Retirement Planning Strategy: Don’t Put All Your Eggs in One Place

“Does the Value of a nest egg dictate whether or not the retirement is a success?”

This statement is not necessarily correct. It is often less about what you were able to save for retirement and more about what you spend INTO the retirement that determines its success. Before going further in detail about options for retirement planning,  let’s talk about what nest eggs are and their importance.

What is a Nest Egg

Investopedia defines the term nest egg as “a substantial sum of money or other assets that have been saved or invested for a specific purpose.” Its usually associated with long-term investments like higher education, home buying, and retirement planning. 

Items that are considered to be part of your nest egg for retirement plans are your savings, bonds, IRA, 401k, pensions, etc. Some advisors will look at Social Security benefits as part of your nest egg depending on the time you start your retirement. 

Nest egg financial growth

How Much is Needed for a Retirement Fund?

When planning your nest egg for retirement, your financial advisor will ask questions along the lines of your spending habits and the type of lifestyle you want. Some households live more comfortably with $300,000 in their nest egg than someone else that has $3 million. This is most often because of the differences in spending habits and lifestyle. 

Spending at an unsustainable rate will cause a person to fail, regardless of savings amount. An extreme example of this is professional athletes. They make a large sum of money in a relatively short time frame. They make plenty to maintain a luxurious lifestyle while they are active and earning. However, when they are no longer earning at the rate they once were can lead to financial failure and unable to maintain the lifestyle they are accustomed to. 

Aside from what you have and how you spend, there are outside factors that can eat up your nest egg investment over time. 

Future economic standings

Planning a retirement by yourself can be hazardous if you overlook the important things in life that you may not consider in younger years. 

The price of gasoline before the 2000s,for example, was less than  $1.50, 20 years later the price of gasoline has been between $2-3 depending on the state you live in. The cost of living is not the only thing that increases in price over time. You can also expect inflation from property taxes, insurance premiums, and medical expenses to name a few. A financial advisor can not only look at your current expenditures but also consider economic inflations over time and calculate it into your retirement strategy plan.

early retirement planning

Mortgage and Debt 

When planning for your retirement in 15,20, or 30 years from today, do you envision it with your house paid off and debt-free? Living in a credit-based society, the majority of Americans have debt whether it be a home mortgage or a credit card debt.  According to Forbes and data from 2016, the average household debt for someone of 65 years old and over was $31,300, two and a half times more than what the average debt in 2001.

A financial planner can calculate your debt to income ratio and help you strategize the best retirement options for your household. 


You may stop working or work less during retirement however Uncle Sam is always going to be asking for contributions. Nobody wants to pay high taxes especially if you are on a fixed income or are a single-income retiree. Looking at tax-free retirement plan options is a great way to increase the value of your nest eggs. 


A traditional IRA and 401k are great for tax exemption while you are working. It sounds great for now but you will be subject to taxes at the time of withdrawal.  A ROTH IRA or 401k is the opposite where you pay taxes on your contributions however during your golden years your withdrawls are considered tax-free income. 

Social Security Benefits

All Americans who work pay taxes to social security which then distribute benefits to retirees, the disabled, and dependents of the beneficiaries when deceased. Though are not you able to claim the full benefit until your full retirement age, Social Security benefits can be claimed as early as age 62 and are considered tax-free income in 37 states, including Arizona. 

Municipal bonds

Bonds are considered a low-risk investment option for your nest egg. A municipal bond is a debt issued by the state to fund capital expenditures such as the construction of roads and buildings for the city or state. Simply put it’s a loan the local government makes with the citizen as the investor. The return is often paid bi-annually to the investors and most interest earned is exempt from federal taxes. Depending on the state and county you live in, some are considered tax-free there also.

Bottom Line

Evaluating your current nest egg, expected earning years left, and the lifestyle you want to maintain (in terms of monthly or annual income) need to be projected, stress-tested, and challenged to see if your numbers are sustainable. Planning with a knowledgeable financial advisor can help you evaluate if your desired lifestyle is sustainable. If not what changes can be made now to positively influence a more desirable outcome? 

You should be informed and educated before it is too late to make changes.

Contact David Ayala Today!

David Ayala is one of the partners here at Heritage Wealth Solutions, and a specialist when it comes to retirement planning and wealth management for medical professionals. If you’re looking to increase your financial security so you can keep your focus on healing, contact David today for a consultation.

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David Ayala

Wealth Management Advisor, RJFS

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