Spending Down

[Bluerobin]

At what age should you switch from investing, to spending down the nest egg? Our present plan is simple: When one of us dies, the other should sell off everything and divide by 20. Then spend 1/20th each year.
No, I don't to mention specifics so I did not post on YM. Besides I trust you folks much more. I have a 78 YO friend, who converted to cash between 70 and 75 and is now spending down. Is that a good guide?

ETA: No kids to inherit our "fortune". Several charities will get what is left.

[Bluerobin]

DI, we are getting by comfortably now. I get dividend income sent to me twice a month, so that provides for many extras. I retired 2 years before the crash, and things were great then. After, I am a little more careful with some investments.
I just cannot figure what a reasonable life expectation is for us. I have heart problems and Crabby is a cancer survivor, so I don't see us making our 90's.

[ModE98]

'Ole Blue.... I'd plan on the probability of 10 years. My wife had cancer (3 differing types) for which she had operations and chemo. Survived all of them, it was unfortunately Alzheimer's that caught up to her at age 77 (late 1999) and survived until August 2004. I had a quadruple bypass in 2003 and still going, with some chest tightness on occasion (might have just been doing too much at the time).
I hope you are both covered by some long term care insurance. Ours came in handy and saved $$$ as wife was in Assisted Living for 3 years, and Skilled Nursing Care for 1 year, 7 months. I am still covered if it ever comes to need. Perhaps, if I am lucky, will just go to sleep some night in the future and not bother to wake the following morning.
Have a little aside for "final expenses" and slowly spend down the rest. (Travel, Cruise, New Lexus, or do what pleases and have fun as long as it lasts.) Make the best at your time around. Like J.G. Wentworth ads say at the close..... "It's your money, use it now!"

[Bluerobin]

We are in the process of sheltering assets, so Long term insurance should not be necessary if we can make it 5 years. We have enough in the bank for our cremations. If we go to the home, our attorney will get a "burial" account. We generally do what we feel like as far as travel and entertainment. I just wonder when should the spending start.

[ModE98]

Just what would you like to do and enjoy within your remaining years? Why not make a start now and play it as whatever is appropriate to your desires. Sounds like you are fairly well prepared for "when the time comes". The chances are you may make beyond 5 years.
Life expectations keep expanding, so still think it could be 10. Of course, you know much better than we here, about how you really are doing. My comments are certainly not "advice", but only mere "suggestions" based on my experience. Everyone has there own view and acts accordingly. I am 88, going on 89, still bowling 3X per week, yet have my moments when it may become "the big one".

[kadee79]

Don't forget to take a look back at your parents & especially your grandparents. Did any of them live beyond the "normal" age range for their time? Did any of them live well beyond normal? That can play a big part in your own longevity!

My brother was surprised that he has lived past 70 (I have no idea why), but we had one grandparent who made it into their mid 80s back when that wasn't all that common.

[Bluerobin]

Kadee, Dad died before I was born. Mom made it 85. Grandparents and aunts and uncles were all over the place, with all kinds of reasons. So family longevity is not that much help.

[The Virginian]

75 is a safe bet. Anything beyond 95 you will (might ;D) have Social Security to fall back on. If unsure just spend a little less each month for reserves.

[Bluerobin]

The impression I am getting is to start spending down in our early to mid 70's. Guess we could do the divide by 20 plan then.

[Bluerobin]

Update: I asked Crabby for her opinion today. She wants to leave a bunch to charity. So much for a complete spend down. Guess for the time being we will continue to invest. Oh, yes, she wants new furniture NOW!

[ModE98]

Yep, it's a good start.

[dancinmama]

DH will hopefully retire next year at age 55. We will start spending down at that time. We don't plan to take our retirement savings and divide by 30 and spend that much each year, but there will definitely be more discretionary spending.

We are not "planning" to leave an inheritance other than our primary residence (that is if we don't sell it before we die). ;D

[Bluerobin]

mama, somehow, we have increased our discretionary spending too. We eat out more, and seem to have the funds to do what we want, without hitting retirement accounts. The funny thing is we retired on less than we were making. Funny how it cost so much to work - we are saving @ $250 a month, just not buying gasoline, not to mention clothes, lunches, etc.

[The Virginian]

Funny how it cost so much to work - we are saving @ $250 a month, just not buying gasoline, not to mention clothes, lunches, etc

I was thinking the same thing - I spend $10-15 a day just for lunch $200-300 a month on lunch. Combine that with less driving and less gas I could easily cut $400 a month from my budget.

If I really wanted to save we could potentially eliminate one of our cars but in reality that's probably not going to happen. I'm sure if you put your mind to it you could trim other dollars from your budget.