We talk a lot about preparing for retirement on this blog, especially those crucial ten years before your retirement
date. In this post, we’ll take a turn: what to do with your money after you retire. As of 2015, half of Americans
don’t have a withdrawal plan—or, as we like to call it, a spending plan—for their retirement.
You’ve spent years working hard and frugally saving your money for your retirement. You have a retirement plan in
place with financial goals that constantly keep in mind. You follow a budget and you have a diverse portfolio to
contribute to your nest egg. Suddenly, your retirement day is here. And you can spend.
But that spending is often more difficult than it sounds. After years of saving, flipping the switch to spending may
feel unnatural or scary. Spending in retirement can be tricky—you shouldn’t have to deprive yourself of the things
you love to do, just because you’re worried about running out of money too quickly. Nor should you spend
irresponsibly. This is why you need a spending plan.
One strategy you’ll probably hear about is the 4% Rule. This rule was created from a 1994 study by William Bengen, a
financial planner. In this study, Bengen tested many different withdrawal rates against historical rates of return.
He found that if retirees withdraw 4% or less each year, your nest egg will last you at least 30 years.
However, this rule is not foolproof. Historical market values don’t determine future market values, so while the 4%
Rule a good guideline, you need to stay aware of market trends and work with a financial planner to help you make
good decisions for your personal finances.
Now that you’re in the spending years, your market investments aren’t about growing your nest egg anymore. Instead,
you’ll want to shift your investments and reallocate your savings to more conservative options. The goal now is to
preserve your principal and protect it from market volatility.
It’s important to realize that creating a spending plan is an extremely important part of your retirement plan. If
you do not have a spending plan for your Golden Years, make an appointment with a financial advisor like Ashton
Strobelt. Financial planners can help you learn all of your options, such as insuring your income, to ensure you’re
making the right financial decisions for your situation. We want our clients to be able to spend their money
confidently so they can truly enjoy their retirement.
If you have any questions, you can call Ashton Strobelt, email us at email@example.com, or schedule a
free first consultation to help you create a personalized retirement spending plan that you can feel good about.