Where Will Our Retirement Income Come From?

The journey towards Financial Independence is all about saving money but what about once you hit your FI goal?  That is when things change and you go from savings mode into spend down mode.  When in the car the other day both Mr. SFF and I admitted that the thought of actually spending our hard earned money was a little terrifying.  Yup, terrifying is the word we both used.  When you are a natural saver, like both of us have been our whole lives even well before starting this journey to FI, the thought of not only stopping saving but spending that hard earned money is a completely foreign and scary prospect.  I think this is part of the reason I am overestimating how much money we will need.  But in addition to overestimating our needs we are also trying to create other income streams so that we don’t actually have to rely on just our investments.

Now I think the term “spend down” might be slightly misleading for us as ideally we don’t want the value of our investments to go down over time.  Once we hit FI we need our investments to not only keep up with inflation but also cover any unexpected costs that could come up over the decades that we will be spending in our retirement.  This is even more important for those of us who will be spending so many years out of the full time workforce.  If you retire well into you 60’s and you haven’t been diligently saving over the years then you will likely be drawing down your money but as we likely have 40 or more years in our retirement we need to make sure our investments are still growing and ensure our needs are covered.  This means either making sure we have more than enough saved in our investment accounts or create other income streams.
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