On this episode of Money Mile, we are wrapping up your financial training plan by looking at retirement income at the long-course level. I equate a retirement income strategy with the nutrition and hydration component of triathlon training.
Many of us have experienced a nutrition-related “bonk” in a race or a long training session. My goal with this podcast is to prevent you from “bonking” financially in retirement. Press play to learn what you can do to avoid bonking your retirement.
You will want to hear this episode if you are interested in…
- Figuring out your actual retirement spending goal [2:22]
- Why you may not want to use a sustainable withdrawal rate [7:21]
- Understanding dynamic retirement income strategies [10:20]
- Creating your legacy plan [12:10]
- What to do with this information [15:48]
- Your homework [18:52]
Understand your retirement spending goals
Financial independence, retirement, whatever you want to call it, I’m referring to the enjoyment phase of your financial training–when you are no longer working for money and you have control over how you spend your time and energy.
It is important to understand your actual spending goal to ensure that you are in control of your financial independence. Your spending goal doesn’t have to be created with a complex formula, one way you can figure out your actual retirement spending goal is to look at your current expenditures.
Get a read on how much you spend each month and consider what will change when you stop working. Focus on your core spending–your expenses minus debts, taxes, and savings. Everyone’s situation is different so you may spend a bit more in retirement, but you may spend a bit less. Listen in to learn how your expenses may change in retirement.
You may not want to rely on the 4% rule for retirement spending
You may have heard of the 4% rule. This popular retirement rule was created by a financial advisor named Bill Bengen in the 1990s. His goal was to create a rule to ensure that someone wouldn’t run out of money in retirement.
While it is comforting to know that by spending only 4% of your portfolio you won’t run out of money, doing this could cause you to end up working longer or not fully enjoying your life. Listen in to learn why you may not want to rely on the 4% rule in retirement.
A dynamic spending strategy could be your retirement superpower
While you certainly don’t want to run out of money, you don’t want to simply survive on rice and beans. Finding a balance between the two ends of the spectrum will ensure that you are making the most of your financial independence.
If you can adjust your expenses in retirement then you can make the most of your financial independence and enjoy your life to the fullest. A dynamic retirement income strategy uses flexibility like a financial superpower. Learn how to use this superpower by pressing play.
Bonking in retirement isn’t like bonking in a race, so it’s important to understand what you can do now to avoid a financial bonking. Learn how to maximize your financial independence by focusing on what you can control in retirement.
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