Planning retirement spending is tough to do since there are so many unknowns. Many people tend to take a fear-based approach and rely on the 4% rule. Some even take a step further and spend less of their nest egg.

Today’s Retirement Headline urges you to take a different approach. Listen in to hear what the article advises and my thoughts on the matter. Then stick around for the listener question to learn how our national macroeconomic situation affects financial planning.

Outline of This Episode

  • [1:22] Rethink underspending in retirement
  • [5:01] My thoughts on the article
  • [10:12] How does our national macroeconomic situation affect financial planning?

Legacy planning doesn’t have to include a sizeable inheritance

One of the goals of this show is to get you to spend more money in retirement which is why I was drawn to this Morning Star article by Christine Benz.

If you are approaching retirement you have also probably considered estate planning. We often feel the urge to leave our heirs with a sizeable inheritance, but the balance of your accumulated savings is simply unmade memories. Part of legacy planning should be more than leaving an inheritance–it should be leaving a legacy.

Those who choose to rely on the 4% rule often end up with substantial remaining balances. This tendency to underspend leaves heirs with larger inheritances and often these inheritances come at a time when your heirs don’t really need the funds.

A flexible approach allows you to spend more

Adopting a flexible withdrawal strategy that adapts to the portfolio’s performance will allow you to use more of your savings during your lifetime.

Actively supporting your loved ones with financial gifts during your lifetime can be more rewarding, especially when it comes at a time when they need it the most. This flexible approach to retirement planning not only ensures financial security but also enhances personal fulfillment while positively impacting your family and community.

My takeaways

Consider the effect that receiving an inheritance now would have on your financial well-being as opposed to 20 or 30 years ago. How can that knowledge help you plan how to spend your money and plan your legacy? Is there a way that you could help a loved one now rather than later?

Remember, the 4% rule is based on worst-case scenario planning. Is that how you want to live your life or would you rather live a life based on abundance? Spend your money while you can enjoy it with your loved ones.

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