were super-savers and indeed it is difficult to switch to a spending mode after decades of working and saving for retirement. But we had accumulated so much in savings out of concern of running out of money later, that even with what we consider extravagant spending in retirement we still gain more every year. But we didn't deprive ourselves our decades of working any more than not buying new cars frequently or taking expensive annual vacations. it was a balance that worked well. Once we retired we forced ourselves to spend more money routinely. I take a weekly allowance of "mad money" as my mom called it to be used just for fun stuff. If I don't spent it all I track it then spend it on larger purchases, upgrade flight status, etc. I definitely agree with the spending less later in retirement idea. We probably spend at least 25% more than when working but we still could spend more - probably 3-5 times more and still not deplete the gains our investments make. The problem is, what do you spend all of these savings on ? After 4 decades or so of saving and setting up a home, we already have everything we need. Do you just by new all new appliances every year to get rid of money ? Replace a few rooms of furniture every year ? Buy a new riding lawn mower every year? We don't want to just buy more stuff as we already have too much and if anything want less in our house. Buy every meal out .... not healthy. Buy a new car every year and give it away ? If just replacing perfectly fine things listed above seems silly (it is) then what should one spend this extra money on ? We tried travel for about 5 years until Covid hit but frankly it was getting a little old and not as fun being gone so much. We still are in our early 60s and healthy enough to do whatever we want, but after a dozen or so trips to Europe we don't get as excited at the idea of a 9 hour flight. We still like Florence Italy in December to visit the Christmas market and may go back this year as travel restrictions are lifting. And maybe Maui next year for a month of snorkeling again. But living through Covid and not traveling much the last couple of years we are surprised that we aren't excited to start leaving home half a dozen times a year on vacations as before. So if we don't travel as much, then again, what to spend it on ? I think that many find out similarly in retirement that they have most of what they already need so they don't spend as much as projected. The figures on increasing net worth at death support that happens for increasingly more retirees. Rather than just wasting money because we can and replacing perfectly good things, we are giving more money to charity. We also are funding retirement savings for our kids, nieces and nephews. For retirees who listened to the warnings decades ago that they needed to put away huge sums, replace 80% of their working income in retirement, etc. many are finding out that they really didn't. It used to be just upper income earners had that prospect, but now former middle class savers find themselves with that possibility. But you don't know until you get to this point and fear of running out drives many to just over save and under spend and have that cushion, just in case.
@@Meadowlark57 We found it more rewarding to see it help others while we aee srill alive. Plus, if you leave it there is no guarantee your estate will go to who you want. This way, we are 100% sure it does. Good luck geting to the place you can also help others too !
@@SafeguardWealthManagement I apologize for my original comment, which did come across as a bit curt. My point is, as you get older and your ability to earn money diminishes, people get worried, and want to hold back money for what might lie ahead. I am a healthy 72 years old. However long term care, Market drops and inflation are real concerns.
Come on, let's be real about this. Nobody can predict how smiley the smile curve is going to be for a particular individual, and if I overspend in the first 10 years of my retirement I'm likely completely screwed. There's no going back once you've burnt through your nest egg. Nobody is going to plan for the smile for that reason, and I'm not even talking about the psychological aspect of the situation.
No one can predict exactly the money you're going to need in a linear, inflation-adjusted spending approach either. There are things that are unknowns in the future regardless of the approach you take. Research around the spending smile shows its actually quite predictive. Yes, there are outlying examples. In my opinion, the alternative of always leave a massive margin of safety because of fear around the corner isn't prudent approach.
From my experience and observations, I've formed a similar belief that many people over saved for retirement and then spent less than they could have. Studies have shown that there is an increasing number of people passing away with a larger net worth than the day they retired decades before. A minority for sure, but increasing. We will be in that group even after retiring in our mid-fifties; 7.5 years after retirement our net worth is double the day I retired.
We were super-savers and indeed it is difficult to switch to a spending mode after decades of working and saving for retirement. But we had accumulated so much in savings out of concern of running out of money later, that even with what we consider extravagant spending in retirement we still gain more every year. But we didn't deprive ourselves our decades of working any more than not buying new cars frequently or taking expensive annual vacations. it was a balance that worked well.
Once we retired we forced ourselves to spend more money routinely. I take a weekly allowance of "mad money" as my mom called it to be used just for fun stuff. If I don't spent it all I track it then spend it on larger purchases, upgrade flight status, etc.
I definitely agree with the spending less later in retirement idea. We probably spend at least 25% more than when working but we still could spend more - probably 3-5 times more and still not deplete the gains our investments make. The problem is, what do you spend all of these savings on ?
After 4 decades or so of saving and setting up a home, we already have everything we need. Do you just by new all new appliances every year to get rid of money ? Replace a few rooms of furniture every year ? Buy a new riding lawn mower every year? We don't want to just buy more stuff as we already have too much and if anything want less in our house. Buy every meal out .... not healthy. Buy a new car every year and give it away ? If just replacing perfectly fine things listed above seems silly (it is) then what should one spend this extra money on ?
We tried travel for about 5 years until Covid hit but frankly it was getting a little old and not as fun being gone so much. We still are in our early 60s and healthy enough to do whatever we want, but after a dozen or so trips to Europe we don't get as excited at the idea of a 9 hour flight. We still like Florence Italy in December to visit the Christmas market and may go back this year as travel restrictions are lifting. And maybe Maui next year for a month of snorkeling again. But living through Covid and not traveling much the last couple of years we are surprised that we aren't excited to start leaving home half a dozen times a year on vacations as before. So if we don't travel as much, then again, what to spend it on ? I think that many find out similarly in retirement that they have most of what they already need so they don't spend as much as projected. The figures on increasing net worth at death support that happens for increasingly more retirees.
Rather than just wasting money because we can and replacing perfectly good things, we are giving more money to charity. We also are funding retirement savings for our kids, nieces and nephews. For retirees who listened to the warnings decades ago that they needed to put away huge sums, replace 80% of their working income in retirement, etc. many are finding out that they really didn't. It used to be just upper income earners had that prospect, but now former middle class savers find themselves with that possibility. But you don't know until you get to this point and fear of running out drives many to just over save and under spend and have that cushion, just in case.
Exactly! Glad you decided to become more charitable with your extra funds; that is what I hope to do one day, also.
@@Meadowlark57 We found it more rewarding to see it help others while we aee srill alive. Plus, if you leave it there is no guarantee your estate will go to who you want. This way, we are 100% sure it does. Good luck geting to the place you can also help others too !
Thanks for sharing the information, particularly the “smile spending curve”.
So good, I watched it twice.
Most people only live to 81-84. Why don't you do the example to those numbers?
Good video...I have not thought about it that way and it makes sense.
Great video Eric, thanks for your knowledge share!
Equal thanks for being an awesome part of this community David!
Remember possible serious medical costs, investment losses, RMDs, Long Term care etc . Better hold plenty back, young man....
@@pensacola321 I'm not sure what you mean, these are built into a plan
@@SafeguardWealthManagement I apologize for my original comment, which did come across as a bit curt. My point is, as you get older and your ability to earn money diminishes, people get worried, and want to hold back money for what might lie ahead. I am a healthy 72 years old. However long term care, Market drops and inflation are real concerns.
When do you recommend taking your Federal welfare check? I'm waiting until I'm 70 to start collecting SS.
If that's your mother in the thumbnail, tell her she's cute! And getting you plenty of extra clicks. :)
Come on, let's be real about this. Nobody can predict how smiley the smile curve is going to be for a particular individual, and if I overspend in the first 10 years of my retirement I'm likely completely screwed. There's no going back once you've burnt through your nest egg. Nobody is going to plan for the smile for that reason, and I'm not even talking about the psychological aspect of the situation.
No one can predict exactly the money you're going to need in a linear, inflation-adjusted spending approach either. There are things that are unknowns in the future regardless of the approach you take. Research around the spending smile shows its actually quite predictive. Yes, there are outlying examples.
In my opinion, the alternative of always leave a massive margin of safety because of fear around the corner isn't prudent approach.
Fast talker again, decaf maybe?
Listen faster.
@@swright5690 maybe you need decaf also
Speak at your own pace, @Stuart. The slow listeners can go through it twice. Great info, as always.
The little round 'gear' shape at the bottom of the video is for making the speed of his words faster or slower. Try it out!
@@peterhoffman8525 thx, I actually did that