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.