The myth of never touching your capital starts when people are working and saving for retirement. Some become conscientious savers, never touching their nest egg. That mentality spills over into retirement. Changing habits can be hard.
Retirement myth #5: Never touch your capital.
Conventional thinking and approaches often work on keeping your assets intact during retirement. That may work for the wealthy, whose investments generate plenty of cash flow so that they can preserve their capital for their children, grandchildren and favourite causes. For most of you, it’s okay to spend your capital as a way of providing lifetime income. While saving may be a goal in itself during your working years, plan on an orderly spending of what you have saved during retirement. Isn’t that what you intended? It really is okay to spend your capital. That’s what it is there for. And using capital as part of your cash flow is tax-free. The idea for many like you is to spend down in retirement. Saving is not a goal in itself. Work with a retirement income planner on ensuring that you have enough capital to provide you with the cash flow you need no matter what happens; no matter how long you live. Look at alternatives to provide legacies for children and favourite causes while giving you enough cash flow to fund your basic lifestyle and pay for those dreams and plans on your bucket list.
© 2020 by Peter a Wouters. republished with permission by Peter Wouters. For the complete list of articles, please visit here.
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Ten retirement myths series: Myth #10
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Ten retirement myths series: Myth #8
Ten retirement myths series: Myth #7
Ten retirement myths series: Myth #6
Ten retirement myths series: Myth #4
Ten retirement myths series: Myth #3
Ten retirement myths series: Myth #2
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February 2020
