It’s generally a good thing when more cash is coming in than going out.
When our planned retirement income is greater than our expenses, we have the basis for a solvent retirement. The equation could be stated pretty simply: income > expenses.
The bigger part of our work and time and energy is devoted to striving to build your capital. More capital means more cash flow from your capital. We’re trying to get you access to the income you’ll need and want.
But lifestyle decisions may have a bigger impact on our finances, by way of expenses—that other side of our equation.
I recently decided to buy a different home, selling one I had originally purchased for a life chapter now ended. There is no sacrifice involved: the new place thrills me, although it is less than half the size of the old one. It actually feels like an upgrade to my quality of life.
The new place also features less than half the utilities, taxes, maintenance, insurance, and other expenses. Those add up to more than $1,000 in savings per month for me.
When downsizing helps you wipe out mortgage debt, that might improve your annual cash flow by thousands of dollars.
The effect of this lifestyle change on my retirement picture is amazing. Projected Social Security benefits cover a larger fraction of the budget. So a reduction in my need for income produces a much larger reduction in the capital I need to retire comfortably.
Reducing expenses means our money goes farther. Perhaps it means we can retire at a younger age or live with greater flexibility.
Clients, I still intend to work to age 92. And I’m looking forward to a new chapter where my living arrangements make more sense to me.
We are happy to talk with you about your retirement plans and planning, whenever you are ready. Email us or call.