The “I’m Spending It All” Retirement Plan

I watched my 96-year-old mother as she napped in the comfortable nursing home. I couldn’t help but think of how long she, as a grade school teacher, and my father, as a municipal worker, had worked, sacrificed and saved for their retirement. And now, after a combined, cumulative 90 years of working and saving, their nest egg was being completely drained by the nursing home in less than 18 months.

I realized that although I had advised them how to responsibly save for their retirement, I had neglected to advise them how to responsibly spend during their retirement, while they still had each other to enjoy it and before they ended up in the nursing home. I had failed to properly advise my own mom and dad.

If you have spent a good portion of your life learning a skill while others played, working while others slept, putting your money into investments while others were just spending; you are probably sitting on a nice pile of your hard-earned money known as your net worth. But some of us end up becoming victims of our own delayed gratification. The very traits that have made us so successful have also resulted in delayed gratification to our own detriment.


Your money in the bank or brokerage account is electronic money, a series of ones and zeroes, and nothing more than just IOUs provided to you for your past work, time and effort. These IOUs, not yet converted into enjoyable spending or gifting, are your uncompensated past work, time and effort. The challenge you will face will be if and when to reverse course and start redeeming all those earned electronic IOUs with enjoyable spending and rewarding gifting.

With pre-mortem gifting, you can enjoy giving to your choice of deserving individuals or charitable causes while you are still alive to enjoy the pleasure and satisfaction. You can gift to your children when they have the greatest need and can benefit the most from your generosity, whether it is for their advanced education, their wedding or their first house; rather than having them receive the inheritance by default when they are retired adults. Sometimes the best gift one can leave behind is nothing for the grieving family to fight over. Steel baron and philanthropist Andrew Carnegie famously said: “He who dies rich, dies disgraced.”

The Traditional Approach

The traditional approach to retirement savings involves a conservative strategy of a recommended allocation of capital to stocks, bonds and cash, with a 3%-4% annual withdrawal rate. Most traditional estate planning seeks to preserve your net worth up to and usually beyond your life, with the remainder being distributed to your heirs, attorneys and the taxman.

The Annuity Approach