Spending Before and During Retirement


by David D. Holland



Do you worry that you’ll never have enough money to retire? When you hear statistics that say you will need to replace 80% of your current income, do you get a bit panicky? Here are a few things to think about.


Holland Financial

Don’t Go Overboard! First let me say, yes, it is very important to save for your future. BUT, I do not recommend that you give up on living to do so! I’ve seen people save every penny – only to be diagnosed later with a serious illness, and then be unable to enjoy the fruits of their labor. Who has said at the end of their life, “I wish I had worked harder?” You can take vacations and enjoy life without breaking the bank. Just think simpler. When I was growing up, my parents would take me and my brother to the Florida Keys for a few weeks each summer (as teachers, they were on summer break, too). I don’t remember much about the car we drove or the quality of the accommodations, but I do remember the experiences we had as a family. We didn’t need to spend a lot of money to have a great time. Those are the same kind of memories that I want for my children. So, I save for the future, but I have downtime, too, and I think the “time away” makes me a better adviser.


You’re at the Helm. Don’t forget, you are in control of your spending in retirement. That 80% income replacement rate (mentioned above) may actually be more than you need, especially if you’ve paid off your home or re-financed the outstanding loan balance with a reverse mortgage (thereby eliminating principal and interest payments). However, you are still responsible for property taxes, homeowners' insurance, and HOA fees. The decision whether or not to pay off a mortgage is as individual as you are! We can “run the numbers,” and weigh the pros and cons, but, psychologically, many people are happy (and relieved) not to have large monthly obligations as they enter into retirement.


Be Flexible. You can always choose to adjust your spending to meet your needs. My parents took early retirement from the school system when they were in their 50’s. Even though they wouldn’t have the same income as when they were working, they knew how to make prudent lifestyle choices. Instead of exotic world travels, Mom and Dad would pack up the RV and go to the mountains or just explore. They really weren’t missing out; they had a wonderful time (and still do!).


If you are curious about how much money you might need in retirement, or if you just want someone to help you strategize, give my office a call; I’m here to help!



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