[Flugzeug]

Not me personally, but my parents have a sizeable investment portfolio as well as DB Pensions (one of these being an indexed government pension). They’ve been retired for several years and still seem to have a saver’s mindset.

My father told me it’s been a hard thing to change for them after decades of saving and watching their spending.

 

[Italicum]

There are some big changes going into withdrawal mode. You're right that I've already adapted to unpredictable self employment income, but I've still always had enough new cash coming in.

Has that been difficult for anyone else here? I mean, going from a "saving" mindset to withdrawing and spending. Again, look at the bogleheads thread for what I mean.

I am scaling back work, easing myself into retirement mode, but still bringing in enough to support myself and my son (in university). I expect my path to be not too difficult when I need to complement/replace my business' earnings (i.e. semi/full retirement), as my situation is relatively fortunate for my purposes. I plan to simply use the divvies generated from my accounts, plus rental income. No need therefore to implement withdrawal methods. Should my lifestyle expenses run ahead of that passive income, I would either a. adjust my lifestyle/expenses or b. partially (minimally, if at all) tap capital. I feel I would be comfortable in calling on a. and/or b. should there be a need. I plan to leave and estate to my children and give to charities. Mind you, I am trying to do some of that now for both tax and enjoyment purposes (give while you can witness the benefits to the recipients).

That's the plan but I am not too tight on anything, as life has a way of disrupting plans. It will be fine whichever way it goes.

 

[cainvest]

My father told me it’s been a hard thing to change for them after decades of saving and watching their spending.

I've seen this, people have trained themselves to limit their spending so it becomes difficult to spend more when one doesn't have too.

 

[sags]

People will find their own comfort zone, which may be very different from others offering advice.

 

[james4beach]

I plan to simply use the divvies generated from my accounts, plus rental income. No need therefore to implement withdrawal methods

Well dividends are withdrawals. You are effectively doing the same as liquidation, since each dividend knocks down the share price and removes equity from your portfolio.

If you are taking those cash dividends out of your account, instead of reinvesting them, it's the same net result as selling off shares.

But this is a great illustration about what I mean about the hesitation to actually do withdrawals. You are preferring dividends (which is a more palatable form of withdrawals) plus rental income, rather than liquidation.

This was my whole point earlier when I said that I want to test out withdrawals. What you describe is very common: usually people hesitate to do withdrawals/liquidation. I still think it requires practice.

 

[TomB16]

My father told me it’s been a hard thing to change for them after decades of saving and watching their spending.

Much respect for your father.

Our nest egg didn't build itself. In order to get where we are, we worked like idiots. I've lost count of how much overtime and extra work we have taken on to get where we are today. Our nest egg is literally our life's work. The spend down is going to be a major shift in mind set which I am still working on.

 

[AltaRed]

It is difficult for many to switch gears from accumulating to withdrawal mode. The mental gymnastics can be dealt with easier IF one can detach themselves from their portfolio as part of their actual personal being and consider it as a resource, just like using one's skills to earn income is a resource. The difference really is that instead of the income coming as a result of one's personal labour, it is coming from a place of doing nothing for it (no labour) at all. The "dollars" coming into the bank account don't have physical labels attached to them.

It is easier still if one's standard of living (cash flow spend) remains, more or less, the same post-retirement as in pre-retirement, i.e. one's SWR/VPW draw per year (or annuity if the entire portfolio was annuitized) is about the same as one's pay, net of payroll burden and allocations for investment, pre-retirement. One will spend some of that cash flow differently of course, e.g. recreation and travel rather than commuting costs and business clothing, but if the dollars spent are about the same, a person shouldn't miss a beat. The real difference is social environment and the availability of way more free hours.

Not that long ago, the proceeds of an RRSP had to be annuitized when converted at age 71. If that annuity, along with CPP/DB pension provided one with cash flow that was equivalent to one's pre-retirement cash flow, the mental gymnastics making the shift would be far easier to stick handle.

 

[Italicum]

Well dividends are withdrawals. You are effectively doing the same as liquidation, since each dividend knocks down the share price and removes equity from your portfolio.

If you are taking those cash dividends out of your account, instead of reinvesting them, it's the same net result as selling off shares.

But this is a great illustration about what I mean about the hesitation to actually do withdrawals. You are preferring dividends (which is a more palatable form of withdrawals) plus rental income, rather than liquidation.

This was my whole point earlier when I said that I want to test out withdrawals. What you describe is very common: usually people hesitate to do withdrawals/liquidation. I still think it requires practice.

Yes, I see your technical point (about the meaning of 'withdrawals'). I should have put it another way: I seem to find comfort in the idea that I will be withdrawing all the passive income my investments generate. Should that income not be sufficient (it should), I am prepared from where I stand today to a. adjust down my expenses and/or b. supplement that income with capital draw down. All plans at this point.

Admittedly, should I need/want to resort to b., it would be something novel and might require some gentle soul-searching. That's because it would be the first time in my life that, in a given year, I would spend more than my active + passive income.

 

[AltaRed]

Admittedly, should I need/want to resort to b., it would be something novel and might require some gentle soul-searching. That's because it would be the first time in my life that, in a given year, I would spend more than my active + passive income.

Over time, that should be an expectation by all retirees. If not, then 5% (as an example) annual capital appreciation will double the value of one's investment portfolio every ~15 years. Do you really want to have a portfolio 30 years from now worth 4 times your starting point when you go out boots first? I've been retired 16 years and it has become apparent to me to shed more of my portfolio now at an accelerated pace to avoid that 'problem'. The shedding is underway via gifting in various forms. One does not need to spend it on consumption if that is not their thing.

 

[james4beach]

It is difficult for many to switch gears from accumulating to withdrawal mode. The mental gymnastics can be dealt with easier IF one can detach themselves from their portfolio as part of their actual personal being and consider it as a resource, just like using one's skills to earn income is a resource. The difference really is that instead of the income coming as a result of one's personal labour, it is coming from a place of doing nothing for it (no labour) at all. The "dollars" coming into the bank account don't have physical labels attached to them.

Interesting, this is helpful. I'll see if I can try to detach myself in this way.

My parents also had a lot of difficulty "switching gears" as you say. I'm just trying to get a head start on this problem by developing the skill of tapping into my stored capital.

 

[TomB16]

James, are you enjoying working less?

Do you feel a decompression compared to full time work?

 

[james4beach]

James, are you enjoying working less?

Do you feel a decompression compared to full time work?

That almost made me laugh out loud. Yes, I'm definitely enjoying working less than my full time office job. I can actually find time to do other things.

One thing that was a pleasant surprise is finding more time available to buy my groceries, and cook. I'm really enjoying cooking.

It's also nice to actually have time to tackle organizing and taking care of necessary tasks at home. For years, I was always struggling to find a spare moment to do basic things (like repairs, or bills).

 

[TomB16]

My previous question was not sarcastic.

I enjoyed working less for a while and then I started to miss it. Even now, I still miss it. If I was single, I would have gone back to work quite a while ago.

Thank you for sharing your perspective.

 

[Beaver101]

That almost made me laugh out loud. Yes, I'm definitely enjoying working less than my full time office job. I can actually find time to do other things.

One thing that was a pleasant surprise is finding more time available to buy my groceries, and cook. I'm really enjoying cooking.

It's also nice to actually have time to tackle organizing and taking care of necessary tasks at home. For years, I was always struggling to find a spare moment to do basic things (like repairs, or bills).

... learning how to "repair" things will always be very handy but more-so when you buy/own your own home.

 

[Italicum]

Over time, that should be an expectation by all retirees. If not, then 5% (as an example) annual capital appreciation will double the value of one's investment portfolio every ~15 years. Do you really want to have a portfolio 30 years from now worth 4 times your starting point when you go out boots first? I've been retired 16 years and it has become apparent to me to shed more of my portfolio now at an accelerated pace to avoid that 'problem'. The shedding is underway via gifting in various forms. One does not need to spend it on consumption if that is not their thing.

Indeed, that aspect is complementary, meaning that I intend to spend no more than my passive income to meet my personal lifestyle expenses in retirement. The partial shedding of capital is a side and related point. That was the intent of my " I plan to leave and estate to my children and give to charities. Mind you, I am trying to do some of that now for both tax and enjoyment purposes (give while you can witness the benefits to the recipients)" statement in post 46. It would be a kind of inter vivos generational transfer of assets. I expect that to pick incremental steam after I retire and see, on the ground, my actual lifestyle expenses, income, assets at that point. Too many moving parts at the moment (e.g. very $$ support of son in out of town university) to have a more accurate and defined plan. After basic needs (for each of us to define), in my view flexibility and acceptance (as opposed to striving and psychological grasping) are key.