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My Rant: It’s unfair. We retirees are victims of not knowing.

I discuss Why I Wrote This Book in Chapter 1 of Nest Egg Care and also here. Both of those reflect “the nice” me. As time goes by and the more I think about it, the more frustrated and cynical I get. The “angrier me” rants. I’m not quite at the point of, “I’m mad as hell, and I’m not going to take it anymore!” But I might get there.


It bugs me that so few retirees truly understand What Is Safe to Spend and How To Invest (or even get close). I contend that it isn’t hard to get to answers to these questions. You can make clear, evidenced-based decisions in your Nest Egg Care workbook. Your decisions may be a bit different than mine, but the data and evidence are there for us all to use. I may have laid out the evidence more clearly than most. (You can visualize that you are picking a hockey stick to fit ‘just so’ under your playground slide.) But getting to the answers is pretty straightforward in my view.


The fact that most all retirees don’t get to those answers borders on being unfair. The financial industry, with rare exception, keeps retirees off balance or in the dark. When I ask financial advisors for the key decisions for a financial retirement plan and the priorities of those decisions to be super safe, they NEVER HAVE listed the same decisions and in the order that Nest Egg Care lays out as important. This is CRAZY in my opinion. (Maybe they think I am crazy!) It shouldn’t be this way.


We’re all victims of not knowing. We rely on intuiton for our plan, not evidence. Our intuitive plan is the obvious one that makes sense: we spend little; we may even fret over the smallest expenditures; we invest with the view of minimizing annual variability in our portfolio; we hope that what will be there for our heirs at the end will be “enough”. While this is Okay, it is far from what retirement could be if we really spend time thinking about and implementing a plan. I contend the plan you will develop using the worksheet in Nest Egg Care will be safer than the one you are following now and leads to more for you to spend (and gift) to enjoy and for your heirs.


Why doesn’t anyone paint a picture of a realistic future; why do we focus so much on doom and gloom?  Of course, we always plan for the worst, but the its much more realistic to expect that we’ll have much more to spend (or gift) in the future. Why doesn’t someone tell you (shout at you): if you are on an average track of financial returns, you can expect to spend MUCH more than your initial Safe Spending Amount? Or, “You’re clearly past the gauntlet of initial poor returns that can deplete your portfolio. You’re on a whole new track. You can Spend More to Enjoy More. So get to it.”  None of the retirees I know have anyone telling them that, and some are paying a lot to someone who should be telling them that.


This should have made the headlines at end of 2016: ALL retirees – especially those under age 70 – following the CORE principles “earned” a real pay increase for spending in 2017. How many retirees knew that? Why did no one tell them that?


Almost all retirees I talk to have NO written financial retirement plan – or just a statement of a plan that they can simply summarize for me. This makes NO SENSE TO ME, particularly for the folks paying perhaps $10,000s PER YEAR to advisors. It’s just not that hard to develop and document a plan. Ours fits on a 3” by 5” card. I think I can summarize it in less than one minute. The plan is darn simple, and a sound investment portfolio for the future is shockingly simple.


It bothers me: most all retirees are spending money needlessly incurring far too high of Investing Cost that 1) lowers their Safe Spending Amount that they can spend to enjoy; 2) that increases their risk of depleting their portfolio in the out years;  and 3) that also lowers their potential portfolio value in the future. Retirees are needlessly LOSING THREE WAYS.


Let’s all get off the slow moving boat that’s headed in the wrong direction. Develop your own financial retirement plan by understanding and following the CORE principles in Nest Egg Care.

Why I wrote this book

I devote a Chapter to this in Nest Egg Care. But here is the overview.


1. I didn’t know, now that I’m retired, answers to two key questions, What can we Safely Spend and Never Run Out?” “Is this connected to How Do We Invest now that I’m retired?” Those questions gnawed at me.


I found no good answers to those questions in my research. I found only general rules of thumb on spending and wildly variable suggestions as to how to invest. I was very uncomfortable going by generalities and what seemed to be just opinions. It just had to be clearer than that.


2. Understanding and trying to solve the puzzle was a challenge, and I love puzzles. I dug. I found that there are excellent tools – and free to use on the internet – that got me to the answers to those basic questions. I like that these tools are readily available, since you can recreate all the data and tables I have in Nest Egg Care. You’re not relying on someone else’s proprietary model or expert summary.


3. We’re happier, and I hope that you’ll be happier. Once I pieced the puzzle together, I was convinced of the answers of our Safe Spending Amount and How To Invest. We have NO worry about depleting our portfolio. It’s changed the way my wife and I think. I certainly don’t sweat the small stuff (some of Patti’s spending) that used to annoy me. We’re definitely focused on Enjoying More. Now. And knowing we can give more now, has added a focus and purpose that we did not have. I think you’ll get to that same point once you understand and follow the CORE principles in the book.


Clearly our Safe Spending Amount was more than I thought – more than those general rules of thumb. I think it will be more for you. How I Should Invest was clear and different from the way I had invested for years and different from the way most all retirees invest. It’s shockingly simple, and stress free for us.


It’s realistic to be optimistic about the future, not pessimistic. I found that Recalculate (one of the four CORE principles in Nest Egg Care) is a key point to understand. Nest Egg Care gets you to your Safe Spending Rate that is based on surviving the worst tracks of possible future financial returns. While we plan for the worst, it’s realistic to assume we won’t face the worst. When we aren’t on a horrible track of financial returns (and we can figure out when we aren’t) our Safe Spending Amount can increase.


One key implementation action leads us to be happier. I have total confidence in our calculation our Safe Spending Amount, and I decided to “pay ourselves” that amount monthly “paychecks.” That’s a monthly transfer from our investment account to our checking account. We know we don’t have to save one dime of the annual total; when you go through the logic, saving any of it really makes little sense. This has been a big, positive change in our thinking: at the beginning of the year our focus is, “What’s the next fun thing to do?” And later in the year, so far, the focus is on, “Who should benefit from our increased giving this year? And how much?” Added giving to our loved ones and favorite causes has given us a sense of meaning and joy that we otherwise would not have.




As time has passed, I’m more frustrated that so few retirees understand the answers to the key questions. It shouldn’t be that way. The evidence of the CORE principles is clear, yet most all retirees are victims of not knowing and therefore living a retirement plan that results in their spending, in my opinion, too little and investing in ways that mean less for them and less for their heirs and others they care about. I’ll add another post on this topic soon.

My 4.5% Pay Raise Calculation, December 2016

You can see the calculations on this spreadsheet. I first entered the return rates for the prior 12 months for our stocks and for our bonds. (You can see at the top of the sheet that I used December 15 as the end of year for this calculation. That’s turned out to be an awkward choice; getting accurate return rates for that ending date is harder than it should be. I’m shifting to November 30 for the calculation at the end of 2017; I’ll have a 50-week year.)


I also entered the inflation rate for the year. Those are the only three numbers (highlighted in yellow on the sheet) that I have to enter each year on this spreadsheet .


The spreadsheet does the rest once I move the calculations one cell to the right.


Our SSA for spending in 2017 increased by 4.5% real rate to $46,100 (times our multiplier), and this was also a 4.5% real increase from our start of spending in 2015. The spreadsheet also shows that if we continued to spend C$44,000 in 2017 we had $42,700 “more than enough” for that spending (times our multiplier).


Our plan is to always “pay ourselves” our calculated SSA. And that’s what I did, altering our monthly auto transfer from our investment account to our checking account (our “paycheck”). What we don’t spend out of the $46,100 (times our multiplier), we’ll gift before the end of 2017.

Three Keys to Enjoy More. NOW.

Once you know How Much to Spend and How to Invest – two uncertainties that you control – you can squarely face the uncertainties that you don’t control –  Market Returns and Lifespan. Once you are confident of your decisions and plan, I think you can “Enjoy More. NOW.” We retirees must Enjoy More. NOW. since the sands of time are running. Here Three Keys or Steps.


1. Understand the CORE principles. The CORE is evidence-based and true. I think you will completely understand once you’ve filled out your Planning Worksheet. But you’ll have to use your “Slow Thinking” part of your brain for some of the entries: the evidence presented and questions asked of you in Nest Egg Care may jangle with your intuition and commonly held beliefs. You’re also going to need to become really good friends with the “hockey stick” that you choose – that’s the shape of the curve of the probability of depleting a portfolio for a given spending rate. We can pick a stick with a shaft length – zero probability of depleting – for as many years as we want. (And we can increase its length during retirement.)


2. Trust and Pay Yourself your Safe Spending Amount (SSA). Once you trust your SSR% and how to use it to calculate your SSA, you’ll know it’s safe to pay yourself the full amount in the year. And you know it’s almost certain to calculate to be greater in the future. When you think about it, not spending your annual SSA makes little sense. The only way you’ll really see that you’ve spent (and gifted) it all is to pay yourself a monthly “paycheck” that adds to your SSA for the year. Don’t save one dime.


3. Focus on Fun and Giving. Once you pay yourself and know you will not save one dime of it, your focus can be “What’s the next fun thing to do?” And, typically, later in each year, you’ll find yourself asking, “Who should benefit from our increased giving this year? And how much?” Because one thing is certain: you’ll enjoy your retirement more when you gift to your loved ones and/or fund your favorite causes while you’re still around to appreciate the positive impact you’ve made.


Do these things, and you’ll maximize the joys of retirement.