| Adopting a "Spending With Confidence" Mindset Jo Ann and I decided then and there that we would adopt a balanced approach to saving versus spending: We deliberately set aside time and money each year to travel and achieve other goals, often combining business with pleasure. But we never jeopardize our retirement nest egg. It is a balancing act, what we call "prudent spending through consistent saving." Our approach was similar to the story of Arkad in George Clason's classic book The Richest Man in Babylon. It begins: "In old Babylon there once lived a certain very rich man named Arkad. Far and wide he was famed for his great wealth. Also was he famed for his liberality. He was generous with his charities. He was generous with his family. He was liberal in his own expenses. But nevertheless, each year his wealth increased more rapidly than he spent it." (quoted on Page 22 of The Maxims of Wall Street) Notice that Arkad was liberal in his expenses - he enjoyed life to the fullest. But nevertheless, his wealth increased every year. As his income increased, he spent more on "discretionary" activities - entertainment, travel, hobbies, attending events, etc. - but never exceeded his income. Thus he maintained his nest egg. How to Spend More and Enjoy Life Without Running Out of Money How can you achieve your dreams and goals while still building a nest egg that you can pass on to your children? First, create a vacation and entertainment savings account. Draw upon that account for fun things you want to do. In The Richest Man in Babylon, George Clason advised, "A part of all you own is yours to keep." As your income increases, have a percentage of it automatically going into a savings account. This is a great way to live within your budget each year, and thus, you will never run out of money. What to put into this special "spending" account? If you don't need Social Security for monthly expenses, have it automatically invested into your special account. Another source: If you are over 72, put part or all of your required minimum distribution every year (usually 7% to 8% of your IRA or other retirement accounts) into the special account. The RMD is determined every year by how much you have in your retirement accounts, and you can never run out if you only spend the RMD each year. Use your dividend-paying stocks to add to your special account. Chief Income Strategist Marc Lichtenfeld recommends quite a few high-income dividend-paying stocks. One of my favorites is Main Street Capital (NYSE: MAIN), which pays a regular monthly dividend and a quarterly special dividend. The annual yield is over 7%! Finally, consider buying an immediate annuity that pays you a certain amount every year for the rest of your life. Use this amount to pay for your spending activities. By following these suggestions, you can say to yourself, "I can now afford the things I want to do in life because I know I'm going to die a millionaire!" For more information, see Pages 19-29 on "Saving, Investing and Spending" in The Maxims of Wall Street, available at a nice discount at https://skousenbooks.com. Good investing, AEIOU, Dr. Mark Skousen | 
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