Ep 24: Mailbag - Is It Irresponsible To Spend More In Retirement?

Retirement Coach's Corner

Following last week’s episode of answering questions from the mailbag, we have yet another mailbag full of questions. Troy answers listeners' questions about saving and spending wisely in retirement. Gideon in Lexington is a pastor and has the option to opt out of paying into Social Security. Is this something he should do? Troy said this is a nice option to have. This allows you to invest in yourself and your own retirement. Locally, Troy has worked with a few pastors who have faced this decision. It does come with some risk to opt-out of it, so be sure you have the discipline to invest well into your retirement.

Sam in Crestwood has a whole life insurance policy but his kids are in their 30s now. Should he get the cash value of $50,000 of the life insurance policy and use that cash to pay off his house? Troy says it’s important to know how much is left on the principal of your mortgage. There could be options within the life insurance policy to take tax-free loans. There may be benefits to paying the house as planned instead of paying it off all at once.

Debra in Goshen wants to have fun and travel in retirement. This will require a higher income in retirement than when working. Is this irresponsible? There’s no rule saying you have to spend more or less in retirement. If you’ve been a good saver and have what you need, this might be fairly easy. But if you haven’t saved enough, you might run out of money a lot quicker. A lot of people use the 4 percent rule to live off of their assets. In the first 10 years of retirement, people often do more traveling and spending. It tends to slow down between health and family reasons for the majority of people. Of course, no one knows what their longevity will be, so you’ll want to have enough saved for the long run.

What we discuss in this episode:

1:08 - As a pastor, should I opt out of paying into Social Security?

3:38 - Should I use the cash value of my life insurance policy to pay off the house?

6:32 - Is it irresponsible to take a higher income in retirement?

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