To Spend or Not to Spend

Comments on “Are You Spending Too Little in Retirement?,” in the April 2018 AAII Journal:

I cannot imagine anything worse than overspending in retirement. Actuarial tables are just calculated estimates of life expectancy, given a rather large population or sample set.

Though I am not “planning” to live to 100, our spreadsheets all anticipate that as the life expectancy in our forecasts. To use the government forecasts could be catastrophic if you spend to those targets of longevity.

Sharing the spreadsheets with your spouse and children is of paramount importance, particularly considering the assumptions used in their development. It is also important to understand that many models out there on the internet do not have best-case and worst-case scenarios inclusive of all factors.
—Dale from Tennessee

I finally sold my last business just before my 78th birthday in November. Since then my wife and I have been on one road trip and a trip to Punta Cana in the Dominican Republic. We’re about to leave on another road trip and then we will spend 17 days in Europe next month. We have always been travelers, but are upping the ante while we are mobile. We will be forced to limit our travels down the road and probably learn to be “thrifty.” But Grammi won’t scrimp on the grandkids, I’m willing to bet! We aren’t blowing the “wad” foolishly, but are planning to be solvent for 15 more years.
—Chuck from Wisconsin

I do not find it necessary to spend very much money to be happy or content, but I do think it’s challenging to feel financially secure no matter how much money you accumulate. From a knowledge standpoint I know I have plenty of resources, yet from an emotional standpoint I don’t feel completely secure. I suspect that I could have twice the resources that I have now and I would not feel any more secure. So, what to do about this?

My imperfect solution is to not deny myself comforts and to give to people I care about without worry. At the same time, I evaluate whether or not something I purchase really made my life better or made me or the people I love happier or healthier, and that informs my future decision making.
—John from California

Balancing Taxes and Savings

Comments on “Social Security and Medicare Can Raise Retirees’ Tax Rates,” by William Reichenstein and William Meyer, in the April 2018 AAII Journal:

Even though I’m a CPA and CFP, I am bewildered by all of the calculations and assumptions. I’m kind of old school. Do you have a budget or spending plan? You should!

Yes, consider whether an increase in Medicare premiums will break your budget or negatively impact your standard of living. Also consider what your values are: Are you trying to avoid paying taxes, or are you trying to maintain your current standard of living? Can you do both?

I guess I lean on the side of living comfortably and perhaps leaving a legacy to my loved ones. If I have to pay some taxes along the way and they do not conflict with those goals, then I will pay the additional tax. If the Roth conversion helps me achieve those goals, then I will do the Roth conversion. I lean more toward maximizing my earnings and covering my expenses than I do on avoiding taxes. Focusing too much on avoiding taxes could cause me to lose sight of my other goals.
—Wilbert Guilford from Arizona

The Purpose of Blockchain

Comments on Editor’s Note in the April 2018 AAII Journal:

I get the concepts, but unless one has a devious purpose in using a blockchain, what’s the purpose? Aren’t we in the Dutch tulip bulb and/or technology bubble all over again? Long and short, I just don’t see the utility unless one is intent on 1) hiding assets, 2) buying and selling illegal goods, 3) defeating a tax scheme, 4) selling arms illegally, and more, I’m sure.
—Edward Funston from Kansas