The Question You MUST Have An Answer To

We’re getting there!

Over the last few weeks, I’ve exposed you to the first steps in The Relaxing Retirement Formula™ which were all developed to help you determine your level of Retirement Bucket™ Dependence (the investments you’ve built up over your lifetime).

You’ve done this by getting crystal clear on all of your income sources, and what it costs you to support the exact lifestyle you want.

This is THE biggest distinction between investing during your working years and your retirement years, and it’s the point that I will continue to help you focus on.

Every “retirement calculator” discussion or article I read begins with you assuming an investment rate of return you either want or think you can get.

This completely puts the cart before the horse. It’s what gets so many people into trouble, and what causes so much confusion and anxiety.

Once you’re past the first steps in The Relaxing Retirement Formula™, and you know how dependent you are on your Retirement Bucket™, the next question is, “what rate of return do I need to earn?”

That rate isn’t chosen arbitrarily. It’s the rate of return that allows your money to keep pace with inflation and remain intact year after year while allowing you to continue to spend what you want.


When you’ve reached the stage where the money you’ve saved must now support you for the rest of your life, when you are dependent on your money to “live” as opposed to receiving a paycheck from the work you do, you have to think very differently about how you’re investing your money.

This is no longer a game. It’s no longer a race. You can’t afford to lose this time because, if you do, you’ll be forced to do one of two things:

  1. make drastic cutbacks in your lifestyle (who wants to do that after working all these years in preparation for this stage in your life where you get to reap all the rewards of being a diligent saver), or
  2. you will have to go back to work to make up for the losses, something your health could prevent you from doing in the future.

Neither of those sound like very good outcomes, so that’s why you have to think differently about investing at your stage in life.

And, it’s why you have to know the rate of return you must earn, as opposed to randomly investing your money in whatever appears to be the ‘hot’ thing at the moment.

The Medical Analogy

To draw an analogy, it would be like you taking a new medication without a doctor first analyzing your symptoms and doing a thorough examination to determine if you even need any medication at all.

When asked why you’re about to take this new potent drug, the doctor tells you that it’s a really popular drug right now. It’s all over the news and everyone’s taking it.

Now, if that sounds ridiculous to you, you’re right. However, this is how millions of Americans select their investments in retirement.

They don’t have a carefully calculated rate of return they’re aiming for. And, because they don’t, they’re at the mercy of the next salesperson who sells them whatever makes that salesperson the most money, or whatever appears to be “hot”.

For all the reasons I mentioned above, this is extremely dangerous. Don’t be lazy and fall into this trap. Take the time to figure out the rate of return you need to earn first.

Then you can go about crafting an investment matrix and specific investments that have the highest likelihood of getting you that rate of return over the long run.

However, before we move on to that crucial step, we have to determine the investment rate of return that YOU need to earn.

We’ll do that in the next Retirement Coach Strategy of the Week!

Committed To Your Relaxing Retirement,

Jack Phelps

The Retirement Coach

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