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When Spending Too Little Is the Biggest Railroad Retirement "Risk" Thumbnail

When Spending Too Little Is the Biggest Railroad Retirement "Risk"

Video Retirement Budgeting Financial Planning


Learn about this railroad retirement risk that might affect some retirees.

Welcome everyone to another edition of the Highball Advisors Railroad Retirement. Whiteboard, my name's John McNamara of Highball Advisors. And today we're going to talk, it's a different, it's subject for a certain group of people, but it's an issue. And some of you might say, oh, it's not a big issue. So, it really is. So I just want to bring it up. And for those this pertains to, I hope you get something out of it. So, right, the title is, spending too little in railroad retirement is a risk. So, the way you look at it is, you've accumulated a lot of money because you've been working, you've done very well for yourself, maybe investments come in, you've saved a lot of money, you've been frugal with your money. And then you kind of carry that over into retirement and we say, oh, I'm nervous about things, that type of thing.

And at the end of the day, you come towards the end of your life and say, oh my God, I have all this money, I never spent it. So I just wanted to kind of talk about this subject a little bit. I know, a little taboo, but we'll talk about it anyway. So, when I work with my clients, right? The number one risk obviously is don't ever run out of money. So, right? Don't ever want to run out of money. But some people, right? Have a lot of money, and they'll never run out of money, because between their railroad retirement, pensions, their savings, you don't know what they've come into, inheritances, whatever, they might never, ever run out of money, based on their lifestyle, right? I'm not, the Kardashians or something like that. So, the other risks that they would be facing is they don't spend enough money in retirement, right?

So, if you look at retirement, it's not a straight line, right? It's not I'm going to spend X every month. So, you have that thought of go-go years where you retire, you have a lot of energy, you're still in very good health, and then you slow down, you don't go as fast. And then really towards the end, you're not really doing much at all. So you're not really spending that much money. So let's just stress a little bit about this spending issue, right? So a lot of people will have some discomfort around spending, right? They get nervous about the future. I hear that all the time. I'm nervous about the market. I don't know where this country's going. This is that, that's going on, I'm hearing this, I'm hearing that. So they get very nervous about it. So you're very, very anxious, right? So that's a big reason that they might not be spending, okay? Even though they have the capability to, I mean, you can say that you have the capability to, but they're just very nervous about it.

Or they've always been frugal, and there's nothing wrong with frugality. I mean, nobody likes to save money as much as I do. But, if you have that mindset, you're still going to be piling all this money behind you. So, what I would suggest is, hey, develop a spending plan that will make you happy, right? That will bring you joy. Say, so thinking about, okay, I'm going to spend this money in retirement. What is it going to do? What can I do in retirement that's going to make me happy? And all I can do is look at research, because everybody's individual, right? But, what they say in the research is, spending money on experiences versus physical things, right? Just accumulating a lot of toys and things like that, short-term pleasure. But maybe experiences. So that might be, hey, let's do a family trip or a charity, that type of thing. Helping people out. Very, very important.

Another thing they said is, spending that strengthen social connections, right? So, when you retire, a lot of people, they'll lose their social connections, which were through work, right? Because you're not going to work anymore. So, do you still have that social connection? So the point is, building on your current social connections, right? Through spending, right? Maybe that's a trip, doing whatever, going out to dinner with people, right? Through church groups, all those type of things. Or even starting new connections, okay, meeting new people. Let's say you going on a tour to Europe and you go with another group. So those new connections. So that's like what they call productive spending. And research has shown, people get a lot of value out of that. So that's something to think about. And then the other thing also is even, is charity and legacy giving. All right. So, hey, it's not like, hey, here's all my money, take it. No.

The great way to do it is just start with small amounts. Things that are important to you, right? Hey, here's a little bit here. Get that feeling of helping out and charity, that might make you... You might feel better about doing things like that. And even try to reduce the anxiety. And even if you, maybe giving to your family, helping them out. But the important part of that is understanding your family dynamics, right? You don't want to... Some people aren't good with money, and we'll just leave it there, you know your family better than anybody else. But things like that. I just wanted to get people thinking about that second part of retirement, not just, hey, will I run out of money?

Will I retire and finish my run here with too much money? So, understand that, think about it, reach out to me if you have any questions. Go through my boarding for railroad retirement process, where we kind of talk about that. We'll have a conversation about that after we settle the first question, will you don't run out of money. But anyway, so I hope you found this video helpful. Feel free to share it with other railroaders. Click on my YouTube channel if you like this. Click on the notification bell to get the latest video. And until next time, everyone, stay safe, stay on track, and take care. So long everybody. Bye.


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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved from Highball Advisors, and all rights are reserved.