I discuss many personal finance principles in the Financial Guide To Life (FGTL) like reaching financial goals, but sometimes discussing theory can seem more theoretical than practical, or just too hard to actually do, like the latest diet trend. So today’s post will be about applying financial principles and advice to a real life example — buying my Fitbit health tracker.
Last time, we discussed how to determine how much of your savings you can withdraw in retirement while ensuring that savings will last as long as you (and your spouse) do. Now let’s discuss retirement spending – how to manage your withdrawals from savings in retirement. Whether you have many or few accounts and assets, you need a plan to manage the withdrawal of your assets, converting them to cash, and investing the rest for both income and growth. One of the first questions you should answer when investing is what is your time horizon, i.e., when will you need your money? You should use this same principle when getting ready to use your savings. When you are ready to start using your retirement savings, the answer to when will you need your retirement savings is this. Your retirement spending will need some of your money now, some within a few years, and some many years from now. So you should divide your retirement savings into categories that meet each of these time horizons. This strategy is known as the basket or bucket strategy. Continue reading
How much of my retirement savings can I spend in retirement so I don’t run out of money?
Last week, I discussed how to save the big money you will need to live comfortably in retirement, especially if you don’t have a pension. Now let’s turn to spending your retirement savings which can be as confusing as saving for retirement. Hopefully, you have saved a GIGANTIC pile of money in your tax-advantaged retirement accounts before you are ready or have to retire. Once you retire, managing your retirement savings becomes even more challenging because you have to balance the need for immediate cash withdrawals versus your long-term need to make your savings last for as long as you live. You have the challenge to make it last for perhaps 30 years or more, while guarding against stock market crashes, failure to keep pace with inflation, and spending it too fast. Let’s discuss several strategies to manage your retirement savings withdrawals.
I read a new recommendation for determining how much of your retirement nest egg you can spend in retirement without running out of money before you run out of life. But before we cover the spending topic, let’s quickly summarize what you need to know about saving for retirement. (Also see my more detailed post here.)
Someone recently asked me what is a “jumbo loan” and what makes it different than getting a regular mortgage to buy a home, so here is my recap for American readers. A jumbo loan is not simply a big mortgage, but specifically a loan that exceeds what can be guaranteed by the federal agencies, Fannie Mae and Freddie Mac. For most areas, this has long been $417,000, but increased in 2017 to $424,000. Loans can be substantially more in expensive urban areas.
Making ends meet involves both spending less and earning more. I have an entire blog section devoted to saving money, so now let’s focus on earning more. There are many things you can do to make that happen rather than just hope. Here are tips on how to ask for a raise.
I like to pass a long interesting websites relating to money management, so here are recent ones I have discovered.
Long-time readers will know that one of our key financial principles for saving money is to “avoid paying full price”. See my posts that outline the basis strategies. Now let’s explore some details and apps to save money more thoroughly. Looking for sales is a great start, but you can do even better with a strategy.
New Year’s resolutions are popular because this is a great time to reflect on what parts of your life could use improvement. “Losing weight” is always popular as is some aspect of improving our finances. Improving your financial future is one of the most useful aspects of your life to improve because it affects so many other things. So I’m pointing you to my series on great New Year’s resolutions that can actually change your financial future during 2017. The Financial Guide to Life deals with managing, saving, investing, and spending your money, so I have recommended four personal finance new years resolutions that are achievable and can bring you financial security and peace of mind.
New Years Resolutions for 2017
The holiday season is not just for shopping, but also travelling, so I want to pass on some recent news about airlines and airline travel tips. First the good: Delta Airlines has a new feature that allows you to track your bags so you know where they are even if they get lost. Delta now includes a tracking chip in the luggage tags they put on your bags, and you can follow your bags progress thru GPS tracking with the Delta app. Other airlines are expected to follow suit in the years to come.