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Keeping Calm

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AUTHOR: Edmund Marsh on 8/15/2025

Planning often costs nothing but time. Even then, the hours we devote to it can buy us buckets of happiness. Some plans may go no further. No matter. There’s no harm done. We’ve spent no money and taken no risk. 

A personal financial plan, on the other hand, can be costly–whether it’s implemented or not. For instance, if we don’t do what we know we ought, actions like making a Roth conversion or moving money out of a high-fee mutual fund, we could find our finances treading water. Or, if we follow a poorly-conceived plan, we might even go under.

My wife and I hope to sidestep both pitfalls as we put the money plan for our senior years into motion. But I’m finding I can’t avoid facing the emotional cost of changing the habits and thinking I’ve developed over years of nurturing our retirement savings.

Dripping in. I recently cut back on my work hours as I phase into retirement. Along with my work schedule, however, my paycheck also got pruned. That means less salary for all purchases, including new shares of stock. 

Even so, my wife and I have no logical reason to feel pinched for money. Currently, my part-time pay covers the usual expenses for my family’s frugal lifestyle. There’s even enough left over for low-key leisure pursuits, like the limited travel that keeps us close to our elderly mothers. My employer also pays the bulk of my health insurance premium. And I have an array of other benefits, including a generous allowance for paid time off.

Meanwhile, our finances are underpinned by investment accounts at all-time highs. We can’t take credit for their growth. Our heaviest lift was plunking part of each paycheck into index funds during decades of a mostly soaring stock market. Those steady deposits have swelled into the money pool from which we’ll pull our future living expenses. For now, those funds are untapped, but could be used for any purpose.

Yet, despite my lengthy list of financial blessings, since shifting to part-time I occasionally feel less wealthy. I know my sense of lack stems from a slimmer paycheck. No, I don’t hunger for more spending money. I just wasn’t prepared for my reaction to the skinnier contributions now dripping into my stock-index funds.

Before moving to part-time, a chunk of my paycheck was diverted to buy stocks in my Roth 403b. By comparison, it now seems like just a bit, even though it’s still big enough to get the company match. In addition, I expect my employer will continue to add an annual bonus into my tax-deferred 403b. I also invest the money I deposit into my Health Savings Account (HSA). 

But I miss the thrill of saving back a wad of cash to purchase the promise held in a new batch of stocks. Shaving a few cents off a cup of coffee with the senior discount just doesn’t give me the same kick. I know, I know. Some folks are never content.

Flowing out. I suppose my emotions will adapt to my new reality, just in time to take another hit as I move into the next phase. I aim to hold my work hours in the physical therapy clinic steady for at least two years. Then, at age 65, I’ll either stay the course or drop off the regular schedule to PRN status, working only when called upon. Or, I may heed my wife’s wishes and promote myself to full-time retiree. 

For me, full retirement means no payday, aside from a paltry pension I’m eligible to collect at age 65 ½. Therefore, my wife and I will look to our savings for most of the money to pay bills, until I begin drawing Social Security at age 70. We’ll also get a smaller, but helpful amount from my wife’s Social Security check, which she expects to start in two years when she hits age 62. Her instinct is to wait, but Mike Piper’s Open Social Security calculator advises claiming it early. 

Assuming I do retire in two years, we’ll rely chiefly on our investment portfolio to cover 4 ½ years of expenses, until my Social Security begins. That means selling stocks to generate spending money for the first time. Or, we might pull from the “bond” side, instead. The source could range from the simple freedom of a stash of short-term bonds or bond funds and cash to the commitment of an annuity. Either way, we’ll be dipping deep into savings that have yet to be disturbed.  And even after my Social Security adds a nice addition to the pot, my wife and I are counting on those savings to pay for the retirement we anticipate enjoying. 

My rational self is nodding his logical head at our spending strategy. Makes sense–it’s the reason we socked the money away, after all. But his emotional sidekick feels rising anxiety thinking of rafts of money flowing out of our portfolio, rather than in. The question is: Am I confident our income plan can take the hits that are sure to come our way?

Staying Afloat. True, I can’t predict the future, but I’m reasonably certain that over the next three decades a slew of companies will fail, inflation will rise and I may still be alive. How will my wife and I cover these challenges? 

For starters, we invest in thousands of companies across the globe through low-cost index funds. So when some businesses go belly-up, we’ll still own stock in those that are thriving. Stocks also offer the best chance of beating inflation, so that our portfolio holds its value decades from now, even if our dollars don’t.

Still, much of my optimism for our future results lies in our past behavior. My wife and I have never taken risks with our spending by treading too close to the limit of our paycheck. Or  plunged into debt to satisfy this week’s burning desire to buy. We can’t take full credit for that, since we’ve avoided the troubles that befall many families. Even so, I suspect we’ll continue to make choices that give us a margin of financial safety.

In similar fashion, we’re not calculating the highest withdrawal rate we think our portfolio will bear as a starting point for selling stocks. Instead, we plan to leave a comfortable cushion untouched by ordinary spending, ready to absorb the financial shocks that may come our way. We’re thankful to have that choice, and know many families don’t. 

Assuming we do avoid financial calamity, will I one day lament following a money plan that’s leaner than it might have been? Maybe, but I doubt it. Instead, I hope I’m content knowing we kept a measure of worry at bay by keeping close to the money habits that landed us where we now stand.

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R Quinn
2 hours ago

You write, “Therefore, my wife and I will look to our savings for most of the money to pay bills, until I begin drawing Social Security at age 70” (4-1/2 years).

Why put yourself through those years of market up’s and downs, possible market risk and stress?

Sure the SS four years from now will be higher but your investments may be lower.

Seems like there is both an investment risk and longevity risk here. You know me, I’d take the bird in the hand approach.

DAN SMITH
2 hours ago

Ed, your planning has paid off and I think you guys are in great shape. But telling someone not to worry is a little like telling a person who suffers from depression to stop being sad. It’s taken me a few years to get used to not seeing those elective deferrals going into savings, still, our net worth continues to grow, even with modest distributions. 
So, in the immortal words of  Bobby McFerrin, Don’t Worry Be Happy.

Rick Connor
2 hours ago

Great article Ed. Transitioning from accumulation to decumulation was a bit of a psychological challenge. Phasing out of full-time work was a big help. Transitioning to retirement during a global pandemic, and making a decision to relocate to a higher cost of living region, just when interest rtes spiked, made our financial plan more complicated than we could have imagined 8 years ago when I stopped full-time work. We’ve transferred some of our equity wealth into real estate equity, but our plan still looks sound. I credit that to the kinds of financial behaviors and decisions you reference. When you build a plan with a good margin of safety, it allows you to make choices when life situations pop up. It sounds like you guys are in great shape.

bbbobbins
3 hours ago

I think the emotional response is entirely understandable – if even the process of accumulating less is a concern then of course you’ll find the flip from accumulation to decumulation challenging at first.

That doesn’t mean you shouldn’t do it. There is one inescapable thing for everyone – mortality. And though the numbers on time are even more unforecastable than money we have to remember that far, far more people run out of time before they absolutely run out of money.

So trust in the planning you’ve done. Know that you aren’t suddenly going to change character and start chartering private jets to Vegas etc. And enjoy the best of what the new phase brings you.

baldscreen
3 hours ago

Good post, Ed. We have had some of the same feelings you are expressing here since we retired 18 mos ago. It took time to get settled with our new income, but we are in a good place now. We are frugal, like you and your wife. The lower income is an adjustment, but I am still saving from it, it is just less than before. I consider it a win. I think your plan of going part time and then PRN is a good way to ease into things. Spouse did this too, since they liked their job. Chris

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