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What if the 4% Rule is Wrong

There is much debate about whether the 4 percent rule is still valid. What is the 4 percent rule? It is a rough way to calculate how much you can withdraw from your savings at the start of your retirement and have your money last for at least 30 years. It is a guide post to letting you know whether you’re saving enough. So if it’s wrong there are implications.

The debate stems from expected investment returns. Most investment analysts expect future investment returns to be lower than historical returns. Interest rates are lower than when the 4 percent rule was originally developed and the stock market is at all time highs. So the expectation is the future can’t be as good as the past. I recently saw an article that suggested the new rule should be 2.98 percent.

That is putting a very fine point on something that is completely unknowable. The truth is we can only make an educated guess about what will happen in the future. It is important to have a guess, but you must get used to the idea that it is just that.

There are two sides to the guess. One is the investment return you might expect and the other is the inflation rate on your lifestyle. If your initial savings withdrawal in retirement is 4 percent of your balance, it is assumed it will increase with inflation throughout your remaining life. If your first year’s withdrawal was $20,000 and inflation were 3 percent, your second year’s withdrawal would be $20,600, and so on.

It doesn’t really matter what the specific investment return or inflation rate is, as long as the investment return is higher than the inflation rate by enough to give you some time before your withdrawals start outpacing your investment gains. If low investment returns are accompanied by low inflation rates, the 4 percent rule should still work. It so happens that historically, with the exception of the stagflation years of the early 1980’s, inflation has remained below long-term return expectations.

In 2012, William Bengen, the author of the 4 percent rule, revisited his work to see if it was still valid. If you lived through periods such as the financial crisis or the tech bubble, would your savings still last? He found that his original conclusion was still correct. Even with the impact of dramatic market down-turns in the mix, an initial 4 percent withdrawal rate was still reasonable. That was because the lower market returns were accompanied by lower inflation.

But the real problem is not whether the rule should be 4 percent or something less. The real problem is people are not saving nearly enough to come close to being able to live off 4 percent of their savings. If you have saved enough that your initial withdrawal rate is just 4 percent of your savings, I’m not worried about you. You’ll find a way to make your money last, and it likely won’t even involve painful choices.

The fact is, for your savings to last, your withdrawals must be small relative to your total balance. That is intuitive. Your going to be living on your savings for many years. It’s obvious that if you take a lot out each year, it won’t last. Financial rules of thumb are good guide posts, and give you something concrete to work toward. So pick one. If you save enough to meet it, you’ll be fine.


Photo by Ivan Vranić on Unsplash

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For a comprehensive, step-by-step guide to building your own financial plan, pick up my award winning book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security.  It is available on Amazon.

Should You Save with OregonSaves?

With the start of a new year, many of you are making resolutions to contribute to a retirement savings account. Those who have a retirement savings plan through work, are far more likely to save for retirement than those who do not. Unfortunately only about half of Americans have access to a workplace retirement plan.

Oregon, as well as Illinois and California, is addressing this shortfall by offering a state sponsored plan. If Oregon businesses do not currently offer a retirement plan, they will be required to offer OregonSaves this year.

OregonSaves is a Roth IRA option. All the Roth IRA rules apply. You can only contribute up to the IRA limit, which is $6,000 for most and $7,000 if you are fifty or older. If you have a high income (more than $124,000 for singles and $196,000 for married couples), your ability to contribute at all will be curtailed.

However the program has put together a handful of investment options, and set up rules that require participants to opt-out rather than opt-in. Initial default contribution rates are 5 percent of salary, subject to the IRA limits. You’ll be able to select from a suite of target retirement date funds, a money market option and a growth fund. If you do not opt-out, you will be automatically enrolled in the program, without having to do a thing.

The result will be that more Oregon workers will have access to a convenient way to save, and hopefully savings rates will increase. But the fact of the matter is, you can do all of this yourself and do it at a lower cost. OregonSaves will collect 1 percent of your account value every year to cover investment and administrative expenses. That is high, given that plenty of fund companies offer similar investments at a lower cost.

The investments offered are all index funds, the type which can be had from most institutions. Vanguard, for example, offers a suite of target retirement date funds with an expense ratio of around 0.14 percent. That means you’ll keep an additional 0.86 percent of return every year over the similar investment options in OregonSaves. Over ten years, your account value would be about 9 percent bigger with Vanguard than OregonSaves on just the expense savings alone.

The automatic contributions with OregonSaves is definitely appealing, but you can arrange for that yourself too. Most employers allow you to have your paychecks direct deposited, and you can usually split your deposits among multiple institutions. There is no reason why you cannot set up a direct deposit to a Roth IRA account at any institution. If for some reason you don’t have that option, you can arrange for an automatic transfer from your bank to a Roth IRA to correspond with the deposit of your paychecks.

OregonSaves is a fine way for employers to offer a retirement savings option to their employees. It doesn’t cost them a thing, except for a bit of set-up upfront. However, it isn’t a great way for employees to save. If your employer will be signing up with OregonSaves this year, use the opportunity to take matters into your own hands. Open a Roth IRA account at your favorite mutual fund company, select a target date retirement fund that fits with your timeline, and have a portion of your pay direct deposited to it. You’ll accomplish better than the same thing as an account with OregonSaves.


Photo courtesy of Sharon McCutcheon on Unsplash.com

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For a comprehensive, step-by-step guide to building your own financial plan, pick up my award winning book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security.  It is available on Amazon.

If Only Twelve Days Was All You Needed

Its that time of year again folks! Time for my annual repost of my version of the Twelve Days of Christmas. May your holidays be bright, and the new year bring you happiness, peace and security.


On the first day of Christmas my true love gave to me a fund for emergencies

On the second day of Christmas my true love gave to me a budget for expenses and a fund for emergencies

On the third day of Christmas my true love gave to me a maxed out retirement, a budget for expenses and a fund for emergencies

On the fourth day of Christmas my true love gave to me a pay-down on my visa, a maxed out retirement, a budget for expenses and a fund for emergencies

On the fifth day of Christmas my true love gave to me a Roth IRA, a pay-down on my visa, a maxed out retirement, a budget for expenses and a fund for emergencies

On the sixth day of Christmas my true love gave to me full estate planning, a Roth IRA, a pay-down on my visa, a maxed out retirement, a budget for expenses and a fund for emergencies

On the seventh day of Christmas my true love gave to me insurance for disabilities, full estate planning, a Roth IRA, a pay-down on my visa, a maxed out retirement, a budget for expenses and a fund for emergencies

On the eighth day of Christmas my true love gave to me a 529 for my kids, insurance for disabilities, full estate planning, a Roth IRA, a pay-down on my visa, a maxed out retirement, a budget for expenses and a fund for emergencies

On the ninth day of Christmas my true love gave to me a pay-down on my student loans, a 529 for my kids, insurance for disabilities, full estate planning, a Roth IRA, a pay-down on my visa, a maxed out retirement, a budget for expenses and a fund for emergencies

On the tenth day of Christmas my true love gave to me a sound investment strategy, a pay-down on my student loans, a 529 for my kids, insurance for disabilities, full estate planning, a Roth IRA, a pay-down on my visa, a maxed out retirement, a budget for expenses and a fund for emergencies.

On the eleventh day of Christmas my true love gave to me a long-term care policy, a sound investment strategy, a pay-down on my student loans, a 529 for my kids, insurance for disabilities, full estate planning, a Roth IRA, a pay-down on my visa, a maxed out retirement, a budget for expenses and a fund for emergencies.

On the twelfth day of Christmas my true love gave to me, a pledge to be mortgage free, a long-term care policy, a sound investment strategy, a pay-down on my student loans, a 529 for my kids, insurance for disabilities, full estate planning, a Roth IRA, a pay-down on my visa, a maxed out retirement, a budget for expenses and a fund for emergencies.

Happy Holidays Everyone!

Photo by Clem Onojeghuo on Unsplash

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For a comprehensive, step-by-step guide to building your own financial plan, pick up my award winning book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security.  It is available on Amazon.

Is the PSLF the Government's Biggest Bait and Switch?

Student loan debt is a crippling burden for much of a generation of college graduates. It puts them behind the curve when it comes to building their financial security through retirement savings and home ownership. Some found a grain of hope in the Public Service Loan Foregiveness program (PSLF). But this program may be the biggest bait and switch the government has ever perpetrated on it’s citizens.

The PSLF was created in 2007. The promise was simple. Take a job in the public sector or with a non-profit, and if you made your required student loan payments on time, in ten years your remaining loan balance would be completely forgiven. The first opportunity to receive the long awaited loan forgiveness came in 2017. However, all but about 280 of the first 28,000 applicants were denied. All tolled, more than 80,000 individuals have been denied since. The travesty is outlined in a New York Times article.

The program is overly complex. Only certain employers are eligible. Many individuals don’t have the right type of loan. Others didn’t select the right kind of repayment plan. Some have been denied due to processing errors. About a quarter of the applications processed by the single loan servicer dealing with them had errors.

Regardless of the issue, thousands are facing a future with debt they had expected to go away. Unfortunately, the only true test of whether you’ve done everything right comes when you apply for forgiveness, ten years after you begin making payments.

If you have been counting on the PSLF to provide some relief for your student debt, you must ensure you have met, and continue to meet, all the requirements as soon as possible. You can’t apply for forgiveness until the ten years have passed, but you can build your case along the way. You can find the requirements on the Federal Student Aid website. The following are the important highlights.

  • Make sure your employer is a qualifying employer. Verify this annually, even if you don’t change employers, when you file your employment certification form.
  • Ensure your loans are qualifying loans. Only William D. Ford Federal Direct Loans qualify. If you have Federal Family Education Loans or Federal Perkins loans, they do not qualify. You can consolidate these loans into a Direct Loan, but none of your prior payments will be counted toward the PSLF, even if some of your loans were for Direct Loans included in the consolidation.
  • You must be on a qualifying repayment plan. All income driven plans are eligible.
  • You must make 120 qualifying payments. A qualifying payment is made under an income driven repayment plan, for the full amount shown on the bill, no later than fifteen days following the due date and while employed full time by a qualifying employer. The payments do not have to be consecutive.

In response to the large number of rejections under the PSLF, congress passed a temporary relief bill in 2018 that expanded the number of repayment plans that qualified. If your repayment plan was a graduated repayment plan, extended repayment plan, consolidated repayment plan or a graduated consolidated repayment plan, and your payment was at least as much as it would have been under an income based plan, your payments may be eligible under this temporary extension. Applicants aren’t having much better luck with this though. Only about 4 percent of the available funds have been used.

The PSLF held out hope of debt relief for thousands of teachers, healthcare workers, law enforcement professionals and other public servants. But the program’s complexity and execution have made it largely a failure. If you are counting on your loans being forgiven through the PSLF, it is possible, but you have to stay on top of it. The only friends you have in this process are your own diligence and good record keeping.


Photo by Nathan Dumlao on Unsplash

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For a comprehensive, step-by-step guide to building your own financial plan, pick up my award winning book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security.  It is available on Amazon.

Can Helping Your Kids Hurt?

I recently saw a Pew Research study on financial independence among young adults. The study found six in ten parents of people aged 18 to 29 had provided at least some financial help to their children. In many cases the support was for regular monthly bills like groceries, rent or car insurance.

Of course if your young person is not working, they may need that support. But how long is it reasonable to continue to support your kids if they are not actively seeking an education and are working full time. It’s a question every parent has to answer for themselves. But it is important to understand whether you are setting your kids up for financial failure.

In one of my favorite books, The Millionaire Next Door, Thomas J. Stanley and William D. Danko, contend that it’s easy for a financial boost for your kids to become financial enabling. The support you provide increases their ability to spend on things they otherwise could not afford. With high rents and big student loan bills, life can be financially difficult for those just starting out, and it can be hard to know where to draw the line.

I did not draw the line in the right place. Last May, I wrote about how my daughter financially crashed and burned in How to Go From Happy to Desperate in Six Weeks or Less. Following the crash, to help her get back on her feet, she was living with us. Her budget was meant to be similar to what she would have to pay if she were living on her own with a roommate in our area. She gave us money for her non-discretionary expenses, like rent, utilities, groceries, car insurance, etc. We put it in savings for her. What was left had to cover everything else.

Except her medical costs. She doesn’t make much money. She has a government job with great health benefits but pretty low pay. I didn’t want her to skip getting the care she needed because she couldn’t afford her out-of-pocket expenses. So we agreed that we would pay for her medical expenses, and she didn’t need to include those in her budget.

Toward the end of that year, she had some tests done, and the medical bills came to around $500. No big deal for us, and we were happy she was getting help. She was actually doing really well with her budget. She was covering her “pretend” bills, and saving money beyond the money she was giving us. She had really embraced the idea of assigning a job for every dollar she had.

The problem was, she was assigning money that should have been earmarked for medical expenses, had we not been paying them, to pay for a tatoo. While we laid out $500 for her medical bills, she spent $500 on said tatoo. It was totally my fault. She had saved for it. She didn’t have to spend the money on anything else. But it bugged the heck out of me.

We made it possible for her to pay for a tatoo, because we were paying for an expense that was legitimately a part of her cost of living. And that is where the flaw in providing support to your kids lies. It masks their true cost of living, and as a result, they make decisions based on the inaccurate picture.

I want Kaye to understand her cost of living. She will make long ranging decisions such as where to live, whether to go back to school or change careers based on what she thinks she can afford, and I want her to make those decisions with all the clear-eyed facts.

Today, Kaye covers all of her expenses on her own. She includes saving for out-of-pocket medical costs in her monthly budget. Similarly she sets aside money for car maintenance and repairs. Of course we will help if something big and devastating comes up. But she is fully living within her means and saving for her needs as well as her wants – including her next tatoo.


Photo by Cory Woodward on Unsplash

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For a comprehensive, step-by-step guide to building your own financial plan, pick up my award winning book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security.  It is available on Amazon.

How Close are You to Your Money?

I’ve heard more times than I can count “I don’t know where all my money goes.” People carry little cash. Heck, some stores don’t even take cash anymore. Few families keep a check book. It’s no wonder it’s hard to keep track of where your money goes. Without the tangible activity of pulling cash from your wallet or subtracting from your bank balance, there is little connection to your money.

This idea hit home several years ago. I’ll never forget the time when I was grocery shopping with my daughter. She was about six at the time. I had just checked out, paying with my credit card as always, when I realized I had forgotten the bread. Thinking it would make Kaye feel like a big girl to go through the check stand on her own, I gave her some cash and the bread and urged her to get in line for the cashier.

She looked at me like I was speaking a foreign language, and panic began to creep into her eyes. She held up the money and asked what she was supposed to do with it, and shouldn’t she have a card?

I was stunned. I didn’t realize that she didn’t understand what cash was, or that paying with cash or a card were essentially the same. Without that understanding, she couldn’t know that spending using a card was ultimately constrained by how much cash was in the bank.

Our family pays for everything with a credit card. It’s a tool. It has never made me feel less connected to my money. I am viscerally aware of every dollar I spend, whether it’s cash or card, and we pay off our credit cards every month.

But we are unusual. Only about a third of Americans pay off their credit card balance every month. A credit or debit card or payment app obscures the feeling of giving up money in exchange for whatever is bought for most people. That makes it emotionally easier to let your money go, and that can be a recipe for overspending.

Society is moving away from cash, and there are positives and negatives that come with that. If the negative for you is that you don’t know where your money is going consider approaching your spending differently.

Create a plan with a specific goal in mind. Before you spend any money from your next paycheck sit down and decide how every dollar is going to be spent. Be realistic. You need a plan you can stick with. But cover all of your bases. Make sure you are including money for expenses that don’t show up as regular bills, like car maintenance or celebrations.

The only way to keep your connection to your money is to be intentional with it. Cash may no longer be king, but you can stay in control. Rather than letting your money decide what you will do, decide what you will do with your money. Your financial security and your goals require you to make a plan, and understand where every one of your dollars goes.


Photo by Daniel Jensen on Unsplash

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For a comprehensive, step-by-step guide to building your own financial plan, pick up my award winning book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security.  It is available on Amazon.

Nothing Happens Without a Plan

October is Financial Planning Month. Of course it’s also Adopt a Shelter Dog Month, Breast Cancer Awareness Month, Global Diversity Awareness Month, National Bullying Prevention Month, and about ten other awareness, appreciation and support worthy causes month. But since Financial Planning is in there, there is no time like the present to do something important for you.

Rarely anything happens without a plan. Even your daily to-do list is essentially a plan. If something isn’t on that list, the chances of it getting done go down dramatically. So your financial security certainly isn’t going to happen without your attention. It won’t happen when you get a raise. It won’t happen when the kids are out of day care or college. It simply won’t happen unless you make a plan to make it happen.

Recently I’ve been speaking with a few couples who have just gotten started on their plan. They are in their sixties. They have saved a bit along the way, because they knew they were supposed to, but they haven’t followed a plan. As a result, they had not saved enough to support their lifestyles after they leave work. And in all cases, they are mentally ready to leave work.

Fortunately, because they have saved some, and they have equity in their homes, they are still going to be able to support themselves. But their lack of planning earlier means they will have to make significant changes to their lifestyle, even if they plan to work until they are in their seventies.

Now of course, if you are not currently saving, or saving enough, saving more will require a change in your lifestyle, even if it’s only being more conscientious with how you spend. It’s never too late, but the sooner you start the less dramatic and painful those changes will be.

The start of any plan is a goal. Some goals are far away and as hard to imagine as they are easy to put off. Typical savings metrics are uninspiring. You need three months of expenses in an emergency fund. You need 25 times your income in savings before you can retire. Both of these are daunting and unimaginable.

Savings goals aren’t actually about the money, but rather what you want to do with the money. So rather than save an emergency fund, a better stated goal would be to protect yourself from a financial setback, such as a job loss. Rather than saving for retirement, save for the freedom to choose whether to work and who to work for.

The next piece of a good plan is to define your goal, and this is where the money comes in. Your goal isn’t about the money, but it does have a price tag. If you find saving hard, simply start with a dollar figure you can live with. However ultimately you will want specific targets, especially for your long-term goals. And you’ll want to break those goals down into shorter more manageable targets, like how much you want to save this year, in the next three years, and so on. The rules of thumb can be a good place to start, but you know your circumstances, so make your own targets. For some free calculators to help you get started, check out my resource page.

With your goal defined, you can develop your strategy. Be very specific. Decide exactly what you will change on a daily, weekly and monthly basis in order to achieve your goal. Think about what might go wrong and how you will adapt, and if you can’t do all you want to now, think about how you can do more later. If you have a significant other, you have to work together on this. It will be hard to make progress if you both aren’t all in. Decide together on your goals and your strategy, and hold each other accountable.

I try to limit promotion of my book, Save Yourself, to the footer of my blog, but given the topic I’ll make an exception. My book provides a step by step guide to creating your own financial plan from developing goals and defining them to creating a strategy to achieve them. The final chapter walks through the development of a real couple’s financial plan. There are worksheets and references to calculators throughout. It’s available on Amazon and BarnesandNoble.com.

I hope you’ll take some time during Financial Planning Month to get started on your own path to creating your plan. Nothing happens without a plan, and that goes for your financial security too.


Photo by Ben Regali on Unsplash

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For a comprehensive, step-by-step guide to building your own financial plan, pick up my award winning book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security.  It is available on Amazon.

Talking Paying for College

With school having just started, many homes with teenagers are starting to get serious about preparing for college. Some seniors will be taking early acceptance by November, while juniors are mulling their options. So it’s time to get real with your kids about how you’ll pay for college.

You want the world to be your child’s oyster, and no one wants to talk about expenses when dreaming about the future. College is expensive no matter where your child chooses to go, but some choices will set you back farther than others. The following chart shows the average cost of college for the 2017-2018 school year from the College Board.

While most parents want to send there children to college, only about 57 percent of them save for it. The average household savings for college was only $18,135, according to Sallie Mae. That won’t even cover a single year at a four year school. So, that means the money must come from somewhere else. The following chart shows how America pays for college, also from Sallie Mae.

A full 27 percent of the cost of college will be paid for with loans. The average student loan debt per borrower from the class of 2017 was $28,650. At the current Federal Direct unsubsidized student loan interest rate of 4.53% for undergraduates, over the standard 10 year repayment period, payments on loans of that amount will be about $297 per month.

That can be a significant piece of a new graduate’s entry level job income. It’s no wonder that 30 percent of college graduates with student debt move back in with their parents. With money like this on the line, it is important to sit down with your future college student and cover the facts.

Here are five things to discuss with your child before she chooses a school.

  • Tell your student how much you will be able to pay. This includes what you have saved and what you are willing to commit to out of your income. The converse of this is how much should she expect to pay.
  • Outline options for raising the extra money. In addition to student loans and scholarships, your student may be able to raise some money through part-time or full-time work. Taking a gap year to work and save up for school is a reasonable approach.
  • Help your student understand the implications of their choices. Private and out-of-state public four year schools cost nearly twice as much as in-state public institutions. Student loans may be hard to avoid, but they can certainly be minimized if you understand your trade-offs. You can calculate the monthly payments given different loan amounts on the Federal Student Aid web site.
  • Provide context for the information. Estimate the kind of monthly salary your student might earn given her career interests. Payscale’s College Salary Report is a good place to start. It wouldn’t hurt to also talk about average living expenses. Nerd Wallet has a cost of living calculator. Don’t forget to show the impact of taxes. How much of her take home pay will be left after student loan payments?
  • Consider starting school at a community college. The average cost per year at public two year colleges is only $3,570 assuming your student can stay at home while she attends.

If you don’t have enough saved to pay for college, think carefully about the impact of paying for school out of your current income. It can put you behind in your efforts to save for your own future. And avoid taking on your own debt to pay for college for the same reason. If you are behind in saving for your own retirement, paying for college should not be your top priority. Your child has time to recover from the expenses of school. You do not.

A college education can substantially improve your child’s ability to earn a living. But taking on a lot of debt to pay for it can weaken her financial stability. Help her understand that her choices have implications for her lifestyle after school. Before she makes her final decision, she should know what she’s in for.


Photo by Tim Gouw on Unsplash

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For a comprehensive, step-by-step guide to building your own financial plan, pick up my award winning book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security.  It is available on Amazon.

Don’t Touch That

I’ve recently had a revelation. It started with my quest to make the perfect pizza dough. Then I realized, looking back, some of my more successful efforts were the result of the same idea. Things turn out better if I leave them alone.

It took many attempts to make pizza dough from scratch. The first several batches could be considered weapons. They were so hard, their only possible use was to hurt someone. I tried the cold rise, the warm rise, the overnight in the fridge rise. Finally I just used my bread maker. Low and behold, the dough was perfect. All it took was me not touching it. Apparently I had been overworking the dough.

I make a mean Thanksgiving turkey too. The secret of my success? I leave it alone. I don’t baste it. I put it in the oven, and only open the door to take the foil cover off so it can brown. The bird is juicy and perfectly done in less time. That is because I’m not constantly letting all the heat out of the oven.

I have to say my investment strategy is and always has run along the same lines. I generally leave my investments alone. Since I started saving for retirement, right out of college, the bulk of my money was invested in a single mutual fund, the Vanguard Life Strategy Growth fund. Target date funds didn’t exist at the time, or I probably would have started with one of those.

Since we were saving for an early retirement, we needed to save outside our retirement plans, so about half of our savings was taxable. As we got older, our investment strategy needed to get more conservative. But I didn’t want to pay capital gains tax on my Life Strategy investment. So I solved the problem by gradually buying bonds and bond exchange traded funds with my savings contributions. No selling, no trading, only buying.

Now that I’m retired, it hasn’t changed much. We still have the Life Strategy Growth fund and the bonds. Each year some of the bonds mature to provide for our spending money during that year. At the beginning of each year, I rebalance between the Life Strategy Growth fund and my bond holdings. And that is the extent of my investment management strategy. Like the pizza and the turkey, the secret to my investment success is leaving my investments alone.

Could I have had better results if I had been more active. It’s not likely. In fact it’s far more likely that my results would have been worse. The average actively managed investment strategy does not produce better results than a buy-and-hold index investment strategy. Though active investment managers will tell you their strategy is the one that does.

If you are wondering how to invest your retirement savings, find a strategy that you don’t have to put much thought into. A target date retirement fund is a perfect solution. You can spend your energy saving for retirement and your investments will do much better if you leave them alone.


Photo by Nadya Spetnitskaya on Unsplash

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For a comprehensive, step-by-step guide to building your own financial plan, pick up my award winning book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security.  It is available on Amazon.

Time to Retire Retirement and Bring Out Financial Freedom

These days, it’s easy to find advice that says you should never retire. There is evidence that maintaining some structure and the social network that work provides is good for your physical, mental and financial health. And there is nothing wrong with putting a positive spin on the necessity that far too many face; the need to keep working to pay the bills well beyond the normal retirement age.

Unfortunately, this line of thought is being used to justify not saving for retirement. That is a mistake. Even if you love your job, there is a good chance that you won’t be able to do it forever. The older you get, the more health issues can sabotage your plans, whether the issues are your own or a loved one’s. Older workers face higher unemployment, and it’s more difficult to get a job after the age of fifty-five.

But while you are young, and have the time to save for retirement, these eventualities seem remote and certainly not your own. So it may be a good time to start thinking about your life beyond work in different terms. While retirement conjures visions of white haired people playing endless golf and gardening, having enough money to be able live without a paycheck has a much more important benefit – financial freedom.

That is why I left work at the age of 51. My husband and I had saved enough money to support our lifestyle for the rest of our lives. He had retired the previous year. We didn’t need to work for pay anymore. While I liked my work, which was challenging, I had become tired of catering to other people’s demands. I figured if I didn’t like retirement, I could always go back to work. Because we had saved, we had choices.

I have never looked back. Since leaving work, my husband and I have done the things that are important to us. I began this blog and wrote a book to help others learn how to save and invest for their own financial security and retirement (you can find it on Amazon). I’ve personally helped dozens plan for their retirement and get their financial houses in order, all for free, because I think its important and I like doing the work.

I also serve on the boards of a few non-profits where I do volunteer bookkeeping and offer my expertise. That includes the non-profit my husband started to coordinate services to low income and homeless individuals and families. He is building a mobile shower unit to serve the homeless in our county. You can read about the project here. The proceeds from my book have gone to fund this effort.

So, as you can see, our time is filled with activities that have meaning and that we value. The money we saved for retirement gave us financial freedom to do what is important to us. It gave us the power to choose what we do with our days, and the freedom from fear of losing a job.

What would you do, if it didn’t matter whether you brought home a paycheck? Start a business? Create art? Help a family member or neighbor in need? Leave me a comment if you’re willing to share. You may not know right now what you would do with your financial freedom. But wouldn’t it be nice to have choices?

Maybe it’s time to retire the word “retirement” and replace it with financial freedom, as in, “I’m saving for my financial freedom.” That might just be motivating enough to get you to start working toward it today.

Photo by Fuu J on Unsplash


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For a comprehensive, step-by-step guide to building your own financial plan, pick up my award winning book, Save Yourself; Your Guide to Saving for Retirement and Building Financial Security.  It is available on Amazon.

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