The Peace of Knowing: When Can You Retire and How Much Can You Spend?

The Peace of Knowing: When Can You Retire and How Much Can You Spend?

One of the biggest sources of stress I hear from people approaching retirement isn’t necessarily that they don’t have enough money.

It’s that they don’t know if they have enough money.

They wonder:

• When can I actually retire?

• Am I saving enough?

• How much can I afford to spend each year?

• What happens if the market drops right after I retire?

• Will my money last?

• Can I travel and enjoy retirement without constantly worrying about my account balance?

Those are not investment questions.

They’re financial planning questions.

And having answers to them can provide something that a portfolio statement can’t: peace of mind.

“Can I Retire Yet?”

There is a huge psychological difference between having $2 million in an investment account and knowing exactly what that $2 million is supposed to accomplish.

A retirement portfolio doesn’t exist in a vacuum.

Your income needs, Social Security, pensions, taxes, healthcare costs, investment strategy, spending habits, inflation, longevity and other assets all play a role in determining whether you’re financially prepared to stop working.

That’s why I don’t think the question should simply be:

“How much money do I need to retire?”

A better question is:

“What does my retirement actually look like, and can my financial resources support it?”

Once you have a plan that connects the different pieces of your financial life, retirement becomes less of a guessing game.

Maybe the answer is that you can retire next year.

Maybe the answer is that working another two or three years gives you significantly more flexibility.

Maybe you could retire today, but you want to continue working because you enjoy what you do.

The important thing is knowing why.

The Other Question: How Much Can I Spend?

This is where retirement planning gets particularly interesting.

During your working years, you’re generally focused on accumulating money.

You earn an income, save, invest and watch your accounts grow.

Retirement flips the equation.

Now the question becomes:

“How much can I actually spend?”

And that can be surprisingly difficult.

I’ve seen people spend too little because they’re afraid of running out of money.

They have accumulated a substantial nest egg, but they still live as though they’re one market correction away from financial disaster.

On the other hand, some retirees can afford to spend more than they realize but don’t have a framework telling them that it’s okay.

That’s where a good financial plan can make a tremendous difference.

Instead of simply looking at an account balance, we can build a spending strategy around the different sources of retirement income and the goals that matter to you.

Your Retirement Number Isn’t Just One Number

Your retirement plan should answer more than “How much do I have?”

It should help answer:

How much can I spend?

How much should I keep invested?

How much should I keep in cash?

When should I claim Social Security?

How will taxes affect my withdrawals?

Should I consider Roth conversions?

How will required minimum distributions affect my income later?

What happens if the market falls 20% early in retirement?

How much can I afford to give to my children or grandchildren?

Can I travel, buy the second home or pursue the things I’ve been putting off?

These questions are interconnected.

Changing one part of the plan can change the answer somewhere else.

That’s why retirement planning shouldn’t be reduced to a simple withdrawal-rate calculation or an investment return assumption.

The Goal Isn’t to Predict the Future

Nobody knows exactly what the next 20 or 30 years will look like.

Markets will move.

Taxes may change.

Inflation will fluctuate.

Your spending will change.

Life will happen.

A good financial plan isn’t designed to predict every variable perfectly.

It’s designed to give you a framework for making decisions when those variables change.

Think about it like a financial GPS.

You may know where you’re going, but there will inevitably be detours along the way.

The value isn’t in pretending there won’t be detours.

The value is having a plan that helps you navigate them.

Retirement Should Feel Like Retirement

There is something powerful about knowing you have a plan.

You wake up in the morning and don’t have to wonder whether you can afford to take the trip you’ve been talking about for five years.

You don’t have to panic every time the market falls.

You don’t have to constantly check your investment accounts to determine whether you’re “okay.”

Instead, you have a framework for understanding your income, spending, investments, taxes and long-term goals.

That’s what financial planning is really supposed to accomplish.

Not just helping you accumulate money, but helping you understand what your money can do for you.

Because ultimately, retirement isn’t about having the biggest portfolio.

It’s about having the confidence to use the money you’ve worked your entire life to build.

Know the Answer Before You Need It

The best time to figure out whether you can retire isn’t the day you hand in your resignation.

It’s years beforehand.

When you know what your retirement income could look like, what you can comfortably spend and how your plan responds to different market and life scenarios, you can make decisions from a position of knowledge instead of fear.

And that’s where the real value of financial planning can show up.

The goal isn’t simply to retire.

It’s to know when you can retire, how much you can spend, and why you can feel comfortable doing it.

At Lloyd Financial Group, we believe your financial plan should be more than a collection of investment accounts. It should give you a clear picture of where you are, where you’re going and what your money is designed to accomplish.

Because when you know the answers, you can spend less time worrying about your money—and more time enjoying what you worked so hard to build.

Dream Bigger. Sleep Better.

Click here to schedule a meeting — I’m here to help you take the next step toward financial freedom.

Colin Symons, CIO Lloyd Financial Group

ADP Employment was 20K vs. prev. 16.25K, the third week of growth.

Philly Fed Non-Manufacturing Activity Index was -22 vs. prev. -10.6, but hiring and capex look good, still, though prices are a problem.

Richmond Fed Manufacturing was -2 vs. exp. -1 , with shipments and new orders down a bit, though employment stayed strong.

The dollar (DXY) hit an eight-week high as Fed hike bets grow.

S&P Flash Manufacturing and Services PMI today.

Bottom line: The dollar keeps climbing

Click here to schedule a meeting — I’m here to help you take the next step toward financial freedom.

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This content is intended to provide general information about Lloyd Financial. It is not intended to offer or deliver investment advice in any way. Information regarding investment services are provided solely to gain an understanding of our investment philosophy, our strategies and to be able to contact us for further information.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

Past performance is no guarantee of future returns.

Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable

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