Page 44 - Ready Set Retire

Stephen J. Kelley

The most important goal of any healthy income plan is two-
fold. The first is to make sure you have enough income, and
the second is to make sure it lasts as long as you need it. Both
are equally important, and they are often at odds with each
other. Think about the trade-off with Social Security. If you
choose to start receiving income as soon as possible, it may
have the impact of getting you to break even quicker, but what
then? Once you have passed break even, all the income you
receive from an early election is less than you could have gotten
from a later election, and the rest of your financial life is put in
jeopardy.

The reason that’s important is because we have no idea how
long we are going to need income. Before we can have any idea
how much we can spend, this problem has to be solved.
Otherwise you are always trapped in what’s known as a “zero-
sum game.” A zero-sum game is when there is a finite resource,
and in order to maximize one set of conditions, you have to
minimize others: robbing Peter to pay Paul. So you get into a
“more now, less later,” or “less now, more later” mentality.
You start to think things like, “I want my money when I am
more active, and to do so have to give up security later in life.”
I can’t even begin to estimate how many times I have had this
conversation with people.

34