1 – We Would Like to Introduce You to Your Pile of Money
If you are reading this book, there is a high probability that you are a retiree or soon-to-be-retiree (STBR),
and there also is a high probability that you have saved some money for retirement, because if you
hadn’t been concerned with saving for retirement, you wouldn’t have saved any money and wouldn’t be
reading this book!
You may have saved a small pile of money for retirement, a medium pile of money for retirement, or a
large pile of money for retirement (Figure 1-1).
Figure 1-1
Whatever size pile of money you have, it’s your money, and we would like to introduce you to it, because
chances are you do not know it very well at all. By the time you finish Don’t Bet The Farm, you will know
your pile of money better than you have ever known it, better than you thought you ever would, and you
will finally know how to make it work for you!
A pile of money is real money; a retirement account statement and portfolio statement aren’t real
money, they are just paper summaries of what someone else thinks your money looks like. Rather than
thinking of all the complicated things about money, we like the symbolism that the phrase a pile of
money projects in our minds. A pile of money:
x
Can be touched.
x
Can be seen.
x
Has height.
x
Has width.
x
Has depth.
x
Has a smell.
x
Can have a sound.
x
Can be spent.
22
We would like you to meet Andy and Jackie, both age 60 and just retired. We would like to congratulate
them. It has been a long ride from their first day in the work force almost 40 years ago to the day they
said good-bye to their coworkers (Figure 1-2).
They have saved a stack of money for retirement.
Jackie is thinking about the pile of money they have saved for retirement and says, “I am so happy we
have retired, but now what are we supposed to do with the money?
Andy is also thinking about the pile of money and says, “I don’t know. I think we are supposed to watch it
closely and carefully.”
Figure 1-2
This starts the practice of retirees watching their money closely and carefully, paying extra-close attention
to their retirement account statements and asset values, what we call fake money (paper
money),watching it go up, then down, then back up again, then back down again, or discussing how
unhappy they are with how low interest rates are. They basically look at their money rather than use it.
Sound familiar?
23
Andy and Jackie, Age 65, Five Years after Retirement
They have lived five years into retirement and have not touched their savings.
Jackie is again thinking about their pile of money and says, “Can we start using the money yet?”
Andy is also thinking about their pile of money and says, “I don’t know, but I don’t think so. I think we are
supposed to keep watching it closely and carefully.” (Figure 1-3)
Again, this might sound all too familiar.
Figure 1-3
This is the ongoing dilemma of retirees continuing to watch their statements and ride the emotional roller
coaster of account value volatility. The money that was saved for retirement income is not being used for
retirement income. This can go on for years, even decades, for many retirees. Does this sound familiar?
24
Andy and Jackie, Age 67, Seven Years after Retirement
Andy and Jackie have lived seven years into retirement and have not touched their savings. They have
met with their financial advisor to get advice on using their money.
Jackie is wondering about their pile of money and asks the financial advisor, “Can we start using the
money yet?”
Andy is also wondering about the money and tells the financial advisor he would like to know the same
thing.
The financial advisor responds, “I don’t think so, I think we are all supposed to keep watching it closely
and carefully.” (Figure 1-4)
Again, this might sound all too familiar.
Figure 1-4
This is a problem many retirees face when they meet with their financial advisors regarding using some of
their assets for retirement income. Many of the financial advisors do not specialize in retirement income
distribution planning and can’t help retirees build a comprehensive retirement income plan, so the
retirees get no positive feedback or constructive guidance on how to use their money. We have heard
stories about financial advisors “scolding” retirees about wanting to use their own money! Does any of
this sound familiar?
25
Andy and Jackie, Age 70, 10 Years after Retirement
Andy and Jackie have lived 10 years into retirement and have not touched their savings. They are at their
favorite local restaurant and are ending the evening with a dance.
Jackie is thinking about their pile of money again and tells Andy, “I appreciate our evening out at our
favorite local place, but I really would love to take the trip to France we planned before we retired, and
dance in Paris. Can we start using the money yet?” (Figure 1-5)
Andy is also thinking about the money. He says, “I don’t think so. I think we are still supposed to keep
watching it closely and carefully.”
Again, this might sound all too familiar.
Figure 1-5
This is a problem many retirees face because they get used to not spending their money and are not sure
if they safely can, so they do without because doing without seems safer than spending some of their
money. They have no guarantees that their money will last forever, so the bottom line is they are very
afraid to spend it. They are more willing to give up on their dreams and wonderful plans than to risk
running out of money. We know this sadly may sound familiar.
26
Andy and Jackie, Age 80, 20 Years after Retirement
Andy and Jackie have lived 20 years into retirement and have not touched their savings. They have taken
out their IRA RMDs—required minimum distributions—but they haven’t spent any of it; they put it back
into savings into their bank account.
Jackie and Andy are sitting on a bench. They were on a walk but got tired—after all, they are 80 years
old! Jackie is thinking about their pile of money again and tells Andy, “I think back to when we were
working and saving all the money for retirement. We made sacrifices to save our money and thought we
would use the money for income to spend, but we have been retired 20 years and we haven’t spent it,
and I realize now we have sacrificed without so many things we really wanted and dreamed about, just
like we sacrificed when we were working. Now even if we could start using the money, what would we
spend it on?”
Andy is also thinking about the money again and says, “I don’t know what we would spend it on, but I
agree it seems kind of crazy that all we have done is watch it closely and carefully. We could have made a
lot more wonderful memories if we would have spent some of it.” (Figure 1-6)
Again, this might sound all too familiar.
Figure 1-6
Many retirees get to the age when their health will not allow them to do a lot of the things they planned
to do during retirement. They may have wanted to do a lot of travelling. At age 60, 65, and even 70,
traveling is very doable, but as they get older, travel gets more difficult. Maybe only one spouse is healthy
enough to travel or, worse, only one spouse is still alive. We don’t want this to sound familiar to you. We
want you to have a wonderful retirement, doing all the things you planned on doing when you were
retired, from your first day of retirement!
27