Living Within a Budget During Retirement
Now that you’ve reached retirement, here’s the big surprise: You’ll probably need to keep doing a lot of what you’ve been doing leading up to this day, minus the full-time work in Silicon Valley. That means budgeting and smart money management to keep your finances in order and ensure you maintain your path into retirement.
Because you’re retired, you’re likely comfortable with the disciplined behavior you need to save for the long term. The same strategies you used before retirement will continue to serve you well. Living within a budget is important now because you’re reliant upon cash flow from your investments to fund your lifestyle in California or elsewhere. But your spending plan can be challenged in retirement because you have more free time to spend money than you did when you were working fulltime.
The key is to live below your means by spending less than you make, cutting out any frivolous spending that doesn’t truly deliver satisfaction, and refusing to give into peer pressure to keep up appearances. Only you can define the type of spending plan that works for you based on your means and your lifestyle desires.
Keys to Budgeting in Retirement
- Create a reasonable spending plan: Living in retirement means monitoring your spending and planning accordingly for inflation to ensure that your investment earnings and additional cash flow meet your needs. If you set goals you can’t meet, you’ll quickly become frustrated or you’ll create an extreme penny-pinching reality that you won’t enjoy. And what’s the point of retirement if you can’t enjoy it? Start by setting goals that are reasonable so you can watch yourself make progress. You want to stretch yourself without breaking.
- Find an easy way to track your spending: Keep tabs on how you spend your money, but don’t feel like you have to track every single penny if that’s not your personality type. If you’re able to see where your money goes each week or month, you’ll be able to analyze your spending more accurately and pinpoint areas where you can cut back on frivolities that don’t truly benefit your life. This practice is a great way to feel good about the progress you’re making while you adjust your spending plan and goals.
- Work with your spouse or partner: It’s important to involve your significant other in this process so you both agree on the plan. Without cooperation, a spending plan can drive people apart because a lifestyle will be forced on one person without his or her input. It’s important to give each other some cushion as you implement this plan, and get comfortable with its effects on your daily lives.
Make the most of your retirement years in California and beyond by creating a budgeting plan that allows you to experience life with less worry.