Your daily routine, from tying your tie in the morning to loosening it when you get home, has probably been done for most of your life. When you retire, your daily routine and your financial routine will shift as well. Your saving and wealth accumulation strategy was in place in your working years. But in retirement, typically your goal is to spend your money wisely, not necessarily to accumulate it. This requires a much different approach to how you view your money!
Making the Switch to Paying Yourself
When you’re ready to switch from earning money externally to paying yourself, your net worth and income should be viewed in a different light. You’ve gotten used to seeing income as something which comes to you from working- staying busy, and your net worth as something you build and contribute. Instead, we feel, your net worth should be viewed as something you actively tap into, and your income as something you create yourself and may not be from external sources.
What Does This Change?
Though this approach to thinking about your net worth and income may seem unactionable, in practice it comes with some serious consequences for the way you spend your money. Throughout your life, you’ve wanted to boost your income in order to cover your expenses, save, and invest in your future. This perspective puts your income as the foundation of your life and your achievements.
However, if you attempt to carry that mindset over to retirement, maximizing the spending of your income may leave you paying more in taxes than you need to, which may slash the lifespan of the savings you worked so hard to build.
What makes up your net worth – retirement accounts, dividend investments, rental properties, or other assets – should provide you with the income you need to cover your expenses, but since you’ve already accumulated and built up your net worth, any excess taxes you pay based on the income you receive from your retirement savings may be a hindrance to your retirement longevity.
Making the switch from saving to spending is like going from driving a car to flying a plane. It’s a whole new question to ask of your money and there are a lot of new tools, frames of mind, and opportunities to be aware of to help you successfully navigate your retirement. Rather than learn the whole retirement game on the fly, we can help guide you toward working towards your retirement goals.