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

Jeff has over 30 years of experience in the investment industry. He currently holds his FINRA Serices 6, 63, 66, 7, 24 & 51 licenses with LPL Financial as well as his health and life insurance licenses.