Happy Friday Reader ☀️
Welcome back to Safe Money Weekly, where I share retirement income planning strategies, case studies, and ideas to help you retire with more confidence and less uncertainty.
The Three Questions That Should Shape Every Retirement Plan
For years, the retirement planning conversation has started in the same place:
“How should I invest my money?”
I actually think that’s the wrong first question.
Before we talk about investments, asset allocation, or even annuities, I think every retirement plan should begin by answering three simple questions.
1. What do you need?
This isn’t about your dream retirement.
It’s about the amount of monthly income that helps you sleep well at night.
Recently, I worked with a couple who plan to retire at age 65. Together, they’ll have roughly $5,000 per month from Social Security.
When I asked them what amount of guaranteed income would make them feel comfortable regardless of what the markets were doing, their answer was $8,000 per month.
That became the foundation of the entire plan.
Instead of trying to maximize every dollar for growth, we first solved for the income they never wanted to worry about.
Once that foundation was in place, everything else became much easier.
2. What do you want?
Now we can start talking about the fun part.
This couple wanted to travel several times each year, take the entire family on an annual vacation, help pay for their grandchildren’s education, and simply enjoy retirement without constantly wondering if they were spending too much.
Their goal was to spend about $12,000 per month.
After building the plan around their priorities, they could actually support about $15,185 per month while still keeping the majority of their portfolio invested for long-term growth.
That’s the power of building your portfolio around your retirement instead of trying to force your retirement to fit your portfolio.
3. What do you want to leave behind?
Legacy means something different to everyone.
For some people, it’s leaving a financial inheritance.
For others, it’s paying for college, helping children buy a home, supporting a favorite charity, or simply creating experiences the family will remember forever.
In this case, the couple wanted to leave their home to their children, help fund education for their grandchildren, and also preserve an additional $500,000 (adjusted for inflation).
Even after adding that goal, they could still comfortably spend roughly $14,500 per month—about $2,500 more each month than they originally hoped for.
The investments never changed because of a market prediction.
They changed because their priorities became clearer.
I believe that’s exactly how retirement planning should work.
Your portfolio shouldn’t determine your retirement.
Your retirement should determine your portfolio.
So before you ask how your money should be invested, ask yourself these three questions:
- What do I need?
- What do I want?
- What do I want to leave behind?
Those answers should shape everything that follows.
-Matt
p.s. enjoy some of my new content from the past couple of weeks