Preparing To Retire
By Gary Silverman, CFP®
I am preparing to retire. No, I’m not retiring anytime soon. But I am a financial planner as well as an investment manager, so I plan. Something as big as retirement needs planning way in advance. Over the next couple of weeks, we will look at what you can do for your plan. This will not be an exhaustive list—just the basics.
This week let’s talk about spending. Spending can be a stressful chore for some and a joyful activity for others. I find it to be rather satisfying. No matter how you relate to spending, the truth is you will spend money in retirement.
One of the first questions we ask people when they come in for retirement spending is how much they plan to spend monthly in retirement. Very few can answer with any confidence. A great starting point is to look at how you spend now. So, we ask how much they are spending now. Again, very few know. This tends to drive my business associates, Michelle and Brittany, a bit bonkers. You see, they know, pretty much to the penny, how much they spend. They have tracking apps, spreadsheets, and save their receipts from everything. (Yes, they know just how abnormal they are!)
I am proud of them, but I don’t do that myself. For me, what works best is to periodically gather all that data, ensure everything looks fine, and go on with my life. I am less proud of me, but I’m happy with it. Different levels of tracking can achieve the same goal if it is done with a purpose. But all must meet certain truths to be useful:
- While you might not keep an eye on your expenses every day, you do need to look at them regularly enough to see if you are getting off-track.
- Periodic checking can help detect someone getting access to your accounts without your permission.
- You need to have access to your data. Can you, relatively quickly, access your banking and credit card information? Do you have ways to know where those ATM withdrawals went?
- You need to ensure your spending is low enough that you will have money for future spending needs—including short-term goals and retirement.
If you know what you spend now, you are in a good place to figure out (if you haven’t already) what you will need in the future. Yes, some expenses will decrease or go away completely, but other expenses will increase or be added to the budget.
Next week we’ll look at the income side of things and talk more about expenses. At least I probably will, but as there is a Lottery drawing tonight, I might be heading down to Austin to collect my winnings.
May Ukraine Stay Free