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Exploring the finish line, stillness, and frequency

Welcome to the Intentional Dollar weekly newsletter — great work taking this small step to move your money forward. I’m Logan, a Certified Financial Planner™, and I’m excited you’re here!

What’s inside?

• One tool to experiment with

• Two quotes from others

• Three questions to dig deeper

• Four lines of poetry for the point

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_{One tool to experiment with:}

The Finish Line:

At what point can you walk away from work and cross the finish line?

For some odd reason, we have created a norm to fix our gaze on a future age.

• I can retire at 62

• I hope to retire at 65

• My retirement won’t be until 70

Old, yet current, social systems had a heavy hand in developing these age-based retirement dates. Through specified ages to access pensions, the systems have kept a big portion of our future income under lock. This was engineered to support us when we aged out of work — when we could no longer trade our time for economic value. 

Long ago, the age anchor was dropped and it’s since kept our minds in place. But the truth is, these times are different. Our options are different. What I am suggesting here is not intended to substitute how you think about retirement, but to supplement it. To make it more robust. This way, you’re not turning calendars and counting down years, but properly focused on the dials you can exercise control over. Time and a function of time — age — are not one of these dials. Time sits in an unfettered field, one we can’t alter. Better to look for the things we can.

A problem with an age in mind is that we flip the autopilot switch and jump into the unforgiving current that is a career.

When the tide carries us close enough to our anticipated age, we surface for air and assess the state of things. In other words, we try to figure out if we have enough money to make it work. 

So what can we do?

Stephen Covey said to begin with the end in mind. The end is not death, and the end is not a retirement age. Rather, it’s a retirement rate. 

There is a principle in wealth planning, and it’s more of a guide than a law, called “safe withdrawal rate.” This rate signals the annual percentage you can pull from your assets, with a high probability of not running out of money. 

That number sits in the range of 4-5%.

Let’s say we have $450,000 in investment assets.

Using the conservative end of our range, 4% of this is $18,000/year, or $1,500/month. If we spend $4,000 per month, we can see how “funded” our independence is ($1,500/$4,000 = 25%).

It’s good to keep this number in your pocket because you can make regular comparisons against your current income/expense situation and see where you stand relative to your finish line. 

This rate also allows us to see that someone who spends $2,500 per month is a lot closer to independence. 

This is pretty interesting for a few reasons. 

1. You see a tangible current income value for the work you’ve put in

2. You realize that the base here, expenses, are generally the limiting factor in reaching financial independence 

3. You can see how to reach the finish line in different ways

To expand on point three, with $1,500/$4,000 funded, there’s an income gap of $2,500 per month. Earning $2,500 of net income is easier than $4,000. So it means perhaps more opportunity for part time, flexible, or lower stress work earlier in life. 

You’re the race director for your independence, and you decide where the finish line sits. 

Take a moment and calculate your current monthly income potential. Are you surprised at what you see? You’ll see how valuable it is to save early and build your base, and how much more flexibility you achieve with a lower expense profile. 

Note that there’s nothing wrong with wanting to spend money. If your goal is a higher spending base, you have to:

1. Save more money, which cuts into current consumption

2. Work longer at a higher wage to maintain current spending while building the base

3. Find additional sources of income 

For context, someone that spends $10,000 per month needs an asset base of $3,000,000 to follow the 4% rule ($120,000/0.04).

The people that find independence first, if speed equals race success, are the ones that have the highest incomes relative to their expenses, or the lowest expenses relative to their incomes. 

When you think about your finish line, or your retirement, supplement the old age-based model with a withdrawal rate — something that keeps you in control of the race.

_{Two quotes on stillness:}

Stillness, focus, concentration — take some time this week with the aim of briefly quieting the busy mind — new ideas will emerge.

_{Three questions on frequency:}

1. What if I saved $10 per day, rather than $300 per month?

2. What if I updated my net worth quarterly or monthly — instead of an annual review?

3. Am I stressed about money? What if I reduced the frequency I “checked” the numbers, and let the plan play out?

Which question stuck with you? Questions like these are spotlights for the mind. Reply to this email and let me know which one shined light on a previously dark cave.

_{Four lines of poetry for the point:}

Contact Me:

Content ideas, questions? Reply to this email or reach out to me at [email protected]