The Psychological Side of Spending Your Retirement Savings

Saving, investing and then spending are three primary issues for anyone planning to retire. Any number of tools are available to help with the process along with unlimited expert advice.

I recently stumbled on the following which I think is an excellent and refreshingly simple explanation for organizing expenses and assets to handle them.

NOTE: “maintain a cash reserve” which I strongly recommend along with the ability to replenish if necessary. In other words, some saving is always necessary.

Organize your expenses: Three typical categories include essential expenses (think food, housing and insurance), lifestyle expenses (vacations, hobbies) and unexpected expenses (healthcare costs, auto repairs).

Consider paying for your essential expenses with guaranteed income sources such as Social Security or annuities. Use growth or income investments to pay for lifestyle expenses, and maintain a cash reserve for any unexpected costs that might occur.

Source: The Psychological Side of Spending Your Retirement Savings

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