Hot Times Mean Earlier Walks

Early warning signs of running out of money in retirement.

Last Week, I went for a walk in the morning with my wife Gina. This is part of our commitment to remain healthy. It was as hot and humid as it gets here in South Florida. The temperature hit over 95 degrees with 90% humidity. We left the house at 6:45 AM and returned at 7:45 AM. Our 5 year old golden retriever Jack went along for the walk. After we returned home and proceeded to drink a lot of water we decided the next time we went for a walk it would be earlier in the morning. This plan to adapt to warmer weather reminds me of how clients make changes to their spending in the later years of retirement.

A question that I often hear from clients is—”what if I start running out of money in retirement?” The number one fear of a lot of ‘fixed’ income retirees– is will I run out of money? This fear is a real fear and does happen. Most of the time, I find people who are living on limited income and small amounts of savings do not run out of money in retirement. They just spend less. They tighten their belts. If they do eat out on special occasions, they eat out earlier.

The major exception that I find of retirees who run out of money, are the ones who do not know how much they spend. If you are currently working, making a good salary and at the end of the year, find you have no money saved, and you do not know why—you could be a person who runs out of money in retirement. The only way to stop running out of money in retirement is to spend below your maximum amount of spending. This means, figure out what your expenses need to be to maintain your lifestyle and don’t over spend. It starts when you are working and continues through retirement.

So a good warming sign of future problems:

If you do not know how much you are spending per year, you could run out of money in retirement. The only way to reduce/adjust your spending is to make a change to your current spending. The starting place to make a change is to know how much you are currently spending.

There is a saying that when the days get warmer, you feel like doing precisely nothing and lazing about in the heat. Now there is proof that as the days gets hotter and you adjust to them people usually feel more lethargic and less productive. On the other hand current crazes that some people do–like hot yoga would imply heat is good for you. Either way, when there is a massive change of temperature be careful and drink plenty of fluids.

Remember – Plan Today. Protect Tomorrow.

Regards,

Peter