You will be afraid to spend!!! (Part 2 of many)
By Tom Wall
“Safe withdrawal rate” studies (see part 1) were originally conducted under the assumption that one would need their income to rise with inflation. For folks of lesser means, that’s probably prudent because most of their income is spent on necessary expenses like housing, food, transportation, etc. But for the mass-affluent and above, a larger portion of their income is used for discretionary spending like travel, club memberships, dining, luxury items, etc. These expenses can more readily be curtailed in hard times, and often decline anyway as a wealthier retiree’s lifestyle moderates over time. Numerous academic studies have backed this up.
Taking a more level income stream across retirement has historically provided 50-100% more income in the early years with the same probability of success. But, since nothing is guaranteed, people with greater wealth will STILL be afraid to spend and are unlikely to take as much as they could. Inflation should absolutely be considered, but rising social security benefits will mitigate some of this, and some strategic deferred assets can help too.
Annuities are the answer. They provide MUCH higher initial income that aligns more closely with typical lifestyles, with the comfort of a monthly paycheck that never stops. Whole life insurance is your ticket to annuitize, guaranteeing a financial legacy to loved ones while providing access to cash.
What is your SPENDING strategy? You're not too young to have one, no matter how old you are. The mistake you probably don’t know you’re making is blindly accumulating money without a plan to fearlessly turn it into your dream lifestyle. It will never be a better time than now to start putting that plan in place.
Taking a more level income stream across retirement has historically provided 50-100% more income in the early years with the same probability of success. But, since nothing is guaranteed, people with greater wealth will STILL be afraid to spend and are unlikely to take as much as they could. Inflation should absolutely be considered, but rising social security benefits will mitigate some of this, and some strategic deferred assets can help too.
Annuities are the answer. They provide MUCH higher initial income that aligns more closely with typical lifestyles, with the comfort of a monthly paycheck that never stops. Whole life insurance is your ticket to annuitize, guaranteeing a financial legacy to loved ones while providing access to cash.
What is your SPENDING strategy? You're not too young to have one, no matter how old you are. The mistake you probably don’t know you’re making is blindly accumulating money without a plan to fearlessly turn it into your dream lifestyle. It will never be a better time than now to start putting that plan in place.
