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Bridging The Gap From “Accumulation” to “Income”

As I talked about in my lead article, at some time in your life moving into retirement entails moving from the "accumulation stage" of life into the "income stage" of your life. It won't be about how much you have, but how it will support you from the day of your retirement party (still wearing the gold watch?!) to the last breath and beyond, to take care of the loved ones you leave behind. Moving into this next step of your money life necessitates changing your thought process around money, and taking out the fear of spending instead of saving. It's a change of mind-set, and takes a bit of getting used to. You may go from whipping out the credit card at will to a fear of charging, or begin to lose sleep over worrying if you'll have enough money to live your life. No, you don't have to move in with the kids or eat hot dogs 5 nights a week (although for me, I love hot dogs!): you just have to get used to a different way of living with regard to how you handle your money and your income. You may have to consider a bit of (Gasp... shall I say it?) budgeting, but all it is doing is giving you a firm handle on your spending habits- nothing terrible. Will you have to change your standard of living pre-retirement? Well, it depends on you. Many find they’ve gotten tired of all the eating out and traveling through the years and welcome life getting a bit more sedate, while some worked so hard during their working years they never had the chance to eat out and travel. Everybody's different and it's up to you to find the middle ground where you are happy.

Through our working years we program ourselves to save, not thinking about the time where we start using the money we saved. If I see $100,000 for example, I only see $4000- the principle amount times 4% (in this hypothetical example) as we don't want to kill the goose who is laying the golden eggs-your monthly income. Saving for all those decades tend to turn us a bit possessive- we don’t want to give it up. The fact is- let's not lose sight as to why you've been saving. I remember my Mom and I having a conversation about her annuity when she was around age 85. She refused to use it to supplement her income. When I asked her why, she replied- "I'm saving it for my old age." My Mom's been a forward thinker since the day I was born, and long before that.

When you were in the accumulation stage, you managed to save all through getting your first house, having kids and sending them through college, and all the pot holes thrown in your way along the decadesand you still managed to save. Let's not forget why you sacrificed all those years- for the later years. And, if you've reached that stage in your life where you are moving into the income stage, now is the time to reap the fruit of the seeds you planted many moons ago, and watered every month when you made your 401(k) contribution or did your IRA . It's a different mindset, and it takes a bit of getting used to- you're not alone. Just remember why you did it all those years, and reach out and grab the brass ring... it's time. If you don't know what reaching for the brass ring is, ask your parents. They'll give you a "round-a-bout" answer...

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