What, when, how does your priorities go from saving to start spending?

[QuarterMillionMan]

I'm 57 and up until a few years ago my mindset was to save at all costs. At my age now at 57 and knowing I could die at any moment my mindset has changed from saving at all costs to spending my wealth and enjoying my money rather than save, save, save. How do you know when to enjoy the fruits of your labor? I still save but now I find that I have no trouble spending if I want something and won't hesitate to treat myself if I see something that I want.

[kork13]

This is always a challenging dilemma for someone who is more naturally a saver (myself definitely included). I'm not sure if there's any sort of common circumstances for people, and I'm not sure what I would say for advice to others, besides explaining what we've done.

At least for us, it became easier to shift somewhat toward a "spending more" mindset when we felt that we were in a strong/secure position financially (3-4 years ago now, in our early 30s). We started to see some light in the tunnel leading toward FIRE ($1M+ assets & closer to military retirement), we became able to save >40-50% of our income, and at the same time we were getting particularly busy (both with jobs & kids). So we started to trade money for time -- hiring a housecleaner & lawn service, spending less time trying to optimize spending on groceries & other needs, being more intentional about taking time off from work for proper vacations, eating out more often, etc. I can't really say that we've prioritized spending more, but we've mostly just become more relaxed about how we spend our money. By saving aggressively, we became more willing to spend.

Going forward, we'll have to see how we handle it. I'll be FIRE-ready in roughly 5 years, though I may continue for a couple extra years & DW (currently training as a PT) intends to work in that field for the foreseeable future. It'll be a transition, and probably a very different transition than it has been for us over the last few years.

[LivingAlmostLarge]

A few years ago we hit spending mode. What that meant? Less austere living. I began to realizing that maximizing every dollar wasn't the issue. The issue was we had more money than time. Now with less income we don't have as much disposable income but still a substantial amount. And when we made that transition to downgrade DH's income, we decided that we were going to decrease our savings instead of staying the course and feel secure that the investments we had (which went down a lot), and the lifestyle we lived was still doable and it is.

So we decide we would save like 20% instead of 50%. We decided we would take ease up on the gas of savings and instead give ourselves a break. That we had been austere and responsible for so long it was okay to not save at that rate. Also now I don't sweat going on vacation. Now I don't mind traveling with people instead i see it as sure it's a few dollars more but we are making memories. So it's a nicer hotel than I would have picked, oh well. But I do push for a better location than a nicer hotel. Sure I didn't want to eat at a super fancy restaurant, but at the same time I don't care as long as it fits time wise for us.

I also now prioritize time. Now I look at how much time can I save if I spend a few bucks? WDW and Universal is on our agenda this summer. Savings? Going last week in august which is supposed to be less busy (with other kids back in school) but still brutally hot. But even with the "lower" crowds I think I'm going to pay for genie and lightening lanes the maximum. Why? The heat means we'll be dying so I might as well minimize standing in it. Will that increase our cost? Yes. Will it make my DH who has limited time happier? For sure. So we're doing it.

Another example. We went skiing a weekend ago at an expensive place. We have ski passes somewhere else but this place isnt' on the pass. But DH hasn't gone all season, just the kids for lessons. So we decided we'd shell out a lot extra to go somewhere not on the pass. Why? He'd ski only one week. Turns out when we were driving there he forgot the kids skis. Sigh. Another $200 to rent them for the day. We could have turned around but it would have been an extra 1.5 hours each way. No thanks. For $200? Before maybe. But not now.

Before maybe i'd at least consider a connecting flight. Now? No way in hell. Before I would have suffered a 12+ hour flight in economy without paying to upgrade. This time? I paid $267 for extra comfort. I guess it's not on everything but there are things that seem to becoming more worth it as we get older.

[ua_guy]

I echo what's been said above. It's about feeling our mortality, and having already done a lot of heavy work to increase income and build up savings. So we are now able/willing to prioritize things like our comfort, or hiring out for expertise when we need it.

[myrdale]

An older guy involved in one of the same hobbies as me said about spending on the hobby: "Use to I had money but no time, now I have time but no money".

If you can project what you're expected cost of living will be for the next 30 or 40 years, and how your savings might perform, it might be a good means of determining what you should budget for blow / fun. And then once every year or so, revisit that and make sure you're still on the curve. If after a couple of years you have more cash than expected, you can loosen the reigns some. If on the other hand you've spent more than intended, then tighten the purse strings.

I think the key is being aware of where you are, and where you're going, with the assumption that you're going to live to be +90.

People in my family have a hard time making it past 65, but I am saving with the intention of hitting 100.

[Fishindude77]

I'm 57 and up until a few years ago my mindset was to save at all costs. At my age now at 57 and knowing I could die at any moment my mindset has changed from saving at all costs to spending my wealth and enjoying my money rather than save, save, save. How do you know when to enjoy the fruits of your labor? I still save but now I find that I have no trouble spending if I want something and won't hesitate to treat myself if I see something that I want.

Wish I could answer this, as I retired six years ago at 57. How long are you going to live is the mystery?

Dave Ramsey has a pretty good way of putting this when you consider a major non-essential spend item. If you took the same amount of $$ this item / thing / activity is going to cost, piled it on your floor and lit it on fire losing all of it, could you still continue on life as usual?
We put about $500k of our nest egg into a major home remodel last year that we certainly could have lived without. So far I think that was a good decision. Hasn't required any major lifestyle changes.

[bjl584]

I've sort of organically been spending a little more and worrying about saving a little less.
I can't point to an exact tipping point, but as my wealth grows and my debt diminishes, I've loosened up the purse strings a little.
Things are good, and I'm in a comfortable spot.
It was just time to enjoy living a little more I guess.

[Atretes1]

Well, In 9.5 years I'll have a 6 figure state pension that I can draw from at 56 until I die. Its a huge plus for me and makes my savings icing on the cake. I will make that decision when I am 56....With my pension and by then a 7 figure plus portfolio my chances are pretty good on spending.

Of course who knows what life will bring between now and then.

[LivingAlmostLarge]

Well, In 9.5 years I'll have a 6 figure state pension that I can draw from at 56 until I die. Its a huge plus for me and makes my savings icing on the cake. I will make that decision when I am 56....With my pension and by then a 7 figure plus portfolio my chances are pretty good on spending.

Of course who knows what life will bring between now and then.

Are you still working though? Or is that pension frozen? How does it work if you stop working?

[kork13]

Well, In 9.5 years I'll have a 6 figure state pension that I can draw from at 56 until I die. Its a huge plus for me and makes my savings icing on the cake. I will make that decision when I am 56....With my pension and by then a 7 figure plus portfolio my chances are pretty good on spending.

Of course who knows what life will bring between now and then.

That's alot like my situation, as I described above. I haven't really thought of it that way, but I agree -- along with a pair of solid pensions, DW will still be working for a while, and we'll have all of our savings/investments (which have grown to be significant, and are continually growing). Our pensions will cover our needs, DW's income will cover the wants ... so our investments will mostly just be icing. What that means for how our spending will change over time ... is a little mind-boggling.

[Atretes1]

Are you still working though? Or is that pension frozen? How does it work if you stop working?

I am still working and I would need to continue to work to be able to retire as early as 56. Its a point system for retirement. KPERS.

[LivingAlmostLarge]

That is so neat. My friend just made fun of me for saying that now I want double what my target number was. I said the $5M i thought we needed to retire is fine. We can easily manage on that and are really good there. But DH is working too much to be satisfied with that. With the risk we've both taken and the work we've both put in, it's definitely us wanting more. Otherwise he should have just stayed in a comfortable easy w2 job.

[disneysteve]

I think you really need to crunch the numbers and use online retirement calculators like FireCalc to see where you stand and play around and see how much you can spend without impacting your predicted success rate. I did a ton of that last year in preparation for dropping to per diem status at work. Now that I've been per diem for 8 months, I'm starting to run the numbers again to see where we stand. My sense is that we're actually doing better than predicted, which doesn't surprise me because I was intentionally conservative with my estimates. I was waiting until this weekend to sit down and review the first quarter and extrapolate the numbers out for the year. What I expect to find is that I can actually work even less than I've been working and still maintain a low withdrawal rate from our portfolio. Either that or I can maintain the same work schedule and loosen up the spending, or a little of both - less work and more spending.

Bottom line is knowing your numbers and having a plan. And keeping in mind that a plan isn't a set thing and needs to be tracked and revisited periodically.

[scfr]

For us (me & DH), it helps us to know that we went through the steps to squeeze maximimum value for our dollar and have planned things out well. We're just programmed that way after almost 30 years of living like that.

We're planning a European vacation later in the year (10 nights in 3 cities). We've already earned enough credit card bonuses to cover 8 of those nights, DH has the mileage to cover over half of his airfare, and I spent a good chunk of the weekend researching and coming up with a rough schedule and very detailed budget. Next I'll be pinpointing exactly what sights we'll take in. DH leaves much of the itinerary to me because he knows I'll come up with a bunch of cool places we can visit for free, any places we have to pay will be worth the price of admission, I'll have the "good cheap eats" takeaway restaurants mapped out, and will have figured out that we should stay at hotel XYZ because it's close to where the bus from the airport will drop us off and has free breakfast. And he's a wizard at knowing exactly when to book the flight. I also milk the experience way beyond just the travel dates. I've already got books & DVDs from the library (about the places we're going to visit or stories set there), with more on order, to spread the vacation fun out much longer for absolutely free!

Knowing we're going to get what will hopefully be an excellent "bucket list" experience for $3K, and that we're maximizing every one of those dollars, makes it easier for us to to spend it.
Could we blow more on the trip? Absolutely. But we won't. We'll enjoy it more knowing we maximized our $. That's just what works for us.

I will add, as others have, that we wouldn't be considering be a trip like this if our financial house wasn't in good order.

[disneysteve]

We're planning a European vacation later in the year (10 nights in 3 cities).
Knowing we're going to get what will hopefully be an excellent "bucket list" experience for $3K, and that we're maximizing every one of those dollars, makes it easier for us to to spend it.
Could we blow more on the trip? Absolutely. But we won't. We'll enjoy it more knowing we maximized our $. That's just what works for us.

I will add, as others have, that we wouldn't be considering be a trip like this if our financial house wasn't in good order.

Sounds great. Have an amazing trip. Just before I came to the board and read this post, I had emailed the travel agent who is handling the Mexico trip we're booking for next February. A friend is turning 50 and her wife is planning it as a surprise and invited us (and others) to join them. 7 nights at an all-inclusive resort in Tulum. It will be our first big vacation since 2019 so we're not looking to be super frugal. We booked a club level junior suite, which really wasn't that much more than a standard room and has a bunch of extra perks. As I said above, though, we're tracking under budget overall so splurging a bit is no problem at all. Not counting airfare, it will be just under 5K.