[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern” z_index=””][vc_column][vc_separator type=”normal” up=”10″ down=”32″][vc_column_text]When you were growing up, you might have been conditioned to know that if don’t eat your vegetables, you can’t have any dessert. Culturally, we are wired with the feeling that we should save the best for last, to keep a reward for ourselves at the end of hard work.

How much does this logic relate to how you spend your retirement savings? As a retirement planner in Costa Mesa, I stress the importance of having a systematic withdrawal plan in place once retirement kicks in. On the most basic level, your retirement spending plan can fall into one of three categories: your spending can increase over time, decrease over time, or remain constant over time. Let’s look at some of the benefits and drawbacks of these three spending strategies.

Decreasing spending over time

A lot of new retirees naturally gravitate toward this type of spending arc. It goes without saying, though, that your spending plan needs to actually be planned. Whether spending more now or spending more later, the numbers need to add up. It can be all too tempting to make big purchases right out of the gate by buying a motor home, or going on extended vacations—which is fine if your plan accommodates this.

Generally speaking, there is truth to this logic. In your earlier years of retirement, you’re naturally more active, and as such is the best time to achieve your retirement goals. You want to make the most of your retirement years. In this sense, this spending arc may be a good fit for many.

Increasing spending over time

What about the reverse—the equivalent to saving your dessert for last? The truth is, that it isn’t possible to peer into the future to see useful information, such as how long you’re going to live.

One thing to consider is that as retirement goes on, the possibility for big medical expenses increases. This factored in to your long-term plan may mean that your spending will go up.

Spending the same over time

A recent Wall Street Journal article[1] brought up the point that anticipation in retirement spending brings joy. If we are locked into a monthly spending groove from the very beginning, it can be demotivating. An option for alleviating this sense of stasis is to allocate one month a year to give yourself a “bonus.” This can give you something to look forward to.

In the end, it may not be totally necessary to save the best for last, as you learned as a child at the dinner table. Most importantly, creating a systematic withdrawal plan should be something personal, something we take very seriously at Miramontes Capital. If you’re in the Costa Mesa area and want a retirement planner that can give you this high level of personalization, give us a call today.

[1] Benartzi, Shlomo. “How to Get More Pleasure out of Retirement Spending.” Wall Street Journal. Sept. 11, 2016[/vc_column_text][/vc_column][/vc_row]