Just two weeks ago, Senay was complaining about being bored in Gainesville, but now she’s already overwhelmed with all the activities she’s managed to dive into. She’s great at keeping herself busy and filling her time with fun things to do. She says her classes are pretty easy, and she’s smartly crafted her schedule so that all her classes are packed into Tuesday through Thursday. That sounds like a great setup to me, and I think you should aim for a similar work schedule once you graduate.
My wife had another procedure up in Chicago last week. It is supposed to take a little time to work. She hasn't had a real relief yet. We finally found a pain medication that helped, though (non-narcotic). And guess what? Insurance doesn't cover it, and it costs $100 per dose. That just seems so wrong.
The fantasy football draft was a blast this year! My son, Chris, who isn’t a huge football fan, decided to put together his team based purely on players with the funniest names. His starting lineup is absolutely hilarious, featuring Younghoe Koo, Snoop Conner, Cooper Kupp, Chuba Hubbard, and Deebo Samuel. It’s safe to say his draft strategy brought some extra laughs to the table!
Below you can see the middle of the intense moments as people constructed their teams for the season.
When I take on new clients, there are certain rules that I ask them to follow.
One of the most important rules is: As soon as you retire, each month, you take an income check from your retirement and investment accounts, whether you need it or not.
Here’s a quick example:
Mr. and Mrs. Smith retire with $500,000 in savings. We determine that utilizing a diversified portfolio of stocks and bonds (with at least half of the money in stocks) would allow them to withdraw $25,000 a year from their savings. Looking over 200 years of economic history, this is a sustainable and reasonable withdrawal amount.
Now, do Mr. and Mrs. Smith dip into their account whenever they need money, ensuring they don’t exceed $25,000? No.
Do Mr. and Mrs. Smith take all $25,000 at once at the beginning of the year? No.
There is a psychology to retirement spending, and I’ve learned through the years that neither of these approaches works particularly well.
If you only dip into your account when you "need to," most people find it to be a painful experience. Remember, many of you are children of depression-era parents. To many of you, withdrawing money from your retirement savings can conjure up thoughts like, "I hope this isn’t a mistake; I hope I don’t run out of money. This money doesn’t even really belong to me; it belongs to retirement."
Every time you make that call to withdraw a few thousand dollars, it feels like a weight drops in your stomach. You can’t help but feel irresponsible, and the emotional toll can be overwhelming. It’s natural to be uneasy, but managing your savings shouldn’t make you feel this way.
What about taking the $25,000 all at once? While this is a better option than the above, I’ve found that, generally speaking, human beings live their financial lives on a monthly basis. Most, if not all, of your bills are due monthly. You’ve been getting paid monthly or bi-weekly your entire life. Budgeting a $25,000 lump sum to last the entire year can be difficult.
So, after years of in-the-trenches financial planning experience, I’ve determined the best strategy, by far, is to receive income checks monthly. So, in the example above, Mr. and Mrs. Smith take their $25,000 over 12 months (or $2083/mo).
This not only allows you to know exactly how much money you can spend in any given month, but it also removes the pain of withdrawing money from your retirement savings "as needed." When human beings see their checking account growing as the investment income checks automatically roll in each month, they treat that money differently than if it was still in their retirement savings accounts.
Think about this for a second. If you had $500,000 in your retirement savings and that account grew to $525,000 during the year, you might say to yourself, "Oh, that’s nice. At least the money is growing." And then you go about your day and probably do not think much about it.
But if that $25,000 ended up in your checking account, you might say, "Wow! This is awesome. Instead of me working, my money is working for me. It’s like I’m getting a ‘paycheck’ for doing nothing! How will I spend my money to make my retirement more awesome."
As you can see, these are radically different experiences of exactly the same investment results.
My goal is for you to live an empowered and fulfilling retirement, armed with the knowledge that you are spending the right balance between too little and too much.
If you find yourself thinking, "I’m not managing my finances well; there must be a better way," as you receive your monthly investment check—pause for a moment. If you’ve developed a plan that ensures you’re withdrawing the right amount from your savings—not too much, not too little—allow yourself the peace of mind to enjoy your financial freedom without second-guessing yourself.
It’s natural to feel uncertainty, but once a well-thought-out plan is in place, there’s nothing more you can do. Trust your strategy and know that you’ve made the best decision for your future.
Be Blessed,
Dave