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How Will It Feel to Actually Spend Our Investments?

Before we dive in today, we want to say THANKS. We’re so grateful to all of you who read here and comment here, and we haven’t told you so in a while. So we’re sending a big virtual hug your way. (If you haven’t read it, here’s our post on what you guys mean to us. It’s all even more true now than when we wrote it.)

Okay, tell us if this sounds familiar to you: Somewhere in your home, you have some tiny soaps or hand towels that are “for guests only.” Or you have a formal living room that’s only “for special occasions.” Or dishes that only come out at Christmastime. Or some something that’s so special that you literally never use it at all. Or even if you don’t have any of these things now, you grew up around someone who did.

In my house growing up, we pretty much had all of the above. We weren’t rich, but my parents must have thought that that’s what civilized people do, they reserve part of their belongings for other, fancier people to use. You know, in case the Queen just happens to drop by, or maybe the Dalai Lama. But the idea of having soaps and hand towels we couldn’t use, and a whole room we never set foot in, to me it all just felt so wasteful. So frivolous.

Even though I hated that we had stuff we didn’t use when I was a kid, and we make a much bigger effort now to use everything we own and to use every part of our house, the truth is that we still have something very central in our lives that we aren’t allowed to touch, that we’re saving for a special occasion: our investments.

Special Occasion Thinking

We’ve spent more than a decade building up our savings and investments, all the while granting them a special status by not touching them. Even shelling out $8,000 for our tax bill this year felt painful, despite the fact that $8,000 is practically nothing compared to our full portfolio. The pain of paying that bill made me wonder if we have “special occasion thinking” around our investments. In other words, if we treat our investments like those tiny soaps. Nice to look at, but not to use.

Starting sometime next year, we’ll quit our jobs and we’ll start to live primarily off of our investments for the first time ever. We’ll go from being savers to being spenders. From net earners to net whatever-the-opposite-of-earners are. (Can we mooch off our own investments? In that case, we’ll become net moochers.)

It’s going to be a huge shift.

Given this “special occasion thinking,” I’ve begun to wonder: will we even be able to bring ourselves to spend our investments? Or will we start to view them as a sort of super-sized emergency fund, and find other ways to make money to cover our living expenses? (Further evidence of this thinking: Keeping the bulk of our nest egg off-limits until we hit our 60s, even if that’s for a lot of sound reasons.)

Obviously creating additional streams of income wouldn’t be a bad thing, and doing so would increase our long-term chances of success at making our portfolio last. But that approach starts to feel a little like not using the guest towels, when the whole point of a towel is to be used. (I’m not joking — I remember having to dust the guest soaps and guest towels as a kid. Towels and soaps that get used never need dusting. Not sure if there’s a financial analogy in there, but if you come up with one, please share it!) The entire reason we’ve spent all these years saving is to be able to use that money for our living expenses in the not-too-distant future, not just to admire the pretty numbers.

Using the Guest Soaps, er, Spending Our Investments

When it comes down to it, what will it actually feel like to spend that money? Will it feel painful and scary, like paying that tax bill? Or will it just be a matter of ripping off the bandaid? Scary in theory, but no big deal once we actually do it. We can’t really know, because this will all be new territory. But we have some thoughts on how we can soften the blow:

Redefine success: Currently success means the numbers are getting bigger, both the ones we can control with our savings rate and even the ones we have zero control over because the markets are in charge. (Yes, we know it’s irrational.) But we’re going to have to define success differently in retirement if we’re not to feel like total failures at it. So far we’re thinking we can define success by how well we stick to our spending plan (shh… don’t call it a budget), how well we hack travel, and maybe how well we do at fun jobs.

Stop defining ourselves by a number: We don’t actively or consciously define ourselves by our net worth now, but we sure know what it is, we feel proud for having gotten to this point, and I’d be lying if I said we weren’t a little attached to that number. In positive market circumstances, our net worth should continue to climb even as we begin drawing down our investments, but just as our net worth sometimes goes down now, it will inevitably go down in the future, and may even decrease over time if the markets misbehave. The less we define ourselves by our number, the less devastated we’ll be if the number shrinks.

Remind ourselves that it’s okay for the numbers to go down: The final step will probably also bear the most repeating. We’ve seen our numbers go up for so long now that seeing them go in the other direction will no doubt be jarring. Not being able to dump more money in when the markets dip will be a bummer. But checking in with our projections will help, reminding ourselves that we’re okay spending down most of our taxable accounts (with a buffer, of course) in our two-phased retirement approach. (We hope we don’t spend them down entirely, of course, but we prefer to rely on conservative projections, and so accept this possibility.)

Any of This Sound Familiar?

Anybody else feel like special occasion thinking around money is real? Retirees especially, we’d love to hear from you on this! Was it hard to start tapping into the accounts that had long been off-limits? And for those who have no money hangups around this stuff, feel free to regale us with tales of things you weren’t allowed to use as a kid — my memory is stuck on these little soaps that were shaped like roses and seashells. :-)

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89 replies »

  1. I remember growing up, my grandma made a big deal about eating off of the fancy dishes from the China cabinet on he holidays. I never really got why you would have this big cabinet with dishes that you only use one or two times a year. When registering for wedding gifts, I remember the lady pestering us to register for these fancy dishes and we said no thanks and dragged her to the sporting good section where we registered for stuff we actually wanted like a grill, a football and sleeping bags ;)

    As for $, I think any fear has components that are rational and components that are irrational. If you have 40-50X your spending saved up and are certain you won’t increase your spending in the future, then not touching your investments is an irrational fear. If you have 25X on the nose, the market is at current high valuations, interest rates are pathetically low, and you’re being honest with yourself that you don’t know what your spending preferences and needs will be in 30-40 years then having some anxiety about hopping in to spending down your assets is probably a healthy fear.

    • Hooray for registering for outdoor gear instead. The 4-season tent we got from our wedding registry finally delaminated (though we might be able to fix it), and that was a way nicer remembrance of our anniversary than breaking some plate. :-)

      As you know, we aren’t following 25X exactly because our investments are so heavily skewed toward our tax-advantaged accounts that we don’t plan to touch, or will only touch minimally, before 59 1/2. But just going with that analogy, we’ll have 50X at least in the “later years” savings, but closer to a small margin 25X for the early years. So yeah, focusing on conserving capital early on will be a good thing, either by spending less or by finding supplemental income.

  2. Oh, the towels! Yes, I had a similar experience. :)

    I’m a little concerned that we won’t spend, at least initially. It’s save, save, save, then spend, spend, spend. I imagine we’ll be able to strike a balance, but I think it’s a little daunting.

    • Haha — good to know it wasn’t just me with those blasted towels and soaps. :-) It’s definitely going to be a learning process to figure out how to get comfortable spending our funds, and we’ll probably try a few methods to offset some of the spending, to conserve principle. But you know we’ll write about whatever we do! :-)

  3. Thanks for the shout-out :) I know I’d have the special occasion guest soap spending aversion you’re describing. (That is so funny to imagine you as a kid dusting the guest soap!) It’s a paradigm switch from “this is not to be touched, but to grow” to “this is to be spent as planned.” It’s great you’re coaching yourself on this thinking ahead of time.

    • Thanks for all the comments! :-) And I will tell you a secret — sometimes as a kid, instead of dusting the soaps, I would just quickly run them under some water. So in a way they did get used! Haha. But you’re so right that going from saving our money to spending it will for sure be a massive paradigm shift, and I’m not sure if there’s really any way to prepare ourselves for that. But we’ll keep you posted. :-)

  4. Yes, yes we have those Christmas plates that most often we forget to use around the holiday. Oh well, maybe next year. But in reality this hits home a bit. My wife and I spend a good amount of time saving, talking about saving, investing or talking about investing. But in reality what will it feel like when we act on our plans? I am curious to hear from the commenters who are in retirement. How was that transition?

    The Green Swan

    • Maybe use your Christmas plates for random holidays — Christmas trees plus 4th of July! Christmas trees plus Arbor Day (um, perfect!). :-)

      I do think this topic is worth talking about because most of us are spending all of this time training ourselves to save, and then at some point we have to do a 180. The Accidental Retirees and Mr Fire Station have both weighed in as retirees — but with very different points of view!

  5. I think there are three things to quell any anxiety, assuming your portfolio can sustain a SWR lower than the too often described 4%
    1. A clear strategy on how to withdraw from your portfolio. Darrow over at Can I Retire Yet has some excellent research on withdrawal strategies. Implementing and sticking to it will require planning and discipline which I am sure you can handle.
    2. Sufficient cash to withstand an extended bear market without depleting your portfolio in those circumstances. We will experience such bear markets for sure.
    3. Bear market + unexpected expenses = “ice in veins “required.

    For the optimist, the S&P 500 has performed incredibly well over the long haul. The latest post over at A Wealth of Common Sense is a good read about 30 year rolling stock market returns.


  6. We’re in our second month of ER and I can tell you that so far, I’ve thought far LESS of our financial balances, than I did when we were working. You should also consider that under a “safe withdrawal rate” and ordinary market returns, your nest egg should NOT go down. Ours is up so far – a nice amount already. Go ahead – use the nice China – it shouldn’t scratch!

    • Well that’s some good news! Thanks for sharing that. In normal/positive market conditions, we’ll definitely be fine, it’s the bear markets that will test my mettle for sure. That’s what will scratch the china. :-)

  7. I spent the weekend dealing with fine china. My own and my mother’s ( or should I say my mother’s and my grandmother’s). None of it gets used. My sister started planting succulents in china tea cups last weekend, actually using these tea cups, and my off limit self says that’s wrong.

    I’m so far away from spending my investments, but I’ve already thought about this. I expect I’ll still try to save a portion of what I draw off the accounts. Falling account balances have been an incredible motivator for me for years, one that makes me act and usually work. The whole point in retirement is not to do that. I have a feeling that my solution will be to over save to deal with it.

    • My first reaction was, “No! Don’t plan in your own teacups! That’s what china from the thrift store is for!” Which of course makes no sense if no one is using the china. But I do have a strong desire even still to keep the full set together — then maybe *someone* can still enjoy using it, even if that’s not you. (I dream that I could be the type of person who uses china every day — but let’s get real: all that hand washing? Um, no.)

      I think your over-saving solution makes total sense. The hard thing is balancing that desire to oversave, which I share, with the desire to hurry up and quit already. They don’t exactly go together. So now I’m starting the think the alternate solution might be to underspend, or at least find other sources of income to offset the spending in retirement so we’re drawing off way less than the 4% equivalent. To be determined!

  8. This almost fits in your “streak” category, you spent so much time building and maintaining your nest egg, the thought of selling and taking some away seems crazy!

    It’s like those crazy cake builders, they spend days making crazy cakes -I wonder if the ever eat them

  9. I can remember having hand towels that we only used on special occasions, but I don’t THINK my folks actually had special soaps for those purposes too – at least if they did, I certainly don’t remember them. I didn’t think about it much back then, of course. I just enjoyed the opportunity to use stuff that just seemed (and felt) brand new due to very little use! :)

    I’ve thought about the question that you’re asking before – after spending all those years in the accumulation phase of your life, what is it going to be like to suddenly switch gears and begin spending everything that you worked so hard to achieve.

    I think it’ll be like a hump – it might be kinda strange at first, but after a while we will probably just get used to it. Once the hump is crested, then it’s really all downhill from there whether or not we have additional monies coming in. After all, that money is there for a reason. We worked for years to accumulate enough cash to travel full-time, and once the time comes to actually make that happen, I don’t anticipate much hesitation on our part, but the truth is we don’t really know for sure.

    After all, we aren’t there yet.

    …but soon. Soooooooon!

    • You guys are definitely in the same boat as us in facing this new challenge sooooooooon! Since you’ll have a little headstart, please report back on how it feels to draw down principle. The Accidental Retirees comment that it IS hard makes me believe this is a legitimate concern, not just some pointless bellyaching I’m doing in my spare time. :-)

  10. I actually don’t think it’s a bad idea to have the mentality that you want to make your investments stretch. It’s not like you’re not spending it, but you’re just making it last longer. The point would be though to do work that you LOVE, when YOU want to, instead of having to do it. But it never hurts to make that stretch!

    • Totally agree with you on stretching! I think the hard thing is balancing “stretching” with “not touching at all.” It will definitely be a learning curve to adjust to the new paradigm!

  11. I do this with clothing ALL.THE.TIME. Example: I buy a new suit for an interview. I could easily wear the pants to work. But they’re my “good clothes”, and I don’t want them to wear or fade, or the pants not to match the jacket, the next time I need it. So, it sits in the closet, untouched, for years. And then it’s either too big or too small the next time I need a suit. So, I buy a new one. Such a waste!

    • Oh I’ve totally been there! I’ve recently done two massive closet purges, and it was a bit horrifying to see several pieces that I had literally not worn once. D’oh! But that’s another benefit of early retirement: No need for work clothes! :-)

  12. We had some fancy China and I only remembered ever using it 3x in my whole life. Then something happened and it was lost, and my mom was so torn up about I and I thought, “why are you torn up about losing this stuff? You never used that China and you just lugged it from storage place to storage place. Maybe someone will get to actually use it now.”

    We have discussed this and how it will all play out. Our strategy is to swap the majority of our non bond/cash portion into a dividend index fund to have as some cash coming in and then supplement the rest with sales of the rest. Like you we just have to get to 60 and then we’re “golden”, lol. Until then some of our bridge accounts may go down, but that’s fine because we’ve planned for it and it should all work out. Again these plans have no other income so if Mrs. SSC likes teaching that’s a huge buffer or if we do anything else for income we may not even need to cash anything else out.

    It’ll be exciting to see you guys take the reigns first though and read about any bumps or hiccups or nothing like that at all that happens. Exciting stuff just the same!

    • Reading your story, I’m still a little heartbroken for your mom. :-) I’m sure she had some major sentimental attachment to those special dishes, even if the cultural habit of having special occasion dishes is a bit silly.

      The dividend index fund swap is an interesting idea — you should write about that plan! I’d love to know how you’re thinking about it, and what that will change for you. And Mrs. SSC’s teaching gig does seem like a game changer (has the official offer letter come through yet??) in terms of FFLC cashflow. Who knows — even though we say we don’t want to have to work, we may still end up with some side gig or part-time situation like that that prevents us from having to draw down our principle. Just gotta make it to 60… ;-)

  13. My father’s mother had the guest towels/soaps thing going too. Dad thought the “dust the soaps” routine too much growing up, and so my siblings and I grew up with nary an unused soap or towel. I prefer it that way too. We set the table with the good cloths and napkins regularly, and guests get the same soaps and towels that the kids get.

    For my parents and me, it’s a conscious choice to prioritize the everyday over the unlikely. We are gracious hosts, not because of our soaps and towels, but because of our care and attention.

    • How much nicer — no dusting the soaps! :-) We definitely live now with the philosophy that we don’t want to own things we don’t use, so everybody uses the same soap at our house, too.

  14. Ha! The guest soaps. This really is a perfect metaphor for this! As someone who struggles with actually using my emergency fund for emergencies, I can’t even imagine how I’ll feel when I get to this situation. However, I hope that there will be enough of a shift in mindset to make me feel like I am savoring my hard work. And if my retirement is as well planned as yours, I think I’d feel like I had a nice solid footing to sink into!

    • :::shaking fist at this blasted, dusty guest soaps!::: ;-) “Savoring our hard work” — y0u’re so right. That’s how we have to think about it. But man, I am legit nervous about this, because once we have a gap on our resumes, it becomes a lot tougher to generate new assets!

  15. This is such a difficult issue for me. My initial retirement financial plan involved living off only fixed monthly income without accessing the principal or the growth on our investments, and rolling the growth into other, higher risk/potentially higher reward investments. After a few months in retirement I realized several of my projected expenses were way off the mark, necessitating the use of the growth (not the principal) of the investments just to cover routine expenses. First and foremost was the ratcheted up medical insurance premiums, plus the multiple out of pocket co-pays. Next was veterinary bills, staggering with six aging pets in a mountain environment. Fuel was also far more expensive than I’d budgeted, eventually leading to us selling our 2008 SUV and purchasing a new, fully warranted hybrid. Those changes, along with a few other higher than anticipated expenses (cable internet/phone/television and cell phone service), caused a huge shift in my budgeted numbers. We fixed what could be fixed (no more Comcast, Consumer Cellular instead of ATT), but even with the new, reduced utilities and fuel bills, we typically spend into the dividends every month. Recently Mr. AR and I discussed how much I dislike carrying the zero percent car loan, and he broached the subject (again) of taking the funds to pay off the loan in full from our assets. Unfortunately, for me at least, “dipping in” to the principal brings up all sorts of negative emotions and anxiety. When we started running the retirement numbers, I didn’t feel that I was being overly optimistic, but it certainly turned out that way. Not being able to invest the dividends at this point is something I’ve learned to accept, but taking it a step further and actually pulling from the principal is a leap I just can’t seem to make. Of course, we did so for major purchases (a quarter of a million to pay cash for this house, $60000 for renovations), but to pull from the principal every month would be very, very difficult (I would venture to say impossible) for me at this stage. I look at the budget numbers frequently, and it appears to me we should be living comfortably without touching the growth, let along the balance, so I find it very difficult to accept having to take from funds that generate income for us. I thought, with time, this all or nothing attitude I have toward withdrawing from the investments would soften, but it seems to have gone the other direction. My present financial goal is to apply ALL monthly dividend and interest income toward the car loan. This will not only pay the car off rapidly, it will effectively stop us from spending into the growth just because it’s sitting in the bank doing nothing. I’m not certain how I’d feel if I were scheduling fixed monthly withdrawals and watching the balances fall, but my best guess is I’d be out looking for supplemental income in order to avoid doing so. Our situation is unique in that we truly can live within our means without touching either the growth or the principal, should we choose to do so, we just don’t appear to be that disciplined at this point in our lives for reasons I’ve yet to pinpoint. Great topic today, thank you.

    • While I completely understand all of the anxiety you feel around spending your principle, I’m also a little surprised to hear this. I was thinking our concern was a dumb one, and that real retirees just cope with this easily. In my mind, I was thinking you’d say, “Oh, yeah, that’s just a little hump you have to get over, and then it’s fine.” So, wow! Not the case! This is a legitimate concern. You’re making me more glad that we’re thinking about this now, instead of letting this take us by surprise when the time comes. All of that said, it makes TOTAL sense to me that you would have massive trepidation about selling off the assets that are generating income for you, especially knowing that it’s harder now than it once was to generate new assets!

      • It is much, much more difficult to spend hard earned assets saved over multiple years than I ever anticipated it would be. I imagine it would be quite different in your situation, at least for those years before you turn sixty. For us, it’s proven to be quite a sticking point between my husband and myself. I can’t see it changing anytime soon; I’m firmly in the “leave it alone” camp and he’s definitely leaning toward the “spend it now” side. With time it may smooth out, but for now I simply cannot justify dipping into those assets when there’s clearly no need to do so. My father was extremely frugal in retirement (his whole life, really), and I never understood it. I certainly do now!

      • I suspect we could fall into a similar pattern — me trying desperately to hang onto our dollars, while Mr. ONL, probably more rationally, is fine spending them because *that’s what they’re for*! I SO appreciate your warning!

  16. My parent’s house is STUFFED full of things we weren’t allowed to use. The formal living room couch, the formal dining room and all the fancy dishes in it (from both sides of the family stretching back a few generations)……. they stopped short of the plastic on the couches, but it was a close call. Now all I can think of is what we’re going to do with that stuff when they get older!

    regarding the shift from saver to spender, my friend and I were just discussing that this weekend. He and his wife are closing in on retiring early and this was one of his concerns. You’ll have to let us know how it goes!

    • Estate sale! Get your parents out of the house when you do it, but an estate sale will definitely let you get some value out of all of that precious stuff when the time comes. :-)

      Tell me more about this — you know someone in real life who is about to retire early?! That’s so rare! How did you happen to figure this out about each other???

  17. No special soaps or hand towels in our house, but we do have holiday dishes which is a little crazy when you think about it. It is a one time investment that does get used year over year.

    We felt that way when we finally had our e-fund fully funded. Even when an emergency came up we didn’t want to part with the money. It wasn’t until I lost my job that it became real and a need to start spending it.

    I’m sure the investments will take a bit of time to adjust to spending, but when you don’t have a regular income coming in I’m sure it will sink in fast.

    • If you really USE the special dishes, then it’s not THAT crazy. :-) We can definitely relate to not wanting to spend the e-fund, though you guys for sure had a more traumatic event to force you into getting over that hump! I’m sure you’re right that we’ll be forced to accept the new paradigm, like it or not. :-D

  18. Did not know I was a top commenter.. woot woot… It is that the post ingenue a thought process in my mind…

    You ask very good questions. I have no clue how we will feel when we are close to pull the trigger. I do understand the feeling. For years, the focus is on the number going up up up. Then it will go down down down. The core thought of the 4pct rules to me is that nest egg can support you forever… that would mean, that in the long run, it grows with inflation. What about this as a definition of succes?

    This exact thinking is the reason that I doubt about indexing and would love to have half our portfolio in DGI. That way, we can not touch half of our portfolio. Or build a DGI portfolio to pay for holiday. No dividends, no holidays (better than: no dividends, no food)

    • Yep, you are actually in second place on comments, not that it’s a competition. :-) I think you’re right that our definition of success needs to shift to focus on how we are managing our portfolio long-term, not whether it keeps growing at astronomical rates. Indexing vs. DGI is as ever a good Q. We’re still comfortable with index funds since we don’t want to try to pick winning stocks and continually reevaluate if we have the right ones, but I definitely see the appeal of a portfolio that kicks out enough dividends to live on without having to sell off principle!

  19. Love the comparison of your investments to the guest towels and soaps. It’s funny how many of us have the same memory from childhood :)

    I’ve thought about this a lot so I’m also curious to hear what people who have already retired have to say. Are there any other websites or books that they found helpful? I’d like to avoid meeting with a financial adviser but would consider doing so for some guidance and peace of mind shortly before retiring.

    You’ll definitely have to let us know in a couple years how things are going once you start withdrawing from your investments.

    • That must have been a generational thing for baby boomers, as a reaction to their Depression-era parents’ over-frugality! Your point about meeting with a financial advisor right before retirement is a good one. We had Personal Capital run a stress test (free!) and give us the thumbs up, but I do think having a pro give your numbers and plans a once-over is a good idea, so long as it’s a fee-only planner and they’re not just going to push their own funds on you. And we’ll for sure keep you posted on how it all goes!

  20. I love being called out for being a fangirl! :) We had a whole room for visitors… you know, there was the family room with the TV and couches, etc… and then there was the living room with the couch and fancy pillows we never sat on unless people came to visit that were official or special or we didn’t really know. Our “formal” living room. I always thought it was nuts. It wasn’t off limits… but it also wasn’t comfy! :)

  21. We definitely grew up with those seldom used dishes that are only used for holidays and what not. I don’t think I’ll have a problem spending down my investments. Money is a tool to be used, whether that’s for now or for later. I figure if shit hits the fan, I can just get another job. :)

    Of course though, it’s several years before I need to draw down my investments.

    • That’s great — that means you’re prepared to use your money for what it’s for! Keep us posted if that stays true as you get closer. ;-)

  22. This is one of those things I worry about as reality gets closer to settling in. We are so used to seeing our numbers go up, it might be a shock to the system to switch the “spending down” mode.

  23. I think initially it will be a little weird, but like getting rid of a bad lover, it will eventually be a relief not to be earning but reveling in the reward.

  24. Aw, thanks for the shout-out! I actually really like stealing and using little tiny hotel products, though I feel like I don’t see those decorative soaps too often these days. Or else they just give you one soap and you use it while you’re in the hotel and then feel uninspired to pack up and take home a partially used soap. Anyways, I like to steal the shampoos and use them later as travel shampoos so I don’t have to pay to check a bag (if that makes sense).

    • I’ve gotten so picky — now I only take the hotel toiletries (which I bring home for guests) if they’re a super fancy brand. Haha. And — enviro nerd alert — I actually travel with a full-size bar of soap, and I usually use that instead of using the tiny bar three times and then throwing it away. But then sometimes I still take the small soap home… I might be doing it wrong. :-) And heck, whatever you have to do to avoid checking a bag is worth it in my book! I can’t even remember the last time I checked a bag, but I know a big bottle of liquid could force you into that.

  25. I remember those exact little soaps you’re talking about. At least it’s not as bad as the guy who collects cars, but doesn’t drive them because it will devalue them.

    I’m always worried about outliving my money. I like the idea of converting capital assets into cash-generating assets prior to retirement. In that case, you wouldn’t actually see your net worth decline. At worst, it stays the same.

    But I’m not sure it’s always feasible.

    • You’re giving me total Ferris Bueller flashbacks, with the car you collect but don’t drive. :-) We’ll be pretty well diversified in terms of asset classes, and we also have our rental property, so we do have some of that covered. But given that we got such a big head start on 401s and only really started focusing on taxable accounts in earnest in the past few years, we’re not going to have enough liquid assets to generate the full income we need for “phase one” of our retirement. Sad but true. But by selling shares, we’ll be completely fine — we just have to get to 60, and then we’re golden. :-)

  26. I am fascinated by what it will be like to start living off of the money you’ve built in this way. I am really glad you’ll let us “see” you do it first, which may help acclimate those of us who are a bit farther away from this life change. Decorations you have to dust and cannot use for their intended purpose drive me batty.

    • Haha — same here with those decorations! And we’ll for sure report back on how it goes — I would expect some ups and downs! We’ll never have tried to live without a paycheck before, and I’d be shocked if it’s not at least a little disorienting!

  27. I remember those hand towels and I may or may not have a few handcloths on a top shelf that are for decoration that my 6 year old corrected my thinking about…I now no longer care if they are used or not. I’ve certainly felt this way about money in the past…heck even today. I’ve taken on side hustles to pay off student loans and realized that I needed help with a few online tasks. I work full-time, hustle part time and I have a family to tend to. When it was time to send over a portion of my hard earned side hustle money I thought about crying a little (no shame), but I had to because I have to maintain my sanity!

    • Hi Latoya! Kids can be so insightful. :-) I love how your 6-year-old was the one who pointed out that towels should be used… I’m sure I did the same thing as I kid, but I clearly wasn’t as convincing, since the towels stayed off limits. ;-) And I totally get not wanting to part with that hard-earned money! No shame at all in that!

  28. My mother always had a guest towel set, fancy soaps, and special occasion dinnerware. I remember that we also had plastic covering on the couch in our “guest room” that only came off when the guests arrived. Lol! But I can honestly say that thankfully, I’ve never followed in her footsteps and have what I like to call an eclectic mix of casual dinnerware, and I can assure you that plastic will never come near my house!

    But getting back to the very astute post that you wrote, I can’t even imagine what it must feel like to finally be tapping into our investments. Initially, it makes sense that we would want to preserve our funds as long as possible out of fear of the unknown. I would assume that over time, this feeling would dissipate and would become the norm. Of course, we are nowhere near this stage, so there is not a lot we can say on this. :) – Mrs. FE

    • Hooray for breaking the plastic on the couch cycle. :-) We’ll keep you posted on how it goes once we start tapping into our principle. We expect it to be a bit of a shock but, as always, we think it’s better to anticipate the challenges in advance.

  29. Enjoyed all these stories, which brought back memories of growing up and experiences with my parents and grandparents! Currently, in our own household we are “fortunate” that we have so little space, we can’t have multiple sets of towels (“good stuff” vs. “every day”). But I’m sure once we age and once we live in a less expensive per square foot location we will display that same behavior as generations before us.

    While there is a certain degree of irrationality when it comes to preserving soap and towels, there is a very good rationale for feeling nervous about digging into the principal during retirement. Market volatility is never pleasant, but during your working years at least you can tell yourself that during the downturn you buy stocks at bargain prices. Thus, you buy more shares when the market is down, fewer shares when the market is up. Every time I want to feel warm and fuzzy I look at the tax lots of S&P500 index funds I bought in March 2009!
    During retirement, this reverses. You sell more shares when the market is down and fewer shares when the market is up. That takes a strong stomach and some getting used to!

    • You’re so right that it’s all going to take a lot of getting used to. I’m already not great with volatility now, so it should be fun. :-)

  30. We were given a beautiful Wedgwood dinner set for our wedding, which we use every meal. It has chips in some of the crockery and many of the pieces have broken, but it brings me happiness to use them every day, not for special occasions.
    Perhaps you could reframe it to think of the special occasion as simply not going to work? Then the goal is not to go to work, rather than to accumulate more wealth, so to meet your goal, you have to draw down (albeit conservatively and skewed towards post 60).
    Thanks for the shout out, I love reading your blogs, you are an inspiration for me.

    • If our china didn’t have platinum on it, I really would use it every day. It’s not that I want to save it, it’s just that I don’t want to hand wash the dishes! :-) But I love your definition of a special occasion as something more everyday. And thank YOU for such thoughtful comments!

  31. I wrote a similar piece on my blog about the pain of using saved funds even if they are used in exactly for what they were saved. Some people feel guilty or fearful, even if there isn’t any indication that they are being even remotely irresponsible. Teaching yourself to let go of that can be difficult, but eventually you can learn to feel secure in your spending decisions.

  32. I always save things for later! I always think about how I will enjoy my possessions later in life, but never spend enough time enjoying them in the moment.

    This is something I want to work on.

  33. Wow, you head the nail on the head with this one, for me! I haven’t had to make any investment withdrawals yet, and I keep hoping that day won’t come (though my dwindling checking account balance suggests otherwise). I also imagine our ideal future scenario still including enough income to pay the bills, so that my investments remain untouched. Kind of funny, now that you point it out — did I save all that money just to look at it?

    • Oh man, that is not what I needed to hear. :-) I was hoping you’d say, “Yeah, it’s easy to be completely rational now and just follow the math and take scheduled withdrawals.” Hahahaha. I sure HOPE we’re not saving all this money just to look at it, but this seems like a legit concern if you share it! :-/

  34. hmm I always use from time to time these towels. Personally, we dont own any nice towels or dishes that we dont use. Also, we buy those gift mugs and cups on each city when we travel, we use them everyday and we remember those places.
    On another note, if you make over 10k a month and dont live life now how will you live later? I have seen a lot of blogs where people make 10k , 20k and live off $1500 per month, yes obviously they can retire within 7 years or so but into what life? (not saying you do it, just wanted to bring it uo to the conversesation)
    I spend anywhere from $900 to $1500 a month in food, and spend money traveling, best hotels etc… at least I dont spend in other things like drinking or parties other than on my house with family.
    I believe to do whatever you want in this life people need at least $50oo per month passive at a minimum (no mortgage or rent) some people will argue that they are fine with $1500 per month but, all they will know is cheap hotels, the free forrest 100 miles away that they visit often. Then again, I talked to people who doesnt like to travel, or do things that cost money. I truly believe is just a minority out there like this.

    sorry, that i went from pretty dishes and towels to all that, but in a sense its the same; tricking themselves to believe they are happy like that. Living a high life when they aren’t.

    • If blogging in the personal finance space has taught us anything, it’s that we’re all different. I think if someone is truly tricking him or herself, then allotting too little money for retirement is in fact a shame. But going through the process of saving money and optimizing their finances teaches a lot of people how little they actually need. If you love fancy hotels, great! Budget for them! Personally, I can’t stand spending money at a place where everything might be nicer, but I get essentially the same night of sleep. So we don’t budget for fancy hotels, and that isn’t tricking ourselves, that’s just matching our spending to our values. And I’ll speak for us directly here: We simply do not need all the money we make. We’d have to invent novel ways to even spend it all if we wanted to. But why should we try when that money can instead buy us freedom in the not-to-distant future, at a standard of living that feels great to us, not like a sacrifice? ;-)

  35. We currently have a guest bedroom that we use as a huge closet and changing room. And my wife talks every now and then that we should get a bigger place. Hopefully my blog will encourage her not to think that way!

    I think if I were in your shoes, it would be tough to spend that money too. Especially for the longest time it was considered “hands off money”. But that’ll be a great problem to have when the time comes :)

    • Haha — it WILL be a great problem to have! But still a problem. :-) I’m sure we’ll get over the hump, but it will definitely be a learning curve!

  36. I’m late to the party, both this topic and your blog, but I do have some first-hand experience to share. I’m 18 months into a late early retirement (retired at 59) and experience the same fear of withdrawals that other early retirees mention. So, yes, I think it’s a very real concern—and one that took me by surprise. My barrier relates to the sequence of returns risk, which I understand in theory but not so much in practice. Discussions of SoR risk typically talk in terms of the early period but how is that defined? Five, ten, or more years? And assuming it’s based on a traditional retirement age, what period should concern me as an early retiree? The answer may be obvious but analytics isn’t my strong suit. Due to my uncertainty, I’m reluctant to withdraw even up to the ACA subsidy cap I adhere to. Despite that uncertainty, I do enjoy early retirement very much. No regrets!

    FWIW, I’m a long-time utilities tightwad, driven by economics and my fear for our planet. Whenever I’m tempted to bump up the thermostat, I imagine the black smoke rising from a distant power plant and the image stops me—dare I say it?—cold. As I write this, the sunroom has warmed from a very brisk 45 to a manageable 54 degrees.

    Congratulations on your excellent blog and especially on achieving YOUR early retirement dream. Enjoy!

    • So glad you found us, Robin! Congrats on your early retirement!! :-) The figure we’re focused most on for sequence risk is 3: three years of trying to minimize portfolio withdrawals to head off as much of the risk as possible, and then trusting compounding to do its thing over the long term. And given your concern about using energy, I’d guess you’re a conservative saver and investor like I am, too — so it might help to trust that you have more than you need, and know that the 4% rule is built to take bad years in the markets into account. ;-)

  37. Three years. No kidding? Then I’m halfway there! I won’t touch principle, at least not until RMD-time, but I think I’ll be able to justify collecting vs. reinvesting dividends now and then. Thanks so much for enlightening me. Ignorance is never bliss. :)

    • You can definitely justify collecting dividends — you are paying tax on them regardless, so you might as well use them as your cashflow! We for sure will, even if we aren’t selling shares.