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Set your priorities and watch out for "budget vampires," urge Morningstar - Independent Investment Research readers.
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Live Well in Retirement without Breaking the Buck - Westhill Consulting Rooms - Quora
Elizabeth Evans
Live Well in Retirement
without Breaking the Buck
financial success in retirement. Managing
expenses is also essential, whether your
idea of a splurge is a casual lunch with
friends or a luxury cruise.
I had asked readers to share their tips for
successful budgeting in a previous thread,
but enough time had elapsed that I wanted
to get their takes on this important topic
again. I wasn't just looking for conventional
advice about clipping coupons and taking
advantage of early-bird specials. Not
surprisingly, respondents were eager to
share their wisdom on everything from
saving on groceries and health-care costs to
swinging high-end travel without busting the
budget.
To read the complete thread or share your
'Beware the Budget Vampires!'
Many posts underscored the merits of
having a budget in retirement, and readers
also shared their specific budgeting tips.
JHGalt urged, "Set a budget, and don't
break it. You will sleep much better at
night."
Anticipating near- and longer-term
expenses is an important part of the
process, noted this poster: "If your car is
paid off, you have no car payment, but in
the long run you will need to buy another,
so budget accordingly. If your house is
Rickydeee advised other retirees to model
out how big-ticket items and unplanned
expenses will affect the portfolio's cash flow;
software tools can be an enormous help on
this front. "Use good-quality financial
software that shows the long-term portfolio
effect of potential major purchases, medical
emergencies, and so on," said this reader.
Keeping track of where the money goes on a
daily basis is also important, in the view of
Jacrod: "We keep track of our daily
expenditures in an Excel spreadsheet. This
requires a small amount of effort each day
but gives us a clear picture of where our
Actual spending results are reviewed
monthly, which invites a discussion about
where the money is going and what we
want to do with it in the future. On an
annual basis, we compare our spending
results and develop a target for each
category in the coming year. We include in
this budget any significant purchases that
we plan to make such as home
improvement or travel and revise our
outlook for health care and charitable
giving. This monthly and annual process
helps us to keep our spending in-line with
both our retirement plan and with what we
value most."
Those are any items that suck the life from your
budget: monthly interest charges on credit card
bills, sky-high cable or cell phone costs, etc.
Every year or two look at where every dollar goes
for a month or so and then see if you really
intended for that to happen. Cable or phone bill
increased when you weren't looking? Call and
renegotiate your bill or switch. Satellite radio: still
listening to it or is it time to drop it? When's the
last time you shopped around for insurance?"
Uysses is on board with reshopping insurance
coverage, writing, "I go through the painful
process of reprising car/home/personal liability
insurance package every few years. I saved a
bundle the first time. I also use only high-
We are the ultimate Mr. and Mrs. Frugal. We
shop at a discount grocery store. We have
Tracfones instead of smart phones. We don't
have satellite or cable. We walk three miles at
the local mall every day instead of having a
gym membership. We drive our cars for at
least 150,000 miles. We repair things instead
of buying new. I still use my mother's toaster
purchased in 1939. At retirement we moved
from a high-tax state to one with no state
income tax and close to another that has no
sales tax."
PaulT53 urged other retirees to take
advantage of their extra time to scout around
for the best prices on stuff they need. "Shop
'Make It an Expression of Who You Are'
However, Rule72 urged retired budgeters not to
get carried away with the process. "Try not to
watch expenses too close in retirement as this
generates stress. I was meticulous monitoring
expenses beginning five years before retirement
up through the end of the first year of
retirement. We retired with an expense plan that
allowed for occasional dips in value or surprise
expenses."
For truth teller, skimping in retirement is not part
of the plan. "I don't plan on being frugal at all. I
was frugal for 35 years so that I could retire at 55
and not be frugal."
Advised Chief K, "Structure your retirement
lifestyle, including things like cash flow,
around the things that bring you joy (or
completeness or happiness or Zen or
whatever)."
NormanR agreed that a budget should be a
reflection of priorities. "Prepare a list of
retirement trade-offs. For example, would you
rather own a larger home and pay real estate
taxes, or own a small condo and travel in an
RV in your retirement? This is your budget
and your creation. Make it an expression of
who you are."
Numerous posters enthused about the
One of the simplest ways to make one's
inflows line up with outflows, in the view of
Mtdoc59801, is to continue to bring in some
income. "[Part-time work] provides income,
interest, purpose and preserves retirement
funds. Now retired for three years and
currently age 69, I'm finding that working an
average of six to 10 hours per week and
netting only one sixth of my full-time pre-
retirement income plus Social Security
allows us to continue our lifestyle and grow
(or at least not deplete) our retirement
funds.“
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