We Nest Eggers think differently about retirement and live differently in retirement than most. We Nest Eggers focus on Enjoying More, NOW and helping others Enjoy More, NOW.
What do we do?
• At the start of every year, we pay ourselves our annual Safe Spending Amount (SSA). We deliberately spend or gift it all every year.
• Initially we focus on ourselves. We know we have fewer years (together, if you are planning for two) than we would like. “What’s the Next Fun Thing To Do?” (Patti and I plan our fun trips.)
• Later our focus is on giving to others. We know our money can have a positive impact. Typically we ask, “Who should benefit from our increased giving this year? And how much?” Because one thing is certain: we’ll enjoy our retirement more when we gift to our loved ones and/or fund our favorite causes while we’re still around to appreciate the positive impact we’ve made.
How do we know we are safe? We use a Safe Spending Rate (SSR%) to get to our annual Safe Spending Amount (SSA). Our SSR% is always based on the assumption that we will ride the WORST sequence of future market returns in history. Our decision on spending rate and a few others as to how to invest are key. We know we have LOCKED IN the number of years we want with zero chance of depleting our portfolio – typically to when we are in our late 80s or perhaps 90s. (It’s the shaft of the hockey stick.) The probability of outspending and outliving our portfolio for any year thereafter is extremely low. Besides, we know what to do to dampen any worries if they arise.
• We frequently reexamine to see if we can use a greater SSR% and increase our SSA. A greater SSR% makes sense as we age since we will need our money to last fewer years, and we most likely will find we haven’t been riding the WORST sequence of returns. Our SSA most likely will increase over time – maybe to twice its initial amount.
• We keep investing costs very low. We keep 98% of what the market (stocks and bonds) gives all investors. (The average investor incurs high costs and keeps just 85% of what the market gives.) Over time we will be in the topmost 7% of all investors.
(I like this short reminder of Nest Eggers’ culture, beliefs, and way to live. Here’s a pdf that you can print. I keep this sheet near my 3×5 card of my financial plan.)
Leave a Reply