First, it’s been a good six weeks since anyone’s posted a comment on the blog. There’s been a steady stream of visitors, but no comments, FWIW.
Second, I am very much enjoying having control of the daily/weekly schedule. Not trying to rush into any particular routine yet. Doing a lot of reading, working out, going off on shopping trips with Beth and getting to know the area. I’d like to get more golf in- as I type this on a cool, windy Saturday morning, I’m watching other golfers go by, all wrapped up, as they play in a golf tournament. Looks like we’re going to get more Spring-type weather real soon, finally. Golf twice a week plus a weekly practice session would be great!
Third, I was tempted to make this post a “part two” to the previous post on travel, but instead, will limit comments to one travel subject. Any thoughts on taking 4-6 weeks (or more) and renting an Air BNB overseas? I know a couple of you have done something like that. Does it work out in reality as well as it sounds in concept? Can you fill up the time with good experiences without costing a ton? Would enjoy reading your thoughts.
OK, finally, retirement cash flow. This gets more into personal subjects than some would like, so it may end up being a one way conversation (like most of my posts).
- Most retirement planning resources recommend listing “essential” expenses, and then “discretionary” expenses, understanding that those two categories may have different meanings per couple. Then compare expected expense totals to income sources to see if the planned monthly (or annual) cash flow is positive or negative. Of course this is just a planning tool- until it becomes reality, which is where we are now. And there are several variables retirees can choose from to alter the cash flow equation.
- In our case we’ve decided to hold off on starting Social Security until we reach 70, and then Required Minimum Distributions (RMDs) start about two years later. We also have a brand new mortgage. That leaves us with a negative monthly cash flow for a couple of years.
- Choices to close the cash flow gap until reaching 70, which is 3.5 years from now:
- Reduce planned discretionary spending- travel, going out to dinner, charity donations, entertaining, golf, etc. Of course some of us consider golf as “essential”…..
- Pull money from our nest egg. This becomes a tougher choice when the stock market’s trending downward.
- Take on a part time job.
- Play, and win, the lottery.
- Any combination of the above options.
- (Am I missing other reasonable options?)
- For the next several months we have enough money in our “retirement transition” fund to cover the negative cash flow gap without picking any of the above options. And we can always execute any of those options on very short notice if necessary- we’re going to have to pick at least one of them over the next few years. In the meantime, I’m tracking every single monthly expense to see where the money’s going.
So this is just a broad view of the cash flow situation most of us face, and isn’t meant to be a comprehensive lesson on the subject. It’s meant to stir up discussion, and bring up other considerations. For example, the federal/state tax situation is a template to lay over this cash flow issue. Our huge reduction in 2022 taxes really helps improve the current cash flow picture.
Many of you are already in that positive cash flow situation, and we intend to join you soon. In the meantime, I’d very much enjoy hearing your thoughts on this subject, if you’re willing to share.
OK, six deer just decided to show up in our back yard. Time to wrap this up.
Mike,
We developed a needs and wants list, and looked at cash flow like you did. I set aside funds to cover the negative cash flow until I take SS at 65 and 4 months. At that point it should be no negative (ideally). In the plan (and with a financial advisor, a couple of the future expenses are guestimates (WAG) like the cost of an extended Australia trip, and the cost to replace the windows in the house. Plan appears to be on track…but keeping an eye on the investment accts with the ongoing Russia – Ukraine turmoil.
Still occasionally think about a job…but it usually passes by quickly. Challenge is the longer you are away from it, the harder it will be to get in the role again.
Best wishes,
Don, thanks for both your comment sets. You always provide sound, pragmatic comments to this forum. Wish there were others willing to contribute, but not fretting over it. Putting down my thoughts helps me think through many of these issues, and that’s enough for me to keep the blog up for a while longer.
I was going to combine my comments back to you with replies to your other comments, but thought better as I think this will be a lengthy response.
First…..you’re not 65 plus four months yet??
We’re hoping to hold off on pulling the SS trigger until 70, but wanting to and being able to may be two different actions. I think most of us in this position (pensions plus nest egg) have an aversion to pulling ANYTHING out of the nest egg unless absolutely necessary. If we end up waiting until 70 for SS, I’ll need to either go with a part time job or pull funds from the nest egg for about three years (or start buying lottery tickets). Regarding the part time gig, you bring up a good point about being away from any profession for too long. I’m trying to wait six-to-nine months into retirement life before committing towards any sort of routine, including a part time job.
Also, like you, watching the nest egg investments very closely these days for a number of reasons. I am about to hand over most of our TSP funds to our financial advisor. He and his son have served us well for thirty years.
Last comment, unrelated to all the rest. Was talking with Jonathan Will about a week ago, and he was asking about you two. I just told him about you being in Jax for the last (12?) years and being fully retired- and your impressive collection of woodworking tools! You also know that Rich and Laura Chapman moved to Texas about six weeks ago, yes?