Retirement and 401k News
Retirement Spending 101: The Do’s And Don’ts
January 22, 2020 – Forbes
Knowing how to spend your retirement money is often harder and more confusing than knowing how to save it. The basics for saving for retirement are pretty simple. For four, five or even six decades, you painfully learn how to spend less and save more. But once you reach retirement, there are few really good guidelines about how to wisely spend the money you’ve saved.
“Most financial plans are fundamentally incorrect about the real way that money is spent. Retirement spending is not linear,” said Ted Jenkin, CEO of oXYGen Financial in Atlanta and author of The 21-Day Budget Cleanse.
The 3 Periods of Retirement Spending
There is typically an initial three-to-five-year period of retirement “jubilation,” where many retirees overspend, often with more frequent travel as they start checking off their “bucket list” goals, Jenkin said. That’s usually followed by a longer period of “stabilization” — when spending normalizes for the next decade or so. Jenkin calls the last spending period the “five-mile radius,” when older retirees mostly stay closer to home and their spending (except for health care) typically decreases.
DO put cash into one account to pay for your first year of retirement. Use money from that account to pay your credit card bills and other expenses so you can track exactly where the money is going, said Jenkin. This technique also helps ensure that you only spend what you can afford to in Year One of Retirement.
DO track your spending daily — using your bank’s app, said JB Bryan, owner of JB Bryan Financial Group of Richmond, Va. Alternatively, you can call the bank’s computer system daily — without ever talking to a real person — to check on your transactions and your account balance.
DO spend on learning. Continued education of any kind — from developing new professional skills to enhancing old ones — is almost always a positive way to spend retirement money, said Bryan. “If you’re expanding your knowledge, you’re going to have a more comfortable eighties,” she said.
DO spend on relationship-building. Paying for travel to visit children, grandchildren, or old friends from high school or college — even out of the country — is often money well spent, said Mark Woodward, founder and CEO of KANA Private Wealth Group of McLean, Va.
DO activities that bring you pleasure. Great experiences tend to bring far more happiness to retirees than accumulating lots of expensive stuff, said Jenkin. “If it’s between a Coach handbag and a great trip, go with the trip,” said Jenkin.
DON’T buy pricey, new cars. Buying assets which quickly depreciate is one of the dumbest things a retiree can do, said Jenkin.
DON’T over-support adult children. If you indulge your grown son or daughter, your child will be less inclined to save and invest for retirement, said Bryan. “You hurt your children by not showing them how to be financially independent,” said Bryan
DON’T purchase lottery tickets. Bryan has several clients who spend hundreds of dollars weekly on them. “It’s a terrible habit, and lately I’ve seen it more with women than with men,” he said.
DON’T neglect to put money aside for one-time expenses, like a child’s wedding. “Too many retirees think about this only when it’s too late,” Jenkin said.
Receive Your Stock
Market Updates Weekly
Enter your email address to receive information on the stock market and updates at the beginning of each week.
The information in this communication or any information within the Asset Strategy Advisors, LLC domain, and or any attachments to any AdvisorStream communication is strictly confidential and intended solely for the attention and use of the named recipient(s). If you are not the intended recipient, or person responsible for delivering this e-mail to the intended recipient, please immediately notify AdvisorStream at firstname.lastname@example.org and destroy all copies of this e-mail. Any distribution, use or copying of this e-mail or the information it contains by other than an intended recipient is unauthorized. This information must not be disclosed to any person without the permission of AdvisorStream LTD. Please be aware that internet communications are subject to the risk of data corruption and other transmission errors. For information of extraordinary sensitivity, we recommend that our clients use an encrypted method when they communicate with us.
Disclaimer: Material is for informational purposes only and does not constitute an offer to buy or sell any product. Past performance and any forecasts are not indicative of future results. This material was prepared and views are those solely of the author and does not necessarily represent the views of the presenting party, nor their affiliates. Because investors situations and objectives vary this information is not intended to indicate suitability for any particular investor. Direct investment in an index is not possible. Asset Strategy is unaffiliated with third-party sites, cannot verify the accuracy of, nor assume responsibility for any content of linked third-party sites. The information available on third-party sites is for informational purposes only.All information provided is for educational purposes only. The material herein does not constitute an offer to sell nor is it a solicitation of an offer to purchase any security. Offers will only be made through a private placement memorandum to accredited investors (typically have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last three years), or through an offering circular to qualified investors, and where permitted by law. Investments in any security are not suitable for all investors. Investments in securities involve a high degree of risk and should only be considered by investors who can withstand the loss of their investment. Prospective investors should carefully review the “Risk Factors” section of any private placement memorandum or offering circular. Investors should perform their own investigations before considering any investment and consult with their own legal and tax advisors. Past pricing structures may not be indicative of future pricing and may not result in positive returns. Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services offered through Asset Strategy Advisors, LLC (ASA), an SEC-registered investment adviser. Insurance services offered through Asset Strategy Financial Group. (ASFG). CIS, ASA, and ASFG are separate companies, all of whom are independent of Forbes.