Wednesday, September 04, 2013

Changing our Personal Finance Focus

As we have been revising our retirement spending plan, I realized that the focus of my personal finance evolved over time.  From my youth through starting to work, my focus was on saving, specifically developing good saving habits and getting a good job with enough income to save.    During my working years, my focus was on maintaining our savings plan, specifically living below our means and getting promoted to higher paying levels.  After almost 6 years of retirement, I now realize that our focus should be on spending, instead of saving and maintaining.  So I need to change my personal finance habits that I've been using up to now.

When I started My Wealth Builder in 2006, I was still focused on maintaining our savings plan, hence the use of Wealth Builder Ratios.  When I retired in 2007, I continued to use the Wealth Builder Ratios.  Based on the reviews with my financial advisor, I should change replace my Income to Salary ratio and Savings to Salary ratio, with a Retirement Income to Salary ratio.   Retirement Income will equal 4% withdrawal rate of liquid assets plus other income (dividends, interest, rental income) and be compared with my pre-retirement salary.

For more on The Practice of Personal Finance, check back every Wednesday  for a new segment.

This is not financial or retirement advice. Please consult a professional advisor.

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