April 29, 2024 Weekly Update

We do love it when someone refers a family member or friend to us.  Sometimes the question is, “How can we introduce them to you?”   Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.

Here are this week’s items:

Portfolio Update:  Murs and I have recorded our portfolio update for April 29, 2024

Why Savvy Savers Should Spend More in Retirement – Part 2

In this Episode of the Secure Your Retirement Podcast, Radon, Murs, and Taylor discuss in detail the importance of spending more in retirement as a savvy saver. Taylor provides a numerical analysis and insights into how spending habits in retirement can impact your financial plan in a scenario of a sample retired couple in their late 60s.


Why Savvy Savers Should Spend More in Retirement – Part 2

Learn the importance of aligning expenses with income sources and assets in retirement planning, considering inflation and the potential for increased expenses. You will also learn the importance of enjoying retirement and fulfilling bucket list items even when they require larger withdrawals.

Why Savvy Savers Should Spend More in Retirement – Part 2

If you missed Part 1 of this series, we recommend that you either read through our blog post here or listen to the podcast here. Continuing on with Part 2 of why savvy spenders should spend more in retirement, we decided to bring in our own Taylor Wolverton, CFP ®, Enrolled Agent, on the discussion. 

Foundation of Why Savvy Savers Should Spend More in Retirement 

Oftentimes, we have conversations with clients who have more money than they’ll need in retirement. However, at times the fear of running out of money is so great that even when it’s a necessity, they hesitate to spend. Because of this, many will pass on a multimillion-dollar legacy to their beneficiaries at death, whether that is their true intention or not. 

Let’s look at some examples of this concept. 

Husband and Wife, Both 69 Years Old 

Our first example to illustrate the idea is a husband and wife, both currently age 69, with the following details: 

  • Both fully retired- not currently receiving wages or employment income 
  • Husband receives $4,000 a month from Social Security 
  • Wife receives $2,700 a month from Social Security 
  • Wife receives a pension of $1,900 
  • Cash savings of $200,000 
  • Husband’s IRA balance is $1,360,000 
  • Husband’s Roth IRA balance is $50,000 
  • Wife’s IRA balance is $830,000 
  • Wife’s Roth IRA balance is $44,000 
  • Joint brokerage account containing stock worth $80,000 

In total, the couple has $2,564,000 between cash savings, IRAs, Roth IRAs, and stock along with steady sources of income from their pension and social security benefits. 

Let’s look at their spending. 


This couple spends about $12,000 per month to cover their expenses. This does include $6,000 to $7,000 per year that they use for travel. In our long-term projections of this scenario, we assume inflation on their expenses at a rate of 3% per year for the duration of their retirement. 

Note: When we meet with the client, we try to gather as much information as possible to have an awareness of relevant figures, but there are times when someone forgets about an account or a small pension, so it’s something that we continuously review and tweak as necessary over time. 


As previously mentioned, we assume inflation will rise 3% per year. To stress test a retirement scenario, we also assume that the invested assets will have a 4% to 5% return each year which we believe is conservative. We assume the social security and pension amounts stay the exact same with no cost-of-living adjustments over time. 

What the Couple’s Retirement Page Looks Like 

Clients of ours receive a one-page retirement summary that outlines income and expenses for the duration of their retirement. For this couple, the page will show the following: 

  • $1,900 per month from the pension 
  • $6,700 per month in combined Social Security benefits 
  • After subtracting an estimated for tax withholdings, net income is $8,400 per month 

Based on the couple’s current spending habits, they need $3,600 – $4,000 distributed from their accounts per month to make up for this difference. The couple has over $2.5 million in savings, IRAs, stock, etc., so they have a decent amount of money available to take distributions from. 

Both spouses are age 69 today. At this rate of distribution, what will happen by the time they’re 80? 

Inflation Calculation 

The couple spends $12,000 a month at age 69, and by 80, with a 3% inflation rate, this figure will be $16,900. In just 11 years, additional pressure is put on the savings and investment accounts because the couple needs about $8,500 a month to cover expenses after pension and Social Security. 

You can quickly see how inflation will impact your assets. 

At age 69, the couple had over $2.5 million in retirement accounts, and by age 80, we project they will have around $3.2 million. If you were feeling stressed up until this point, you’re not alone. But with a conservative 5% annual rate of return, the couple in this example has more in savings and investments at age 80 than when they started at age 69, even when taking regular monthly distributions to cover their expenses. 

What about at age 90? In this scenario, the couple is projected to have $2.9 million in savings and investments. Withdrawals started to impact the accounts somewhat, but at age 90, the total value is nowhere near an amount that would cause concern around the ability to maintain the current level of spending. 

You can do a lot with $2.9 million and enjoy the money that you worked so hard to accumulate. We know that this couple puts aside $6,000 to $7,000 to travel, but they do have a few bucket list trips that they would love to take. 

$30,000 Trip Added In 

The couple is nervous about taking these bucket list trips because they will have to take a larger withdrawal. For a few years, the couple has wanted to take a $30,000 trip that they couldn’t because of work and other obligations. 

We always sit down to crunch the numbers with our clients because retirement spending is a major source of anxiety for a lot of retirees. 

What we show the client is something like this: 

  • Remember, at age 90, without taking this trip, you’ll have $2.9 million. 
  • Let’s add in the $30,000 expense at age 69. What’s the long-term impact at age 90? The couple has $2,780,000 instead of $2.9 million. 
  • Over 20 years, they may lose about $120,000, but they were able to tick something off their bucket list. 

Will the trip and memories be worth the money? For most people, the answer is a resounding “yes.”  

$35,000 Trip Added in for 2026 

Perhaps the couple was so excited about their first trip and didn’t mind the retirement spending, so they added in an additional trip of $35,000. By age 90, with the $30,000 and $35,000 trip taken, the couple will still have $2.6 million in savings and investments. 

Passing $2.6 million to your beneficiaries is always going to be a nice gift. 

Withdrawing money and adding in these larger expenses into your retirement planning really comes down to “what are you working for in retirement?” The sooner we can add these figures into your plan, the faster we can secure your retirement. 

We encourage you to start looking at the things that you really want to do in retirement and begin planning them now. 

It doesn’t matter if you would never spend $30,000 on a trip or don’t have $2.5 million in retirement accounts. 

Spending and retirement accounts vary drastically between couples. If you’re not spending more than you have, there’s always a good chance that you can start checking off some of the items on your bucket list and still have more than enough money for yourself well into retirement. 

We can run these numbers for you so that you can feel confident about spending more money and making memories for yourself while in retirement. 

If you have any questions or would like us to run the numbers for you, please feel free to reach out to us. 

Click here to schedule a call with us. 

Why Savvy Savers Should Spend More in Retirement

You’ve saved well enough to secure and enjoy your retirement. Today, you’re going to hear two financial advisors (us) say something that you never thought you would hear: spend more in retirement.

We see it all the time – people are so used to saving that spending money is difficult.

People have developed a mindset where spending money in retirement becomes a moment of anxiety. Many of our clients leave behind significant inheritances. We encourage them, with good and thoughtful planning, to spend some of that money to:

  • Make memories
  • Experience new things

You can spend a little more and still leave money behind for the next generation.

Why Savvy Savers Should Spend More in Retirement

A long time ago, we had a client call us. She had about $2.5 million in retirement and at the time, she had some water damage in the kitchen. She was living on only her Social Security amount and was in her 70s.

She said that insurance would cover the replacement of her linoleum floors, and she asked if she had enough money to upgrade to hardwood floors for about $15,000. We knew that with 100% certainty that she could upgrade, but she was so scared and reluctant to use any of her $2.5 million, she never did.

She left behind a few million dollars to her children and grandchildren, but she never spent her money on herself. Perhaps she would have enjoyed life a little more while she was here by doing something like buying those hardwood floors for $15,000.

The Psychology of Savings

You want to save for retirement and get to a place where you don’t need to worry about having enough money. From a young age, you decide to save for the future, and you put away as much money as you can to enjoy it later.

Everything you do in life is for your family and future, whether it’s saving for a house, putting food on the table, or putting money away for retirement.

You build a habit of saving over the course of decades, and then what happens? It becomes an ingrained habit that can be hard to break. People become extremely frugal, and it’s difficult to spend your money when you reach retirement age.

There’s also a factor of going from accumulation mode to retirement, so you’re taking money out of your retirement and no longer earning a paycheck, which is scary change for a lot of people.

Shaping Your Mind for Retirement

Five or ten years from retirement, when you know you’re on the right track to secure your retirement, it’s time to start switching your mindset. You want to think about:

  • What you’ll do in retirement
  • What big travel or experience goals you have
  • How you’ll spend time with family
  • Whether you want to own a second home

When we’re working, we tend to neglect some things in life, but when you finally hit the retirement milestone, you deserve to make the most out of your time.

We always ask our clients what they’re going to do when they’re on pace to reach their goal, and they’ll often say:

  • We’re too busy to think about that
  • We’ll figure it out when we get there

If you start making goals for what you’ll do in retirement, you can start allotting money to it. Good saving habits help to reach big goals in retirement, but you need to break that “saving only” habit to some extent.

Things to Think About When You Hit Retirement

What are the things you would like to do in retirement? A few questions we like to ask are:

  • Where would you like to travel to in retirement? How would you like to travel?
  • Do you want to do any major house renovations?
  • Do you want to focus on your health and wellness? Ex: hire a personal trainer?

Paying for health and mobility improvements are always going to be worthwhile.

You can also create experiences with your family. For example, we have one client who took their entire family on a cruise for a week. While the person spent a little money on the experience, they created a memory that will last a lifetime.

We’re not saying go out and spend 75% of your retirement, but you can enjoy the money you worked to save and still be confident that you have planned well to secure your retirement.

What You Need to Think About to Spend Your Money Smartly

We don’t want you to go out and spend all your money. What we would like to do is have our clients get these goals in place so that we can use financial planning to help them reach their goals.

If you think about your goals ahead of time, we can:

  • Plan for these costs
  • Allot enough money for these expenses

Imagine a $35,000 trip that you want to go on. We can add the expense to your retirement plan and see its true impact.

When we understand the numbers, it makes it much more comfortable for clients to spend some money in retirement because they see the true impact of their spending.

One story that we love to share is of a client who wanted to sell their house, buy an RV, and travel the US for 10 years.

We told them to provide the details and let us run the numbers. The clients came back with data on the cost of the RV, the sale price of the house, expenses, and everything else you could imagine.

They have been happily traveling in their RV for over 10 years now.

We sat down with them last week, and they plan to keep traveling for the next 5 or so years. Next week, we’ll run through case studies to show you the numbers, examples, and “what-ifs” for this type of retirement goal.

A financial plan is like a GPS to help you reach your retirement destination. If your destination changes, the GPS can reroute you to get you where you want to be. Proper financial planning can help you safely reach your retirement destination while still making pit stops along the way.

If you want to learn more about planning for retirement and spending more money, please feel free to reach out to us.

Schedule a call with us to talk more about spending money in retirement.

April 22, 2024 Weekly Update

We do love it when someone refers a family member or friend to us.  Sometimes the question is, “How can we introduce them to you?”   Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.

Here are this week’s items:

Portfolio Update:  Murs and I have recorded our portfolio update for April 22, 2024

Why Savvy Savers Should Spend More in Retirement

In this episode of the Secure Your Retirement Podcast, Radon and Murs discuss the importance of spending more in retirement. The savings habits we build in our working years can unintentionally lead to a fear of spending money to enjoy life in retirement.


Why Savvy Savers Should Spend More in Retirement

Learn how to shift your mindset from fear of spending and start building good habits that will lead to a successful retirement. You will also learn about the experiences and things you can spend money on, plus the importance of planning ahead of your retirement.

July 3, 2023 Weekly Update

We do love it when someone refers a family member or friend to us.  Sometimes the question is, “How can we introduce them to you?”   Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.

Here are this week’s items:

This Week’s Podcast – You Have Enough to Retire, but How Do You Create an Income.

Listen in to learn the importance of starting a withdrawal strategy in the first few years of retirement to avoid a sequence of return risks. You will also learn about all the things you should be thinking about if you want to retire early or at any age to keep your life fun and exciting in retirement.

What’s the importance of having a financial professional to help you with the withdrawal strategy to avoid the stress of the deaccumulation phase? Learn here…


This Week’s Blog – You Have Enough to Retire, but How Do You Create an Income.

In this scenario, the couple wants to retire at 55 – one year from now. They want to know the best way to take their distributions. The couple plans not to touch the qualified money until they hit age 59.5.

They go on to say that they understand the 4% rule, but they don’t…

You Have Enough to Retire, but How Do You Create an Income?

An article came across our desk from MarketWatch about a couple in their 50s who want to retire early. They have $4.5 million in savings and don’t know what to do to withdraw the money in retirement

Breaking down the couple’s assets, they have:

  • $2.3 million in taxable accounts
  • $2.2 million in retirement assets

The couple has the assets to retire, but this article resonates strongly with us at Peace of Mind Wealth Management. How do you build a plan that will last 20 – 30 years and take care of your family?

The article’s response was pretty standard: seek professional advice instead of trying to do it yourself because everyone and their circumstances are different.

With that setup, let’s dive into the meat of the topic and explain how we recommend you create an income stream.

What the Couple Lets Us Know About Their Situation and Ideas

First, the couple wants to retire at 55 – one year from now. They want to know the best way to take their distributions. The couple plans not to touch the qualified money until they hit age 59.5.

They go on to say that they understand the 4% rule, but they don’t know whether to take money monthly, quarterly, or annually. The couple planned to take money off the table after the 2021 peak, but waited until 2022 for tax purposes, and that backfired.

They also want to know how often they should withdraw money from their accounts.

From our perspective, we love the idea of a retirement focused financial plan. As you grow up you are told to save. Save as much as you can, and dump the money into 401(k), IRA, life insurance, brokerage accounts, emergency funds, and so much more.

Suddenly, you’ll exit the accumulation phase of life and need to enter the distribution phase.

The money you’ve built up needs to last the rest of your lifetime. This is where the anxiety phase seems to kick in:

  • Did I save enough?
  • Did I plan enough?
  • Do I have enough money to last the rest of my life?

We see clients that have less than $4.5 million for retirement and some with substantially more.

How Do You Start Withdrawing?

Based on the article, we know that the individual who wrote into MarketWatch understands the 4% rule. This rule is simple: if you withdraw 4% of your assets annually, you should maintain your assets throughout retirement.

Let’s say that you have $1 million in an account and take $40,000 out of the account annually. In a “predictable” market, this means you’ll replenish the money you take out each year.

We saw in 2022 that the market fell 20% – 30%, depending on the index. In 2020, the market fell over 30% in just a few weeks.

Markets are not predictable. Every few years, we do see volatility and corrections.

While the 4% rule is slightly off and is more like 3.3%, meaning for every $1 million you have in retirement accounts, you can confidently take out $33,000. Rates of returns have gone down, and inflation has gone up.

The times when 7% – 10% gains were almost certain in the markets are, in our opinion, not in our future. You’ll have years of gains in this range or higher, but on average, the market fluctuates too much for it to be predictable.

Based on this information, you should speak to a financial professional and look at all the pieces of retirement and how they fit together.

The person who responded to the question mentioned something else that was important: sequence of returns risk.

What is Sequence of Returns Risk?

If you start your retirement in a down scenario, your return risk goes up. For example, if you wanted to retire in January 2022 and wanted to withdraw $5,000 a month for retirement, it was a bad time.

The markets went on a steady 12-month decline with no recovery phases in the middle.

A person may have had $1 million at the start of the year, but when the year experiences a downturn like 2022, the $5,000 you take out is turning into a higher percentage of your portfolio.

The portfolio stress becomes higher when you withdraw on a down asset.

If the first early years were down 10% or 20%, you could get into a very tricky situation where you might receive 7% returns a year now. However, those initial down years really hurt your chances of the account lasting through retirement.

For us, it makes more sense to consider where you’re withdrawing the money and think about withdrawing money from accounts with less risk.

You may even need to adjust the number of withdrawals you have during down years.

Gap Between the 55 and 59.5 and Funding Retirement

Since the person is retiring before 59.5, they do risk being penalized if they touch their retirement accounts before the age of 59.5. The person writing in understood this fact, but they will need to fund retirement for 4.5 years in some other way.

You can tap into your non-retirement accounts, and there are strategies to tap into a 401(k) at age 55.

The other thing to identify if you’re retiring early is:

  • How much do you need to spend every month? These are “needs”, including food, utilities, mortgage and so on.
  • How much do you want to spend every month? “Wants” include things like vacations, visiting grandkids and so on.

We also need to think about pensions and any income that may be coming in that is not tied to your retirement account. Since the person is 55, we’re not considering Social Security. Early retirement age means thinking about heightened health insurance costs of around 10 years until the person reaches age 65.

When retiring at 55, the person also has opportunities to understand where to withdraw money from to make their money last.

Between the age of 55 and 75, when the person needs to take required minimum distributions, they have 20 years where they can do some pretty cool stuff. For example, they can:

  • Convert pretax to tax-free accounts
  • Reduce taxes through conversions

If the person has all their money in a traditional 401(k), they can start converting these assets through Roth conversions over these years. The ability to grow assets tax-free is a beautiful concept.

We recommend the person spend time understanding where money is coming in, where money is going out, and when various milestones in retirement will be hit.

A person can begin taking Social Security early, at retirement age or at age 70. The additional income may help pad their income needs later in retirement.

Medicare also needs to be considered and is a massive topic because of IRMAA, or surcharges for making too much money in retirement. You may take out more money from one account, but you’ll be penalized in some way:

  • Tax bracket change
  • Taxable Social Security
  • Medicare surcharges

When it comes to a withdrawal strategy, we follow a bucket approach that follows a “why” scenario for spending by breaking your money into:

  • Cash
  • Safety
  • Growth

Bank money and emergency funds are cash. This money is easy to access and will not impact retirement. Safety buckets speak to the idea of the safety of return risks. If we have a safety bucket with low risk and make a return, it brings predictability to our plan.

Finally, the growth bucket is the long-term bucket that is in the stock market and will go through ups and downs. If we can avoid tapping into this bucket, it will be allowed to grow long-term and can circumvent volatility because you don’t need to take money out of the account during down periods.

You can tap into the growth bucket when you need it for things like a vacation. It is a liquid bucket but allowing it to grow over time makes sense for our clients.

We aim to create a withdrawal strategy that minimizes risks and allows you to live comfortably through retirement. Everyone’s retirement plays out differently because your needs are unique and will change over time.

Working with someone who lives and breathes retirement strategies can help you create a withdrawal plan that minimizes risks and tax burdens, and considers volatility in ways that “general” rules, like the 4% rule, do not.

Do you have questions about retirement and want to speak to a professional?

Click here to schedule a 15-minute call with us today to discuss your retirement concerns.