Inventory-Money

Retirement: defined as “the action or fact of leaving one’s job and ceasing to work,” I need to know if I can afford to live off my own resources before I stop working.

Money and how I manage it are the foundation of my Senior Essence journey.

The amount of post-retirement income I have dictates how much life I can live.

And just because I’ve reached 65 years of age doesn’t automatically guarantee that I’ll be able to live out my dream retirement.

So, I need to figure out my bottom line and honestly ask myself, “Can I afford to retire?

Before I can answer this question, I need to know how much income I’ll have and exactly how much I’ll spend. Where will my retirement income come from, and will it be enough to live the life I want?

There are so many rules of thumb and financial gurus who all have an opinion as to how much I’ll need. But they are all simply estimates and do not account for the details of my life, my habits, my hobbies, and my desires. The only way for me to know what I need “In Retirement” is to do a detailed inventory of my resources, expenses, interests, and obligations. In other words, how much do I intend to spend and how much do I need to have?

When I retired, I had a much lower income. Add to that my late life divorce and now I am living off less than half of my pre-retirement income.

I had no choice but to reduce my expenses or rapidly run out of money. The fact is I still have expenses in retirement, and I must be clear on what is necessary, and what is simply a want.

After two years of living beyond my means, I created a new habit of tracking and controlling all my expenditure. Because I wish to live comfortably and independently in retirement, and not to return to work I hate, I slowly learned the lesson of accounting for my pennies. I needed to create new habits and find my bottom line each month or return to another meaningless job that I destained.

My aha…it’s my monthly expenses that dictate how much income I need to produce from my own retirement resources to live without employment. Now I religiously implement a Monthly Spending Plan and account for every expenditure. I now know where I am financially and feel secure that I will not have to return to work unless I want to. Not need to.

 In Practice: There are no “rules of thumb” in my Spending Plan, only cold hard facts. How much I spend decides how much I must produce in self-generated income. That’s the bottom line, the financial truth of retirement. If I continuously overspend, I’ll be forced back to work.

Action Item: My suggestion is to prepare a retirement expense budget while in Pre-Retirement. When we’re in Pre-Retirement we must challenge ourselves to do a Pro-Forma Spending Plan that accounts for all realistic and necessary expenses along with the required income to offset-set them. It’s imperative that we get this right prior to quitting our jobs.