Editor’s Note: I’m proud to be able to bring you some very exciting news in today’s Wealthy Retirement…
We recently had the incredible opportunity to add world-renowned economist Dr. Mark Skousen to our team as The Oxford Club’s new Macroeconomic Strategist!
Known around the globe as “America’s Economist,” Dr. Skousen has been working in the fields of economics, business, and investing for nearly five decades, en route to being recognized as one of the top 20 living economists.
His track record over the course of his career is impeccable, including calling Black Monday six weeks before the crash, predicting the fall of the Berlin Wall, and nailing the exact bottom of the market in 2009. Last year, in his final year as editor-in-chief of his longtime investment newsletter, Forecasts & Strategies, every one of his 15 stock and fund recommendations was up, with an average gain of 35%.
Now, every Monday here in Wealthy Retirement, you’ll have access to his exclusive insights on markets, the economy, and more.
We couldn’t be more thrilled to have Dr. Skousen on board, and I know you’ll feel the same way, too.
– James Ogletree, Senior Managing Editor
“Two of the hardest things to do is save when
you’re young and spend when you’re old.”
– Maxims of Wall Street, Page 19
In a recent survey, retirees and mature investors were asked to list the reasons they hold back on travel, hobbies, attending events and financial conferences, or other forms of discretionary spending.
The list included rising healthcare costs, limited mobility due to physical conditions, and living on fixed incomes in an era of inflation.
A few said they don’t spend money simply due to a lifelong habit of frugality; having saved for decades makes it emotionally hard to shift into a spending mindset, even if the math supports it.
But the No. 1 reason for not spending is “fear of running out of money in retirement.” Around 64% of people in or nearing retirement say they worry about outliving their savings – in some surveys, they fear this more than death itself!
Financial planners see this as a serious challenge: people underspending on the “good life” because they’re paralyzed by the thought of depleting their nest egg.
Our Trip to the Holy Land
Years ago, my wife and I decided to take our first trip to Israel on a tour organized by my uncle W. Cleon Skousen. We were excited to go and “walk where Jesus walked.” It turned out to be one of the top three vacations we have ever taken, and we look back with fondness on that two-week tour.
At the time, we were both in our 30s and living busy lives, working long hours as writers and publishers, and taking care of a growing family. But we decided to take this “trip of a lifetime” because we always wanted to visit the Holy Land with Uncle Cleon, who was like a dad to me after my own father passed away when I was 16 years old.
Over 60 people were on the tour, and we noticed right away that everyone else was a whole generation older. Many were physically challenged and had a hard time getting on and off the tour buses. But they were there and having a blast. For many, it was a lifelong goal. We admired their joie de vivre and made many good friends.
Adopting a “Spending With Confidence” Mindset
Jo Ann and I decided then and there that we would adopt a balanced approach to saving versus spending: We deliberately set aside time and money each year to travel and achieve other goals, often combining business with pleasure. But we never jeopardize our retirement nest egg. It is a balancing act, what we call “prudent spending through consistent saving.”
Our approach was similar to the story of Arkad in George Clason’s classic book The Richest Man in Babylon. It begins:
“In old Babylon there once lived a certain very rich man named Arkad. Far and wide he was famed for his great wealth. Also was he famed for his liberality. He was generous with his charities. He was generous with his family. He was liberal in his own expenses. But nevertheless, each year his wealth increased more rapidly than he spent it.” (quoted on Page 22 of The Maxims of Wall Street)
Notice that Arkad was liberal in his expenses – he enjoyed life to the fullest. But nevertheless, his wealth increased every year.
As his income increased, he spent more on “discretionary” activities – entertainment, travel, hobbies, attending events, etc. – but never exceeded his income. Thus he maintained his nest egg.
How to Spend More and Enjoy Life Without Running Out of Money
How can you achieve your dreams and goals while still building a nest egg that you can pass on to your children?
First, create a vacation and entertainment savings account. Draw upon that account for fun things you want to do. In The Richest Man in Babylon, George Clason advised, “A part of all you own is yours to keep.” As your income increases, have a percentage of it automatically going into a savings account. This is a great way to live within your budget each year, and thus, you will never run out of money.
What to put into this special “spending” account? If you don’t need Social Security for monthly expenses, have it automatically invested into your special account.
Another source: If you are over 72, put part or all of your required minimum distribution every year (usually 7% to 8% of your IRA or other retirement accounts) into the special account. The RMD is determined every year by how much you have in your retirement accounts, and you can never run out if you only spend the RMD each year.
Use your dividend-paying stocks to add to your special account. Chief Income Strategist Marc Lichtenfeld recommends quite a few high-income dividend-paying stocks. One of my favorites is Main Street Capital (NYSE: MAIN), which pays a regular monthly dividend and a quarterly special dividend. The annual yield is over 7%!
Finally, consider buying an immediate annuity that pays you a certain amount every year for the rest of your life. Use this amount to pay for your spending activities.
By following these suggestions, you can say to yourself, “I can now afford the things I want to do in life because I know I’m going to die a millionaire!”
For more information, see Pages 19-29 on “Saving, Investing and Spending” in The Maxims of Wall Street, available at a nice discount at https://skousenbooks.com.
