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Dying with Millions

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Summary

This article discusses the difficulty of transitioning from a saver to a spender in retirement, and how retirees can often end up with larger portfolios than when they retired due to their frugality. It also discusses the 4% rule, which is the rule of thumb for retirement planning, and how it can lead to large amounts of money left over at the end of retirement. Finally, the article discusses working with a financial planner and estate attorney to determine how to put the money to good use, such as through inheritances, charitable giving, or endowments.

Q&As

What is the 4% rule and how is it related to retirement planning?
The 4% rule is a rule of thumb for retirement planning that suggests retirees should withdraw no more than 4% of their retirement portfolio each year in order to avoid running out of money.

How did retirees save during the 2000s, despite the 'Lost Decade' in the stock market?
Retirees tightened their bootstraps and reduced spending during rough times, ending the 2000s with better portfolios than they started.

What advice is given to retirees struggling to change from “saver” to “spender”?
Retirees should save early, save often, and stay the course.

What are some options for what to do with a large retirement portfolio?
Options might include inheritances, charitable giving, ongoing endowments or trusts, etc.

What is the purpose of cashflow planning for retirees?
The purpose of cashflow planning for retirees is to imbue confidence in them to spend money.

AI Comments

👍 This article provides great advice for retirees in how to manage their portfolio and how to make the most of their savings. It also provides useful information for those wanting to help others and do good with their money.

👎 The article does not address the financial challenges that come with retirement such as inflation, rising healthcare costs, and long-term care.

AI Discussion

Me: It talks about the idea of retiring with millions and how it can be difficult to switch from being a saver to being a spender in retirement. It also mentions the 4% rule, which is a rule of thumb used by retirement planners to avoid retirement failure. It looks at how people tend to over-save, which can lead to their portfolios growing in retirement.

Friend: That's really interesting. What are the implications of this article?

Me: Well, it implies that retirees should plan their retirement finances carefully and make sure that they are not over-saving. It also suggests that retirees should consider their options for using their money for good, such as through inheritances, charitable giving, or endowments. Finally, it encourages retirees to enjoy their lives and trust the math behind their retirement plans.

Action items

Work with a fiduciary CFP financial planner and estate attorney to discuss options and preferences for assets while living and after passing away.
Run the McDonalds Test on favorite things to determine how to best enjoy the fruit of one's labors.
Listen to The Best Interest Podcast to learn more about the back story of The Best Interest.

Technical terms

4% Rule: A rule of thumb used by retirement planners to ensure that retirees do not run out of money in retirement. It states that retirees should withdraw no more than 4% of their retirement portfolio each year.
Cashflow Planning: A financial planning strategy that focuses on managing the flow of money in and out of an individual's or business's accounts. It is used to ensure that there is enough money to cover expenses and to plan for future financial goals.
Saver: A person who saves money regularly and avoids spending it.
Spender: A person who spends money regularly and avoids saving it.