ST. CROIX INSIGHTS
Living Off Your Investments: The Transition to Mailbox Money
BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC
Photo by Thomas Ashlock
Transitioning to living off mailbox money (living off your investments for the rest of your life) is an attractive idea, but retiring is not as simple as having enough money saved up and walking away. Many people approaching retirement find themselves apprehensive about departing from the security of a regular paycheck and relying solely on a fixed income.
In theory, it seems straightforward—if you’ve diligently done your financial planning, you likely have a clear retirement goal. Yet, the reality of living off investments can be unsettling.
When the time comes to make the leap, feeling overwhelmed and uncertain is an understandable reaction. It’s true: living on a fixed income has its challenges. What’s more, when you make that transition, there is usually no going back. You have to get it right the first time.
That said, even the scariest of situations can be made a lot less daunting if we’re ready for them.
Here are a few ways you can prepare for the transition to living off your mailbox money:
- Aim to have your home paid off. Living off your mailbox money is a lot less scary when you don’t have a mortgage.
- Practice your retirement budget. Stick to a retirement-income budget plan for six to twelve months. Can you actually live on what you think you can?
- Practice a modified work schedule. Try taking more time away from work to get used to the idea of not working five days a week.
- Retire in stages. Work on decreasing your hours in the office and your income from work over a year.
If you put in the steps to prepare for the transition, you’ll have the confidence to make the leap and start living off your investments full time.
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Ask yourself- can my portfolio support my lifestyle in my retirement?