Here’s a clue, just because you must take your required minimum distribution (RMD) and can start your Social Security benefits, doesn’t mean you have to spend it all. On the other hand by just taking your RMD, you may be shortchanging yourself according to a MarketWatch article.
But not just retirees spend because they must take access to their money. Parkinson’s law is alive and well and most people set a good example – unfortunately.
“The Way the Law Works
This law says that, no matter how much money people earn, they tend to spend the entire amount and a little bit more besides. Their expenses rise in lockstep with their earnings. Many people are earning today several times what they were earning at their first jobs. But somehow, they seem to need every single penny to maintain their current lifestyles. No matter how much they make, there never seems to be enough.
The Key to Financial Success
The first corollary of Parkinson’s Law says: “Financial independence comes from violating Parkinson’s Law.”
Parkinson’s Law explains the trap that most people fall into. This is the reason for debt, money worries and financial frustration. It is only when you develop sufficient willpower to resist the powerful urge to spend everything you make that you begin to accumulate money and move ahead of the crowd.”
Can you say paycheck to paycheck?