Christine Benz at Morningstar has some interesting and personal thoughts on spending in retirement.
It’s that the portfolio withdrawal that my parents made in 1994 to enlarge our down payment counted, technically, as retirement “spending” for them. But I would argue that it was legacy planning, pure and simple. That early gift from my parents meant much more to me and my husband than did the inheritance we received from them at the end of their lives, even though the latter was a significantly larger sum.
We were told this year that we could double our spending and still have a larger portfolio at death than what we have now. Since spending for the sake of spending doesn’t thrill me, (yes, UnAmerican, I know,) I suggested to DH that our kids, (25 and 28,) could benefit more from some cash now than more cash as inheritance. One is saving for a house, and the other a car and possibly grad school.
We gifted them the max allowed without filing extra paperwork, explaining that we would likely do this again next year if expenses didn’t grow and the market didn’t plunge. What we hoped they would use these funds for was towards something that would make them more secure in their future, not frivolous luxury vacations. We would like to see them think about the funds carefully, to dream a bit. It’s hard to dream if there is no way to arrive at that dream, and we hoped that we would be taking away part of the obstacle with this. We also hoped that they would include us in discussions about their plans, but it was a gift without strings.
Ironically, one of the side benefits of giving away this money is that I feel freer to spend now that we are less worried about Youngest having financial setbacks, such as having to replace his high mileage older car. We are really looking forward to traveling extensively after we get our house sold. I suspect that could quickly lead towards increases our expenditures!