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Retirement Income: Be Realistic, Live within Your Means

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You know from here and here that retirement plans aren’t worth a dime if they don’t change with the times—if they’re not dynamic. Planning for retirement and income drawdowns is what I do every day of the week. It’s part of my conversations with you. It’s why we talk, because change happens.

Look, we’ve been telling you for years now that you want to live below your means. You want to save until it hurts, work for as long as you can, consider part-time work in retirement, and pay attention to reality. Retirement income draw rates created in the mid-90s are about as relevant today as the reports they were printed out on. Those glossy reports may look nice, but they’re just not relevant anymore.

Unfortunately, there’s no shortage of financial engines spitting out projections that make you feel good. There’s no shortage of investment products making promises that may not come true. These reports create a false sense of security and give investors false hope. They’re comfort food when you need to eat your veggies. They create expectations that you’re going to be OK when that’s not a promise anyone should make. It’s a constant, daily battle. That’s a promise.

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Pay attention to what’s going on around you. Projections made only a few months ago need to be adjusted and reviewed. You need to be able to keep up with the times. What does that mean? For one, if your portfolio is down, don’t put too much stress on it with an unrealistic drawdown rate. You need to be realistic.

Action Line: All those products that come with “guarantees” are selling promises about the future despite not knowing how it will play out. All they can really promise is that they hope it all works out. Will they be there for you in 10-years, or will they be on the beach? That’s not a strategy I’m comfortable with. Are you? Let’s keep in touch.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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