Making the Switch to Paying Yourself Epstein and White

For most of your life, you’ve probably had a daily routine – from tying your tie to greeting your coworkers to loosening that tie when you get home. When thinking about retirement, not only does your daily routine change but your financial routine does too. In your working years, you made sure to have a savings and wealth accumulation plan. Your retirement goals were focused on building wealth but now, your goal is to spend it efficiently. When you’re going back to school on your retirement plan, you’ll recognize that that’s a much different question to ask of your financial plan! 

Net Worth Versus Income 

When it comes time to switch from earning income externally to paying yourself, you should look at your net worth and income differently. You’ve gotten used to seeing income as something external that comes to you from working – staying busy, and your net worth as something you build and contribute. Instead, think of your net worth as something that you actively tap which informs your income, and your income as something that comes from yourself, not external sources. 

What Does This Change? 

Thinking about your net worth and income in this way may seem unactionable, but in practice, this comes with some serious changes to the way you utilize your money. All your life you wanted to increase and maximize your income so that you could cover your costs, save, and invest for your future, your income as the backbone to living and achieving your goals.    

However, if you attempt to carry that mindset over to retirement, maximizing your income will likely leave you paying more in taxes than you need to, potentially slashing the lifespan of the savings you worked so hard to build. 

The backbone of your retirement, instead of income, is your savings and overall net worth. You’ll want to provide yourself with income from what makes up your net worth – retirement accounts, dividend investments, rental properties, or other assets – to cover your costs, but since you’ve already saved up and built your net worth, any excess income could be a dead weight on your retirement longevity. 

Making the switch from saving to spending is like going from driving a car to flying a plane. It’s a whole new question to ask of your money and there are a lot of new tools, frames of mind, and opportunities to be aware of to navigate your retirement successfully. Rather than learn the whole retirement game on the fly, risking costly mistakes, when you work with one of our financial professionals, we can help guide you toward achieving your retirement goals. Click here to sign up with us for a review of your financial situation to help you get a step closer to your financial goals.

Please Note: Epstein & White is a tradename. All services provided by Epstein & White investment professionals are provided in their individual capacities as investment adviser representatives of Mercer Global Advisors Inc. (“Mercer Advisors”), an SEC registered investment adviser principally located in Denver, Colorado, with various branch offices throughout the United States doing business under different tradenames, including Epstein & White. Information contained herein is for informational and illustrative purposes only and general in nature.  It should not be considered investment advice or a recommendation to buy or sell any type of securities or insurance products and no investment decision should be made based solely on any information provided herein. We provide this information with the understanding that we are not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas. Investment in securities carries a risk of loss, including loss of principal amount invested.  Different types of investments involve varying degrees of risk. It should not be assumed that diversification or asset allocation protects a portfolio from loss or that such will produce profitable results. An annuity’s guarantee is subject to the claims-paying ability of  the issuing insurance company.