#128 Is It Better To Undershoot Or Overshoot Your Retirement Goals?

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Welcome to the Passive Income MD Podcast where we talk about creating your ideal life through multiple streams of income. I'm your host, Peter Kim. If you enjoy hearing about this stuff, make sure to hit subscribe so I can bring it to you every week. Now let's get on with the show.

Hey everyone, Hope you're having another great week. It's been an amazing week of a lot of learning, a lot of different things. We launched our Passive Real Estate Academy. Our conference at pidcon recently ended. We've got another conference or a little mastermind event coming up called Leverage Growth Accelerator Live. And so, so many cool things are happening where we get to interact with the community, people who are listening to this. And so I want to thank you for being part of this. So many of you have left like amazing reviews online and that really helps us, at least in terms of reaching people. If you know someone else that might benefit from this, please let them know because we love watching this audience grow and this community grow and we're doing whatever we can to support you wherever you need it. So this week we're going to be going over a certain question that popped up in my mind, maybe something that came up when I talked to somebody else and we just going to talk through this idea. Here's this question. If you're saving for retirement, would you rather undershoot or overshoot your goal? I told the story of how I was at Harry Potter world of all places. That's in Universal Studios here in la. Cool thing is, since we're in la, we have so many really cool places to go in terms of amusement parks, I think my kids are quite spoiled as a result. But why don't I take advantage of it? Well, we were there with a friend and we were just sitting there talking over lunch and you know, we talk about life and, you know, amongst our families. And she said that she's almost to her nest egg goal and that in a few short years she and her husband could start thinking about cutting back from work. They said in a few years. And so I just asked her, like I typically, you know, tend to do. I say, why don't you just cut back right now if you're close? And for her, I remember her looking and thinking about it and she said, well, she didn't want to fall short of her goal. You know, if she cut back, maybe she wouldn't get there. It would take her longer to get there. And I, I said, well, what if you knew and you were absolutely sure that you reach your goal? Even if you cut back, and she said, oh, that'd be simple. Then I would cut back immediately. So we got into this discussion, like, what's worse? Like possibly undershooting your goal and maybe having it delayed a bit, and having time with your family now while you're healthy, they're young, you're able to do that. Or it's like, worse to overshoot your goal and find out later on that you wasted years, five, ten years of working full time when you didn't have to, where you could have just enjoyed your life more and you're going to never get that time back. And I thought about it, and that's a question I pose for everyone listening to this. Like, what's worse? Undershoot your goal, maybe work a little bit longer, but have that time now with your family or whatever you want to do, or overshoot your goal, and then find out you wasted a whole bunch of years, maybe working when you didn't want to, those extra weekends, those extra nice things you didn't actually have to do, and you could have enjoyed your time more, and you find out you can never get that time back. Well, I think for me, it's an easy answer. For me, it'd be way worse to overshoot your goal. Cause I think in the other way, like, if you undershoot a little bit and maybe you're not quite there yet, you can always work a little bit more. You can maybe even cut back a little bit on your expenses. There's more adjustments that you can make if you have to create other ways of creating income. There's income streams that you can pick up. You can. You can make that happen. On the other side, though, like, once you. Once it's been done, once that time has been put in, once that effort has been put in, you can't get that time and your health back. That's why I talk a lot about this concept of gradual retirement, where you start cutting back slowly. I know a lot of people want to hurry up, make it happen real quick, and then make this huge cut, whether it's to full halftime. Sorry, halftime. Or whether it's, like, to completely retire and think about sitting on the beach. I don't think that's how necessarily we're wired. Meaning that I don't think a lot of us, you know, maybe it sounds like it, but maybe it seems like it. But if you cut back to nothing, you get bored. And I think all of us still need that sense of purpose. We need the sense that we're doing something that we're contributing something. So I would again take a guess that most of us listening to this, that there is a very happy place for us when it comes to our work and our life. And usually it's not at 100% or 110% in terms of work. Are you feeling it or. And then usually it's not zero percent and it's somewhere in between. And nothing can change over time. And so what I believe is that if you start cutting back slowly, you have a better chance of finding that equilibrium spot, of finding that place where you're working optimally to still help you find your, you know, get your goals, but you're still able to do all the things that you want to do and you're going to find that spot. And for me, when I was working in OB anesthesia sometimes I was working 10 to 12 nights at one point. It was really unsustainable, not good for my health, working a lot of nights, working a lot of weekends. I remember thinking, you know, how would my life change if I just had one night shift or one weekend shift down? Like, meaning that I removed one of those because I was able to create income from somewhere else, or honestly, I just decided not to do it altogether. And I remember thinking that would be huge, that would completely change my life because that Saturday I could spend with my family or that night I could actually have a good sleep so the next day I could enjoy and do these other things. And so that's what I started doing. When the income started to come in and it was a scary moment, I started cutting back one night at a time. And I kept cutting back and kept reassessing. Okay, am I doing okay financially? How am I doing health wise as a result of this? Good or bad, how am I feeling about this, how my life experience is going? And it turned out that, you know, after one I felt like, okay, that's amazing. My life actually changed quite a bit. But guess what? Two would be better and three would be better. And eventually I found this place where I was able to get rid of all my nights, but still I was working days and I was just loving that place. And it felt like I was doing what I was meant to do in life. Meaning in terms of my job, still felt good about it. I was still able to support my family fully financially. I was able to still pursue all these other things that I wanted. And that only happened because of gradual retirement. I didn't go and just drop off the face of the earth, or I try to work and work to the bone to get to a place where I could completely retire. I was able to do it in a sustainable way and course correct as I went. Now I'm just going to tell you that most people that from this book that I read called Die with Zero, the thing that they've seen is that people tend to die at their peak net worth. And that's for most of us especially high income professionals, meaning that you're going to die or when you leave this earth, you're going to die with the most money or at least biggest net worth that you've ever had. Now I don't know how that feels to you and that's a good thing because there's safety in that and it feels like you're going to pass it along. But how many of you would have had half of that net worth but had so much more time in your prime years when you're healthy, when you're young and you're able to enjoy all of this and I would again venture, I guess that most of you would rather would be happy to take a hit and, and your future net worth. Like you know the time when you're old enough and you know when you're old and you can't really even enjoy it anyways to have that time today. And so that's something I want to have you think about. And hopefully this is something that will keep coming up in conversations. It's something I always think about, is that guess what? I'd probably rather undershoot a little bit if I had to work a little bit more later. So be it. Who knows though? And nobody knows the future. Nobody knows how long you'll be here. Nobody knows how to look later with kids, colleges, maybe they got scholarships, maybe they do really well financially. They take care of you as parents. You don't even have to worry about a retirement. Who knows what will come. Obviously you don't want to rely on all these things and you want to be financially independent and smart and these kind of things. But to say like this is my goal, I will work to the bone, get there and I'd rather be over and I'd rather give up all this time now I actually think that in a lot of ways that is taking the bigger risk and that's what I believe. But when it comes to all this stuff about, you know, retirement time, money, course, correct. As you go gradual retirement, figure it out, see how things work. Maybe you drop three nights, maybe that was too much, maybe financially you need a little less. Just think about these things. Hopefully this is something that gives you thought this weekend or this week whenever you listen to this. I really appreciate this community. Continue to let us know what we can do to support you. Thank you so much. Let's talk again soon. Bye.

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