I'VE BEEN PONDERING

“It would seem those who are best at systematically saving aren’t so good at systematically spending.”

You know who you are. Or maybe you don’t! Let me help: you worked hard to save your entire adult life. You were always conscious of your cash flow and conscientious about making sure you lived within your means. You value having money and assets so that you’ll be OK in the future.

Now you’re a bit older. You’ve left your primary career behind, or you’re close to doing so. Looking at the balance in your retirement accounts gives you a warm feeling in side. It makes you feel secure, and perhaps, justifiably proud. Those articles about the average American not saving nearly enough for retirement? That’s not you!

But guess what? The good habits that got you to where you are, that helped you build up that pot of money can work against you in ”retirement” (whatever that word means to you)! I’ve seen it with my clients, and research confirms - for a good chunk of “retirees,” it’s really hard to start spending the money they worked so hard to save. The idea of seeing their account balance dip because of their own action (taking money out to pay your bills) fills them with dread. (When I say “they/them,” are you thinking “me”?)

Blogger and podcaster Money With Katie says, “Accumulation is the phase that should be challenging: It involves working and sacrificing. Boo! But decumulation? That’s the party you spend your whole life planning for, baby! Why not take your bra off and stay a while?”

This is what you saved for. You made it. Now it’s time to make a prudent plan to use those dollars that you invested so thoughtfully, to allow yourself some leisure and choice. Quoting Katie again, “To continue to accumulate is to reject the reality that the future you’ve saved for is already here.”

TIMELY TOPICS

Inflation is confusing (and not very much fun): There's often a disconnect between economic data and what we believe is happening, which I think of as the difference between facts and feelings - or between macro data and personal experience. The Guardian recently published a survey that reflects this disconnect. Among their findings: 72% of Americans think that inflation is increasing.

The point on inflation is partially valid, but I think that's because the language around inflation can be confusing. To clarify, since its peak in 2022, the inflation rate has consistently been declining, but that doesn't mean prices are falling (that would be deflation). It means that prices are increasing at a slower pace than they once were. So, yes, prices are still rising, but the inflation rate has fallen considerably.

There's a big difference between economic data and our lived experience. Economists can say that recent inflation was only 2.9%, but our experience is that prices have risen by almost 20% since the start of 2021. We don't feel the slower rate of increase on a month-to-month basis; we feel the cumulative effect in our wallets.

RECENT SIGHTINGS

• I loved having a conversation about the shame so many women carry around money, needlessly but understandably, on the May 9 episode of Women and Money: the Sh!t We Don't Talk About, hosted by the mother-daughter team behind PurseStrings.co.
• The delightful British financial planner and podcast host Dan Haylett invited me to be on his show (see action shot below), Episode 54 of The Humans vs. Retirement Podcast.
• On our own podcast, Take Back Retirement, we dove into the topic of inflation and tried to provide a brief overview of what it is and why you should care - but not panic!

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Let's Connect!

Do you think you’ll have a hard time spending down your assets in “retirement?” What does it feel like to you? What thoughts might be behind those feelings? Hit reply and let me know.

Tag us on social media @sofiafinancial. I would love to hear from you!

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