How I resolved a pre-retirement spending dilemma

Retirement
1

My wife went to see some newly-built houses recently, then I went back with her on Saturday. I was impressed. These are lovely David Weekley Homes, low builder-subsidized financing on top of price discounts… some of these have been on the market since 2024. It must be the softening economic outlook keeping buyers at bay.

But then I got that queasiness in the pit of my stomach… we haven’t had a mortgage since 2012. Our property tax would more than double! (though our insurance, utilities, and maintenance would go down). Could we afford it?

The way I solved it was with the retirement planner. My go-to package is Flexible Retirement Planner, which is freeware.

I’m almost 64 now, and I had been planning to retire at 64 yr 7 mo, but FRP doesn’t do fractions of a year… you either retire at 64 or 65 in my case, so I had been keeping it at 64. Well, when I put mortgage payments and more tax in, the retirement scenarios took a real hit. Then I thought, what if I just work 4 more months, so I put in retirement age 65 and then put in an extra expense item titled “retire a month early penalty”, basically a month’s worth of expenses and the loss of a month’s salary.

That fixed the problem. Portfolio survivability popped back up to 95%, I recaptured my pretty lavish Travel & Entertainment budget, and I am happy.

Then I replicated the results in Fidelity’s retirement planning tool, and I’m ready to sign the contract.

Your emotions will fool you… and you can’t “common-sense” your way into a answer. You have to run a retirement planner which runs multiple scenarios for you automatically. That’s how you stay out of trouble, but also spend whatever you’re entitled to spend.

2

I was laid off by my company 10 years ago at 60. I had been doing these retirement planner calculations regularly and it kept saying I had to wait another 6 months or a year or whatever. But I decided to go ahead and retire. We were living in a small, paid off house at the time as they always tell you to do before retirement. But we decided a few years later to roll the dice and buy a nicer home with a pool on the water but with a mortgage. I refinanced later at 2.5%. After 10 years, I still have the same amount in my retirement accounts (I have no pension, just SS) the value of our home has now doubled, and 75% of our mortgage payment goes toward principal.

I guess what I am saying is, nothing can predict the future, even those retirement calculators. Enjoy your life now.

3

Oh, for sure the retirement calculators are not going to give you all the answers… they like using a compass to navigate on waters with a current. The bow of the boat will be pointed to your target, but you’ll have to adjust course all the time to arrive there.

But as you get closer, you have to adjust less. I’m close to retirement, and running the calculator every quarter is pretty uneventful.