TLDR: Decumulation in retirement is 10X harder than working/accumulation.

Is my thought valid?  Could it be that the accumulation period ends (preferably) when you want it to end—when you have enough to leave your career?  Decumulation is hard for so many reasons.  They can be 1) you don’t know your end-of-plan date, 2) you don’t know your spending rate year-to-year, 3) you don’t know the inflation rate and pricing structure, and 4) you don’t know the tax rate and forced government payments.

I was thinking about this topic last night—or more specifically at 4:07am lying in bed.  Wow, I thought, I have no idea—no real idea—of what lies ahead.  This doesn’t keep me up at night, but it is one of those strange things I think about.

Inflation

There’s nothing worse for a retiree to see the price of a Big Mac in the 70s.  That rate of inflation sends shivers down a retiree’s spine.

Strategy 1

One way to make this puzzle easier is to decide to leave as much of your net worth to others as possible.  With this strategy, you may spend as little as possible, to leave the most possible.

Strategy 2

But, what if you want to do the other extreme and Die With Zero?  What if you want to bounce your last check to the undertaker?  This is an impossible task to time correctly.  What’s worse, you can’t design a glide path down to nothing if you don’t know where/when the runway is located.

Other Strategies

Do you spend more upfront and then glide almost horizontally?  Do you spend very, very carefully now/early and then have a giant dying party-not fun!

What if you’re an intelligent person and choose to balance spending now and spending in the future?  How do you determine the timeline?   How do you set up chapters of life/spending in retirement?  If you fail at your plan of spending for enjoyment, where do your remaining resources go?

Taxes

Let’s say we want to optimize the amount of money we get to spend through our retirement life.  Then we surely have to have the money to spend it—that means not letting it get away.  This is where tax optimization, or at least a tax strategy is important.  By paying our required tax amount each year and figuring out how to optimize that over our remaining/planned years.

Taxes are HARD in retirement.  If you’re lucky your income levels will change over time, pensions, social security, profit-taking, etc.  Bad things can happen too: inheritances, life insurance, etc.  These “incomes” (inflows) may or may not be taxable.  They often stack onto your income stack and push your income towards higher marginal tax rates. 

Oh, but wait, it gets more complicated.  These additional income types/categories may impact other charges (medicare, investment taxes) or subsidies (ACA, etc—I’m sure there will be more in the future i.e. renewable. etc).

Inflows

What about safety-first type inflows—a SPIA?  It’s very nice to have an automated deposit each month.  Is it worth the comfort of handing over a chunk of your money to an insurance company?  Many studies seem to show you spend more comfortably when you have guaranteed payments coming in.

Enough already?

I don’t want to go into a lot of detail about what is going on in my head as I type this, but you get the idea—Money in retirement is much harder than when working/saving…and that was hard in itself.

I am not attempting to present answers today.  I’m just sharing another random thought in my LifeInFIRE.

*** Nothing in this article is to be construed as financial advice.  I am not a financial planner, nor do I pretend to be.  You should always consult your own professional when seeking advice. This post is not a piece of literary mastery, just a random thought I had.

BAM!  Normal life startled me this morning.

6:30a this morning came around too early.  It wasn’t that it was earlier—or much earlier—than I often wake up, but rather the fact that it was my alarm buzzing away that upset me.

I was jolted by the sound of my distant path.  I was required to be in the shower immediately so I could prepare for the commute into the city center.  This is not at all my normal “commute.”

Upon arriving at the parking structure at 7:40a and waiting for the shuttle bus, I couldn’t help but think how I was just a cog in the system.

Jury Duty

At 8:15a I entered the courthouse, went to the jury duty assembly room and checked in.  I was told to sit and wait.  It was obvious at that point that I no longer had any control over my time.

I was called into the first LARGE group at 9am and placed into a congregation room to wait for an hour.  We then did an online questionnaire.  We waited another hour to weed out 20 of the 80 jurors before the remaining 60+ went up to the courtroom at 11am.

At this point—for some reason—we were standing for the judge as if they were some sort of messiah.  I never really understood that.  We went through 3 rounds of questions—judge, plaintiff, then defendant.  We had lunch in between.  The whole painful process of listening to people 1) crafting any possible excuse, 2) those crying about applicable or random life stories, and 3) the different people asking to use the restroom…that was another shocker.  We were forced to ask permission for anything.

At 4:15p the jurors with the lowest numbers were selected first for the jury.  I was #70 something so I figured I was in the clear and just hung out, locked in a courtroom, in a courthouse, in the heart of downtown, 20 miles and two rush-hours away from home.

Retirement, Humor

Many of the jury panel had gray hair.  Nearly everyone stated they were working.  Only 1 in 20 had a sense of humor—maybe because it was a long 9-day civil trial. 

After being in full control—well 99% control—of my time, no matter how interesting the trial and the process would be, the pain of giving up 9 days (100ish hours) of my life felt torturous.  The fact that my exact location, even my chair was fixed and locked and I couldn’t move seemed like an unbearable requirement.

As I sat through the jury questioning—and considered my lack of freedom—I couldn’t help but think about criminal trials and the convicted losing their civil rights and being sentenced to jail.

One main core principle of FIRE—and retirement in general—is “freedom.”  Freedom of time, location, and activities is one of the most amazing values I treasure in my life.

Did I lose my freedom for a day?  Did I balance my freedom on this one day for the ability to live in a society that allowed me to gain my freedom?  I’m thankful in all aspects.

Bias for Action

I decided at the lunch break—which was awesome because I was able to walk around downtown where I hadn’t been since my last jury duty 5-6 years ago.  A nice 75 minutes.—that if I wasn’t locked in a courtroom for 9 days, that I would do a bunch of things above and beyond my normal daily tasks/activities.  To be specific, I said two non-normal things time 9 days—equaling 18 items, many from my wife’s direction/list.

Find the Positive.

I tried to find the positive in supporting our “system.”  I tried to find the positive if I wasn’t sat on the jury.  I tried to find the positive in my normal freedom that I’m lucky to have every day and strive for gratitude.

Respect

I support our judicial system and I’m so thankful for it.  I did think the simplified facts shared on this civil case seemed a little ambulance-chaser-ish, but I didn’t hear all the testimony, so I don’t know. 

I will say that every time I’ve been called in for jury duty, the court employees are absolutely wonderful to the jurors.  They do a great job at being thankful for us for supporting the US judicial system.

*** Nothing in this article is to be construed as financial advice.  I am not a financial planner, nor do I pretend to be.  You should always consult your own professional when seeking advice. This post is not a piece of literary mastery, just a random thought I had.