Making big lifestyle upgrades in retirement?

[Oddball]

There's a lot about housing here, but I'm posting in PF because it's also about overall retirement spending.

Has anyone who is FI and no longer working for money made significant lifestyle upgrades, such as a nicer home or location?

Has the expense been worth it to you? How did you feel about increasing your withdrawal rate?

I'm thinking of moving from a cheap old apartment downtown to a brand-new LEED cottage in a much quieter setting a few miles away. This would more than double my current housing costs but also diversify my assets. It would be less convenient, so I'm still weighing that.

Another factor is that I'm renting in a large building with lots of shared spaces and few people wearing masks. I've been uneasy about this. I know it will pass, but it raises my interest in detached housing.

I have been very frugal for 10 years while working toward FIRE. At my current spending level with the cheap apartment, I can get by on a 2% portfolio drawdown. With a new home, overall annual spending would rise to at least 3% of my portfolio.

It feels extravagant to double my housing costs.

Renting a nice new apartment is also an option, but it might not be quieter and also would involve shared spaces. Plus the rent would rival the house payment. Meanwhile, housing has been on a run here, averaging 10% gains for the past few years (18% in the past 12 months).

Am I just being cheap staying in the old apartment? It does have advantages besides the price.

I'm in my 50s and could probably pay the house off by Social Security time, though no rush with rates so low.

Just trying to decide whether I'm comfortable with the added spending. I'm starting FIRE a little earlier than planned after a summer layoff and have not yet experienced the 4% rule. I'm having trouble trusting a new process after getting steady work wages all those years.

It also feels really weird pondering a mortgage without a job! Then again, if FIRE gets boring I can always go back to work.

Anyone made any spending leaps like this post-FIRE? It doesn't have to be for housing. Maybe doubled travel spending or something else?

[Teacher Terry]

We have definitely spent much more money on travel since retiring. Some years we spent 14k. When working it was much more modest. We decided that we wanted to enjoy ourselves while we can. It sounds like you can afford the house. I like to own my space versus renting.

[jp1]

My situation is not quite the same as you, OP. SO take everything I say with a grain of salt. As most people here know I (and SO) had intended to live in our expensive rented housing in San Francisco for a bunch of years, retire, and move somewhere cheaper. Two months ago we moved to a suburban townhome that we bought. Our monthly expenses have dropped 25%. One of the things I really love about it is being able to drive into the garage, park the car, and come inside without worrying about covid.

SO and I are both still working full time. I can't answer your question about drawing down funds since we both hope to keep working for the next ten-ish years at our san francisco salary jobs. Personally I'm still focused on "this is how i want to live so I'll spend the money to make it perfect". Our next door neighbor, J, on the other hand, a super sweetheart that is in her late 70's and is focused on "I have lived here 30 years and like living here but I don't want to spend a lot of money because I don't have a lot so I'd like to be frugal" has a different attitude. She is also fine with the fact that her hot water heater door is falling off the side of the building. You have to crunch your own numbers and figure out what works for you.

[rosarugosa]

We have not upgraded since retirement. We've been really grateful this year to have our own private outdoor space to putter around in and enjoy, but that needs to be balanced against the fact that this space is our responsibility to maintain, which becomes more difficult (or expensive) as one ages.

[Yppej]

My parents are in their 80's and have been able to live in their own home because my youngest brother lives with them and helps them with yardwork and small repairs. How open are you to sharing your home as you age?

[Tybee]

We are in the process of doing this, going from a paid off house to a mortgage. We are in our 60's and both still working and will have to keep working because of this change, but we will be closer to three generations of family, which should be better for us aging, in the long run.
The new house is an upgrade in terms of space and setting, and probably a level trade in terms of location, although I will miss where I live now, a lot. So there is an element of non-choice here that I am not crazy about, just as there is an element of non-choice in your wanting to get out of the apartment building due to Covid.

I think a 3 percent withdrawal rate should be fine. That is what I am doing to supplement our pretty meager income.

If you like the new cottage a whole lot better, I would be inclined to go for it. You have more time to make more money, too, if you are only 50. Sometimes FIRE isn't as important as how and where you are living, and circumstances change.

But yeah, our housing costs will be a lot more than they are now.

On the other hand, if we stayed here, we'd have to invest money in the place, and the new place is in better shape, so it's probably a deceptive comparison. And the new house stands to appreciate a lot more than the old house, so maybe by the time we can't live there anymore, it will have gained enough in value to pay for a spot in a nice assisted living place. I watched my parents stay in their rural place way too long, and we are both committed to not doing that, but getting out when we can no longer cope.

[razz]

Your life at age 50 is a lot more than just about housing. What else do you want to do for the next years of your life - think in 5, 10, 20, etc segments?

My late DH and I scrimped, saved, paid off our farm and lived a thrifty but a very contented life. We did travel as savings permitted. I am able now, in my 70's and on my own, to afford my very comfy, convenient and fully accessible home in town with a simple lifestyle. Everything I need is readily available - groceries, library including online, banking and investment, healthcare and so much more. I deliberately and carefully chose my home setting to enable this.

I have established a support team of trades, small job workman, etc., which enables me to maintain my home.

Internet services have opened the whole world for me to explore virtually; free education like Coursera and online art lessons, communication, online church services and similar resources. I believe this online world will expand even more.

My chief responsibility is to remain active and stimulated mentally, physically, socially plus support my community. I have a dog that I walk for 1 1/2 hours each visiting as I go.

I listed all these only to demonstrate that you have a lot more to consider than just your choice of dwelling. Is all that you need now and for the next segments of your life available to you in the one new that you are considering vs any other possible alternatives that exist to be explored further?

As a Canadian, I won't comment on drawdowns due to lack of knowledge about this in the US; taxes, healthcare, etc.

[eleighj]

After you retire, wait one year before making any major changes to your lifestyle, home etc. After that time do whatever you want. You are going to find during that time that there are things that you would like to accomplish that did not even show up on your radar and others that you do not really what to do after all. The 4% rule is a number. You will find that if you give some thought and work through it for a while that in some years it could be way above 4% and in others way below, but overall your portfolio will survive. 4% is not a hard stop number.

[pinkytoe]

We made a huge leap by moving to another state when we retired. Financially, it allowed us to buy a house with cash and then save the money that would have gone to exorbitant annual property taxes. Emotionally, it took us away from family and friends which seems to become more important as one ages. We are now in the process of deciding next steps while we are still young enough to pull off another big decision. Sometimes, change itself is worth trying rather than wondering about what ifs.

[Oddball]

Thanks for all your thoughts. You're right, there's more to the story.

The cottage is in a sustainable community that's still being built out. Some homes will have solar panels, and all will be LEED certified. There are communal spaces, including a garden, activity hall, parking, and storage.

It's all ages and nestled in the city within 2-3 miles of all needs. So it's still convenient, just not as immediately as downtown. Basically, I would bike everywhere instead of walking half the time. At night I might take a cab. Or even break down and buy a car if I really needed it.

The lots are tiny, so there would be very little yard upkeep (also very little space between homes). Build quality is high, which I love. The small cottages are 1BR (some with a garage) and thus affordable.

I'll be 53 this winter and have no shortage of interests and passions to last 30-40 more years, paid or unpaid. The past decade has been all about downtown living -- bookstores, coffee shops, museums, etc. During the shutdowns, I have not missed them nearly as much as I'd expected. I would still visit them, just not as impulsively.

As for aging parents and/or potential partners, these are on my mind too, but right now they seem too unknowable to factor in. My folks are in their own home 2 hours away, still mostly healthy. When that changes, I might have to pivot. If they were to like the eco community, it could be a good place for all of us. But not sure they would.