Updated August 15, 2024 – timing information provided at end of article.
The Love-goddess and I have been retired for over a decade now. It went by very quickly but here we are. Recently, I have come up with a bit of a new mantra that I keep mentioning to her… “It’s time to start spending more money”. Being of Scottish Presbyterian descent she’s not keen on the idea, but she does understand that it’s not necessarily unwarranted.
During our work lives, we both worked and saved very diligently. Both of us even had second careers which provided us with defined-benefit pension plans… unquestionably a good thing. And we further prepared for retirement by contributing to our RRSPs and our TFSAs whenever we could. As a result, we ended up in a good place as we headed into the next/final chapter of our lives.
I use the “dual option form” “next/final” here because the Love-goddess belongs to a book club of retired women who refer to their later-in-life focused reading group as “The Next Chapter Book Club” but I keep reminding her that it really should be called “The Final Chapter Book Club” For some reason she does not find this as amusing as I do… go figure. 🙂
From ChatGPT
“The use of two words with slightly different meanings separated by a slash, like “next/final,” is referred to as a “shorthand notation” or “dual options.” This technique allows the writer to present two related ideas, alternatives, or nuances without committing to just one, giving the reader a sense of ambiguity or a spectrum of possibilities. It’s often used in informal or creative writing to convey a fluid or multifaceted meaning.
This style can also indicate that either word could be appropriate depending on the context, or that the truth lies somewhere between the two.”
The added security of work and government pension plans means we will have regular income for life and cannot run out of money. Sometimes it’s difficult to understand what a good thing a pension plan is until you’re finally drawing on it. I am now convinced that the CPP should be converted into a more robust defined benefit pension plan for all Canadians.
Additionally, using even very conservative growth projections, along with taking out the minimal withdrawal required annually from our RRSP’s, we won’t run out of that money for many years. And this is without considering using the money we have built up in our TSFAs. And like most ageing retirees as we get older, we will likely be inclined to do less and spend even less. So, it is definitely time to start thinking about spending more right now.
Having said that, I immediately have to add, that this is probably not for everybody. Some of you may be thinking, “Buddy, we are spending right up to the edge of our means, and we’re already worried about having enough money to last through to the end.” Or, some of you might be thinking, “We both have serious health problems and we know we’re going to have to have major health-related expenses in the years to come, so we have to save as much as we can”. And there’s a good chance what I am proposing only applies to couples where you have double sources of income. This could be a real stretch for any single person, especially for many women who head into retirement in a disadvantaged financial position, to begin with.
Only you can decide if spending more than your current levels will work for you and yours.
The Other Reason
The other reason for thinking that it is time to ramp up our spending game to improve the quality of our retirement is because… There. Ain’t. Too. Much. Time. Left. The approximate average lifespan for men and women in Canada is, for women 84 years, and for men 79. Yes, lots of folks live well past that age, but having already had one extremely close brush with death, I am inclined to take a more realistic viewpoint rather than the most optimistic viewpoint. 🙂
I don’t think I have ever had one of my “Weekly Reads” inspire a blog post before. But recently, an article I read in the Globe and Mail inspired me to write this piece. The article was basically reminding us to get out there and spend our money in retirement and one of the books referenced was Oliver Berkeman’s book “4000 Weeks: Time Management for Mortals, which frames our lifespans in an interesting way.
Berkeman points out that if you make it to 80 years of age you have lived about 4000 weeks… 4160 to be precise – something to think about as the weeks tick away this summer. 🙂 He also adds that even if you live to be 90 years old, you will only have lived 4700 weeks.
To break that down into weeks for the average Canadian lifespan, this means that women on average will have 4368 weeks, and men 4108 weeks. Discovering this immediately sent me to the calculator to check out where I was on the continuum and to tally how many weeks I might have left. The result of the calculation was very “sobering”. By that I mean, alarming. Yikes!
Those numbers also made me think that it was time to formally put in writing the importance of ramping up our spending game. 🙂 To save you from running to the calculator here are a few rounded ages and their corresponding weeks for you to compare to the 4000 or even the 4700-week benchmarks. 🙂
60 – 3120 weeks, 65 – 3380 weeks, 70 – 3640 weeks, 75 – 3900 weeks, 80 – 4160 weeks, 85 – 4420 weeks, 90 – 4680 weeks, 95 – 4940 weeks, 100 – 5200 weeks
Kinda makes you wish he hadn’t decided to frame our lifespans in weeks. However, I can’t really disagree with the choice of weeks because, at the very least, during our working lives that is the timeframe we most commonly focus on. Monday was the start of the most important short time cycle for us; it led us to Friday and the weekend, the best part of the week, and then we started all over again. So not a bad guideline.
Ultimately, his book is about how we can most effectively manage the time we have available to us; it’s not intended to make us worry about the short number of weeks we have left. I have a copy of the book, but I have not read it yet. Perhaps, after I have read it, I’ll do a review, and let you know how I think we should be spending our time as we head down the retirement road.
That said, let’s get back to the spending, and stop worrying about how many weeks we’ve got left.
Our Current Spending Approach
It is very easy for me to write about our current spending habits. We never spend more than our annual income each year and, I track every penny we spend in Quicken so that we have a clear understanding of where our money goes. We never have any year-end fiscal surprises popping out of the woodwork. This approach has meant that we have never spent any of our savings.
I am not telling you about any of this to brag, it is just our reality and good fortune. We have both been retired for a while now and over the years our net wealth has continued to build and not go down as one might expect in retirement. Hence, the impetus for us to consider ramping up our spending game a bit.
Our Proposed Spending Approach
At some point, I decided that it might be time to start using our saved money to provide ourselves with some nicer perks as we move forward… or begin to move more slowly I suppose. I’m not talking about outrageous spending like “I’ve always wanted a Ferrari and a French villa so let’s bleed our TFSAs dry and get one of them”. I’m just talking about not being afraid to spend some of our capital savings each year rather than just spending the income generated by our savings – to make our lives a little bit more comfortable
If you’ve been reading me for a while you know that this past winter, I wrote about flying business class to Madrid to kick off our winter getaway. That is the kind of thing that I think we need to start doing more of. If you read the post, you will know that I quasi-fooled/tricked the Love-goddess into going along with it… i.e. I booked it without her knowing and she didn’t know about it until we walked onto the plane. Fortunately, she was not too distraught over my little deceit and enjoyed the greater comfort offered in business class.
When I said to her later that that probably is the way we should be flying on all our long-haul flights in future, she tried to convince me that it wasn’t necessary, so what I suggested was that I would fly in business class and that she could fly economy and we would both be happy. She was not amused. So, we will probably be flying business class on our longer overseas flights in future. 🙂
The Plan
So, if you are not going to be buying a Ferrari or purchasing a villa in the south of France, how are you going to spend the proposed extra money? What is the plan?
Finally getting around to writing this article got me thinking very specifically about how that might look. I even asked the Love-goddess to contribute even though I was sure it was probably eating her alive to come up with ideas on how to spend more money.
Where We Might Spend More
Flights – Let’s begin with the obvious one, spending large on flights, especially overseas ones like the ones most of us undertake, to Europe. Yes, flying business class is considerably more expensive than whatever level of economy you are used to flying, but we found it well worth it. To start with you may simply want to fly business class one way on the overnight portion leg so that you can lie down and sleep instead of trying to do it in an upright position. To save money then, you could fly home using the regular economy rate because the return flights typically take place during the day.
If you have not flown business class before, you may be wondering what sort of cost is involved in doing this. As I wrote this I did a little online checking. I can report that a return flight to Madrid would normally cost $1861.27 each (not the cheapest available but our usual selection) at today’s prices, while business class (with lie-flat seats) would cost $5786.27. I searched for a flight out of Toronto on September 26 and a return on October 16.
Restaurants – Costly transatlantic flights could be perceived as a big-ticket expenditure and you may not want to go there just yet. Something that is typically less painful to spend more on is eating in restaurants. You can increase spending by going out to restaurants more frequently, or by going to slightly more expensive ones or treating yourself to more expensive items on the menu.
Hotels – Just this week, I was speaking to one of my golf buddies about travelling to Toronto to attend concerts or cultural events. We all live at least an hour and a half from downtown Toronto and it is increasingly becoming a pain driving in for an evening event and then driving back out. This is another one of the challenges of getting older.
We recently stopped doing the drive-home portion late at night. Instead, we book a hotel, have a pleasant evening, and then drive home in the morning. The friend I was talking to still can’t bring himself to spend money on a hotel when he can drive home even though he and his wife can easily afford to do that. We are definitely not doing the late-night drive thing ever again.
Car – It dawned on me last year that the next car we buy might be the last one we ever purchase; at least the second last one ever. Why not treat yourself to a really nice vehicle? As we age, I am increasingly looking for autonomous driving features because I know as I get older, it will be safer for the Love-goddess and me to have the car doing the driving rather than one of us. We will probably also go fully electric at some point relatively soon. Comfort has become increasingly important as well.
From a purely financial perspective, we always let car companies finance our new car purchases. This means that we are not handing over a large chunk of saved money at one time to pay for a new car. A nice way to increase spending of saved money in slow motion.
I should probably also add here that when in retirement it is a good time to think about having just one car. Yes, for couples having two cars is very helpful, but it is a lot of extra expense. Why not spend that extra expense on one really nice car and figure out a plan for sharing it? We have done this and it works for us pretty seamlessly, as it has done for some other friends who have decided to go that route as well
Travel – Like the ability to drive our cars safely on our own, the time for extensive travel will also begin to wind down sometime in the future. And it may happen sooner than one plans for or wants. Start thinking about planning that one special trip you’ve always wanted to do. I for one do not want to be forced to stop travelling for health reasons and discover there is a big pile of money still sitting around that could’ve been spent on great trips while we had the chance. Or, go on a major trip at least twice a year instead of just once a year – even if it is within Canada.
Short-Term Rentals – If you are travelling locally or even internationally, why not sign on for a nicer B&B or an Airbnb rental to enhance the travel experience?
Beds – here’s a simple one. When was the last time you bought yourselves a new mattress or even a brand-new bed? About three years ago, we bought a pair of those adjusting beds and we’re still pretty thrilled with them. When we get into bed, we both adjust our units into a comfortable reading position and while away an hour or two before we call it a night.
Technology – when was the last time you bought yourself a nice new laptop or an iPad? Are you still working away on dated technology? The new AI features that probably will make the lives of older people much easier will require new advanced technology. I am already eyeing Apple’s new Vision Pro but at $5000 Canadian, but it remains at a level that I would not consider even in our ramped-up spending game. 🙂
House Renovations – How about your home? Are there parts of it that really need a refresh, or would a new ensuite bathroom for you to enjoy in the next decade turn your crank? Fortunately, some renovations add value to a home, so this isn’t necessarily just wasting money.
Wine – finally for you wine drinkers it is time to start drinking better quality wines, and no, there is no such thing as a good bottle of wine that costs less than $15 in Canada. In Europe, yes, but in Canada, no. 🙂
You will have noticed that I have not suggested that you should consider giving money to charities or family members at this point, although many folks will certainly do that. I say that because these are the folks who are going to be dividing up what’s left after you are gone. Many people want to leave a healthy amount of money to their children and grandchildren, and this is definitely an important and understandable consideration. But, depending on your situation, it may be possible to allow yourself to spend a little more to make your retirement more comfortable, while still ensuring that your children and grandchildren are taken care of.
Summary
I think I should finish up here by making it clear that I am not talking about just beginning to spend large chunks of one’s savings whenever the mood strikes, or that, you should spend all of your savings before you die. This increase in spending has to be done systematically and thoughtfully so that it will not cause harm to your long-term financial health. It may simply mean adding an extra $5000 or $6,000 from your savings to your annual spending and using that to enhance your lifestyle.
It would probably be healthy to do some hard thinking about actually how many years… or weeks if you prefer 🙂 … you have in total. And give some serious thought to how many years you think you have left before your spending is going to become heavily restricted for health reasons. If you are 10 years into retirement or have reached an age where you were required to draw down on your RRSP’s it may be time to start having a hard look at what may be coming down the pipe and adjust your financial plan accordingly.
After I posted this article I was pondering if there was some way to determine how to be a little more precise about the timing of when you might want to start to consider spending more of your savings. This reflection led me to ask myself the question, “When did you start thinking about this?”… “Perhaps that could provide a bit of a rough guideline, rather than the relatively vague statements you made in the very last paragraph of the piece.” This thinking suddenly flipped a switch for me!!!
I knew exactly when that was, why it was, and it immediately allowed me to understand what benchmarks could be used by others. Essentially, it came down to when our very last income streams were activated in retirement. And these, as it turns out, are exactly the same for most Canadians. If you defer your CPP and OAS for as long as possible, you are obligated to start taking them when you turn 70 years old. Additionally, if you hold off converting your RRSP to an RIF until the last minute you must do that, in the year that you turn 71. You may have other income streams specific to you kick in later than that, but those are the ones shared by Canadians.
So, if you’re looking for a bit of a suggestion when you might want to start thinking about spending more in retirement, it might be in your early 70s as it was for me.
*Note: If financial concepts I address are of interest to you please remember that is always a good idea to ask your financial adviser’s advice when considering making changes to your financial portfolio or changing your spending habits.
