Most significant variable within retiree’s control is spending
Once you officially retire, the transition from nest egg “saver” to “spender” can be a big psychological hurdle to clear. However, when living off money you have accrued over lifetime, it’s also possible to get a little too comfortable spending. Luxury travel, house renovations or a second home purchase can be very expensive ways to quickly deplete retirement savings if you haven’t planned well. Even diligent savers may wonder if their nest egg can cover the many spending “wants” of retired life amid the uncontrollable variables that will almost certainly affect their savings over time, like investment return rates, inflation, medical bills and taxes.
To prepare for spending comfortably during retirement, challenge yourself to live off your predicted budget for a year before retiring and see if your planned spending matches your actual spending habits. MoneyGuide Pro, a tool our Cranbrook Wealth investment professionals use, can also be a great tool to pressure-test your retirement spending strategy and gauge the longevity of your retirement savings under different spending scenarios. Contact a Cranbook Wealth investment professional for more details.