5 Retirement Mistakes to Avoid – Spending Too Much Too Soon

August 3, 2021

5 Retirement Mistakes to Avoid – Spending too much too soon

A successful retirement is an attainable goal. It takes diligence, discipline, and some creativity.

We, at One Degree Advisors, have helped hundreds of families prepare, transition, and live successfully.

We have seen families do retirement right, and unfortunately, we have seen people make serious mistakes too. While mistakes in life and finance are inevitable, we want to help you avoid the big ones.

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5 Retirement Mistakes to Avoid: Mistake #3 Spending Too Much Too Soon

How much can I spend in retirement? That is one of the hardest questions to answer and spending too much too soon is a recipe for retirement disaster.

Alex Okugawa 0:00
How much can you spend in retirement? That is one of the hardest questions to answer. And spending too much too soon can be a disaster for your retirement plans.

Alex Okugawa 0:20
Okay, Anthony. So we are in our series, 5 Retirement Mistakes to Avoid. And today we’re on Mistake number three, which is spending too much too soon.

Anthony Saffer 0:29
So first, let’s start with a couple of tips going into retirement. Paying off consumer debt is really important to credit cards, car loans, things that can be budget busters. The other part of it is accounting for those nonmonthly expenses. So it’s easy to account for the bills that we pay every month, but things like car repairs, gifts, are things that you may not account for going into retirement.

Alex Okugawa 0:49
So let’s break this down into two areas. Let’s break it down to the things that are in your control and things that are out of your control.

Anthony Saffer 0:56
Right so when we talk about things that are out of our control, one thing is market risk. We know investment markets can go up and down. It’s especially dangerous going into retirement if you’re taking out too much too soon. And it happens to coincide with the down market.

Alex Okugawa 1:10
Absolutely. So let’s say a retiree, you know, they retire what’s the big risk to a retiree, you retire, then the next day, the markets go down? If that happens, if that’s coupled with overspending that can have a dramatic impact on that retiree’s portfolio much different than, say, a retiree that enters into retirement in an upward trending market, some of the sin of overspending can be covered by an up trending market.

Anthony Saffer 1:33
Yeah, that sequence really does make a difference. So let’s talk about things that are in our control.

Alex Okugawa 1:37
Absolutely. So spending is something that is in your control, establishing those spending guardrails is incredibly important. How much can your portfolio handle on a maybe, let’s say a monthly semi-annual or annual basis of withdrawals to make sure you’re not running out of money in retirement?

Anthony Saffer 1:54
And then in addition to establishing those guardrails if you have a well-executed investment plan, a good asset allocation, knowing that you have some conservative investments that are built for income, yep, along with your long-term growth investments, then that can create a sound plan.

Alex Okugawa 2:10
Absolutely. So we’ve written a guide 5 Retirement Mistakes to Avoid, this guide is complimentary because the truth is we believe that you can have a successful retirement with the proper planning in place.

Anthony Saffer 2:21
Right spending too much too soon as a mistake that’s overcome with the proper planning are absolutely

Alex Okugawa 2:24
So we’ve written our complimentary guide on five retirement mistakes to avoid that you can download on our website today.

DOWNLOAD THE FREE GUIDE TODAY

This does not constitute an investment recommendation. Investing involves risk. Past performance is no guarantee of future results. Consult your financial advisor for what is appropriate for you. Disclosures: https://onedegreeadvisors.com/solutions/#disclosures