Most retirees depend on withdrawals from their nest egg for at least a portion of their retirement income. However, not all expenses are the same every month. Gifts, vacations, car replacements, and home repairs can all demand larger withdrawals from a nest egg at different times in the year.
Unless you are a skilled saver with “sinking funds,” the request for additional nest egg money could come at the exact wrong time. The investment markets fluctuate up and down, and large withdrawals during the down times can make it difficult for your nest egg to fully recover.
When your investments are lower, having flexibility with your spending can come in handy. Here are some examples of how to adjust your spending as your nest egg changes:
- Travel overseas when the nest egg is up. Travel domestically when the nest egg is down.
- Pay for your family to join you on vacation when the nest egg is up. Make them pay their own way when the nest egg is down.
- Proactively make home remodels when the nest egg is up. Avoid large home projects when the nest egg is down.
- Look to upgrade a vehicle when the nest egg is up. If a car is to be replaced when the nest egg is down, consider a used vehicle for one to two years until the nest egg has recovered. Then upgrade at will.
Not panicking when the stock market is down and avoiding large expenditures at those times can extend the life of your nest egg.
If you want to learn more about what your retirement nest egg can do for you, schedule a meeting with our advisors by clicking here.