In Baseball, Good Pitching Beats Good Hitting. That’s the Conventional Wisdom. The Theory is that a Good Pitcher’s Team will only have to Score a few Runs to Win. They just have to Score More Runs than the Other Guys.
In Retirement Planning, is it more important to Earn More or to Spend Less? The Answer is…It Depends. You need Both Good Defense and Good Offense to Win!
Everyone should take a close look at their Spending. You don’t have to live like a Monk to enjoy a Thrifty Lifestyle. At the same time, Some People would Spend More Than They Earn No Matter How Much They Made!
The Reality is that for someone just beginning a career, the Goal should be to Earn More so they can Save More.
1. Improve your Career Skills
2. Start a Side Business
3. Ask for a Raise
Then, as your Income Rises, you Can Save More. The Key here is Managing your Spending Behavior and making the Conscious Choice to Save More.
As your Savings Accumulate, you will notice that your Annual Contributions account for a smaller and smaller Fraction of your Portfolio’s Balance. At this point, Growth becomes a Bigger Factor than Contributions. Managing your Investments has a Greater Effect on your Retirement Nest Egg. You can Maximize Growth a couple of ways.
1. Optimizing Asset Allocation for Growth. (Greater Stock Exposure.)
2. Minimizing Portfolio Costs
As you near Retirement, your focus should shift to Preserving your Portfolio. A Bear Market close to your Projected Retirement Date could wreck your plans. At this Point, It’s Best to shift your Assets away from Riskier Investments to Less Risky Investments. Your Goal should be to Maximize the chance of living a Comfortable Retirement and to Minimize the Odds of Dying Poor.
1. Optimizing Asset Allocation for Preservation. (Lesser Stock Exposure.)
2. Possible Annutization.
Your Ideal Retirement Game Plan should be to Earn More and Spend Less. Yes, Good Pitching May Beat Good Hitting…But, Great Hitting Beats Good Pitching…Be Sure to Work your Financial Life from Both Sides of the Plate.
So, What Do You Think? Is it More Important to Earn More or to Spend Less? Can you Give an Example?