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The egg is truly a work of art, where form meets function.
The design of the egg is a culmination of nature’s attempt to find a way to provide the best possible chance for the next generation to survive and prolong the species.
Every element of the egg has a purpose with no extra built-in frills.
This minimalistic approach gives you the greatest bang for the buck.
It is pretty easy to connect the dots on why people call the money set aside for retirement their “nest egg.”
The retirement nest egg has a similar function to the real egg, to provide protection and sustenance for the retiree.
We can a learn a lot from nature.
I believe the design of the egg is a great starting place when we are trying to design our retirement nest egg.
Walking on eggshells.
Although the phrase, “walking on eggshells” is meant to convey an egg’s fragility, an egg is anything but fragile, being able to withstand impressive compressive loads because of its shell.
This thin protective coating is the first defense mechanism of the egg, helping to secure the valuable contents inside.
I feel the retirement nest egg correlate is our income during the accumulation phase.
While we are building our nest egg it is our working income that serves to protect it.
It is because of our working income that we would even have the funds necessary to start building our nest egg.
Of equal importance is that our working income also helps us protect our nest egg from being prematurely devoured.
There are cautionary tales of people who have raided their retirement nest egg, either through 401k loans or taking early withdrawal penalties, in leaner times and thus weaken their nest egg’s ability to provide when they do reach retirement age.
In order to have the best chance for your nest egg to adequately provide during your retirement years, it is vital to have a large and stable enough W2 income stream to get you through the accumulation phase and form this protective shell.
The next line of defense mother nature offers for the egg is the egg white layer.
This layer is composed primarily of water and albumin, a protein.
Scientists have discovered that this particular layer has multiple defense mechanisms including thermal and mechanical ones and it even possesses antimicrobial properties.
There is undoubtedly many ways to construct this layer in the retirement nest egg model, it just comes down to individual preference.
For my particular nest egg, I feel that my “market portfolio” composed of stocks/bonds/bond equivalents (pension) forms the bulk of this layer.
In times of inflation I hope the equities component (primarily in the form of total stock market index funds) will increase in value to counter the dollar devaluation (which can truly be thought of as an unwanted pathogen).
When equities underperform, I hope that the bonds/bond equivalent can serve as the mechanical/thermal buffer to smooth out the ride/volatility.
The center of it all, the yolk.
As we continue to progress towards the center of the egg the contents become more and more vital for the survivability of the embryo.
The yolk of an egg is the immediate food source for the embryo, containing all the nutrients required for development.
Again the component that represents this function in retirement nest egg construction will vary according to individual tastes.
For me I feel that the yolk equivalent corresponds to my income producing assets, namely my real estate holdings (with the sale of my guest house this is now solely in real estate syndications).
I am currently on pace to surpass my annual household burn rate this year just from the distributions I receive from this asset class.
This added layer of protection makes me feel that future me (equivalent to the embryo in a weird, Benjamin Button sort of way), will be well provided for without having to tap into the egg white layer.
Retirement planning is often not what it is cracked up to be.
Hopefully using mother nature as a guide, you won’t find yourself with yolk on your face during retirement.
Feel free to share how your nest egg is constructed in the comments below.
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