FREE NEWSLETTER
Quinn’s “big scary number” got me thinking about my approach taken on the path towards retirement. I would say being aware was my best tool.
Oh I did my share of spreadsheets and extrapolations, and while I had a goal of reaching a seven figure net worth, it had nothing to do with achieving a big scary number. Being aware of my spending and saving is what got me over the top. For me retirement planning meant knowing what would be coming in versus what would be going out. I’m not one to analyze every cent we spent, but I knew how much money flowed from the checking account each year. That annual spending became my target number for the income needed to survive.
Now comes the income planning. Again I was aware of my future Social Security income via the Administration’s excellent website. I was also aware of a rather insignificant amount defined benefit pension we would receive. My plan was to purchase an annuity to cover any expense beyond the SS and pension income. The way it actually worked out, by waiting to age 70 to start SS, our expenses are totally covered by the SS and pensions, with dollars to spare. No annuity purchase was necessary for us. The money we accumulated is just icing on the cake. I love icing.
Awareness was my secret weapon, what’s yours?
The 1987 crash made me aware that I had to stay the course. My 401k was cut in half in just a day and the value returned quickly. Same with the 2008 crisis. Consistent investing with a plan, a goal, and the fortitutde to stay the course allowed me to retire.
I did have a “big, scary number” in mind, but I retired at 53 without reaching it. I am now 77 and have exceeded it by a fair amount. I wrote an article last year on how it worked out. I am finally looking at spending some of it.
Kathy, to retire so young, and to have done all that you described in the article, and to end up with more money 24 years later is incredible. I think it’s a great example of being aware.
Thanks Dan. I credit low cost index funds and benign neglect. I was fortunate to have both a pension and retiree medical, otherwise I couldn’t have done it.
Dan, your post pretty much exactly described how I approached retirement planning. “For me retirement planning meant knowing what would be coming in versus what would be going out”. That’s a great summary of how I approached it as well. At a summary level I continue to track cash in/cash out every month to monitor if it’s unfolding as expected on a monthly basis. 6 years into retirement and it’s working as expected. So far so good.