Make More or Spend Less?

03 Aug 2016

Many people think the key to a successful retirement is making more money. However, believe it or not, focusing on how much you spend (your expenses) may help more. Reducing your debt before entering retirement can also help make those years less stressful.

To test this theory, we ran a hypothetical scenario through our financial planning software. With all other factors remaining constant, we ran a base plan, to get our starting probability of success. We then reran the plan keeping the same income goal, but increasing the average annual return by 2%, and got a slightly higher probability of success. We then reran the plan a second time, with the original average return, but lowered the income goal by $1,000/month. This second trial of lowering the income produced a significantly higher probability of success.

The impact of reducing your debt (or income needs) going into retirement seems, in this case, to do more for a successful retirement than making more money. Everyone’s situation is unique, so be sure to have these discussions with your financial professional.


Good Luck!






*This is a hypothetical scenario, and not intended to be a recommendation. Everyone’s situation is unique, please contact your financial professional.


Jeffrey Johnston

Jeffrey is originally from Solon, Iowa. He currently resides in Swisher, Iowa with his wife, Prudence, and his three children, Seth, Ian, and Roman. He graduated from the University of Northern Iowa in 1989, where he majored in Finance and Investments. He has 24 years of experience in the investment and estate planning business. He is currently the President of “Premier Investments of Iowa, Inc.” Jeffrey’s main focus is Estate and Investment Planning for Senior Citizens and Pre Retirees. Jeffrey became a Chartered Financial Consultant (ChFC) in 2001. He is the author of many articles on industry related topics and he is a frequent seminar presenter. He is a Board Member TRIAD Linn County Seniors Against Crime, and he is also a past Board Member of the Heritage Area Agency on Aging Task Force. He is a member of CEO Roundtable in Cedar Rapids, a Daybreak Rotary Member, and a member of the Cedar Rapids Estate Planning Council. In March of 2009, Jeffrey became the host of the Premier Investments of Iowa Financial Hour which airs every Tuesday Evening from 6PM -7PM, on WMT 600 AM Radio. In his free time he enjoys golf, fishing, scuba diving, traveling, and coaching son’s basketball teams.