HOW TO AVOID RUNNING OUT OF MONEY IN RETIREMENT

Are you afraid of running out of money in retirement?

Most people are.  It is the biggest fear of people in or near retirement. 

You can eliminate this risk if you follow these steps.

1. Knowing where you stand.

2. Understanding and managing your expenses in retirement.

3. Having an investment strategy that produces high growth AND protects your savings against major losses during market meltdowns.

KNOW WHERE YOU STAND

Unfortunately, most retirees do not have a clear picture of where they stand financially.  They know how much money they have saved, but they are unsure of how much income they will generate or should generate in retirement from their savings.

Too much emphasis is placed on “the number” – the size of your retirement account. The income you generate from your retirement account is way more important than your account balance.

It is easy to look at one figure – your retirement account balance.  But when we start talking about the annual income that your retirement account will support, things get fuzzy. 

It is not difficult to create a solid set of retirement projections based on your account balance, your investment strategy and your spending needs.  We can do it in less than 5 minutes.  And we do this for free for readers of our blog.

These projections need to be revisited on an annual basis. 

UNDERSTAND YOUR EXPENSES

Some people are good budgeters, and some people hate the concept of budgeting.  Just the word budget can bring up strong feelings in many people. 

This is why I prefer the term “Spending Plan”.  A budget feels restrictive.  Most of us like to spend. 

A best practice is to sort all your spending into two buckets – fixed or discretionary.  

Fixed expenses are the items that you are obligated to pay each month.  This includes mortgages or rents, utilities, car expenses, health insurance, food, etc.

Most of the items on your fixed expense list cost the same amount every month.  Some things like your electric bill may vary seasonally, but using an average is good enough. 

All you need to do is to add up your fixed expenses monthly.  As an example, your monthly fixed expenses might be $3,000. 

Everything else falls into the discretionary category - things like entertainment, travel, clothing, repairs, etc.

Your discretionary expenses will vary quite a bit month to month.  The big variable here for most retirees is travel.  In one month, your discretionary expenses could be only $2,000 and, in another month, they could be over $6,000 if you take a big trip. 

Your total expense needs will be the total of your fixed expenses and your discretionary expenses plus taxes owed to the state and federal government.

Your total spending needs must be less than your retirement income to avoid running out of money. 

THE RIGHT INVESTMENT STRATEGY

Your investment strategy is the most important factor for your financial health in retirement. 

Financial professionals will have you focus on taxes or fees but everything else pales in comparison to your investment results.

A $1,000,000 retirement account at age 65 will support an annual income of about $65,000 over 30 years (until age 95) if your investments generate 5% per year in returns.  A $500,000 retirement account at age 65 will support an annual income of about $65,000 over 30 years (until age 95) if your investments generate 12.7% per year in returns.

So, someone with half as much money ($500,000 vs. $1,000,000) can have the same retirement income if they have a better investment strategy.

In addition to generating higher investment returns, your investment strategy needs to protect your savings during stock market collapses.

The investment services industry does not offer any good solutions to address the most

important needs of older investors – growth AND safety. This is why they focus on taxes and other less important issues.

The lack of a good investment solution from the industry is why I created my superior investment system. I created something that all investors need but particularly people at or near retirement - High growth and Protection against losses.

I love helping people generate higher returns and create more enjoyable retirements, but my greatest satisfaction comes from allowing my clients to live worry-free in retirement. 

Too many retirees spend their golden years constantly checking the financial markets and worrying about their savings. That is no way to live. 

Knowing where you stand, understanding your expenses and using a better investment strategy will allow you to truly enjoy your retirement and help you avoid the risk of running out of money.

You deserve a more comfortable and more secure retirement.

Click here to schedule a FREE Retirement Planning session.  Let us show you how to create the retirement of your dreams.  It is easy and it is painless.

Stay Disciplined My Friends,

Phil

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Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.

Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.