Help Me Retire Podcast - Episode 37
Plug your leaks before you sail
Show notes:
So... retirement is on the horizon... and you’re about to set sail...
Now’s the time to check for leaks in your spending plan... and fix them... while there’s still time...
In today’s episode of the Help Me Retire podcast... 10 pain-free ways to tighten your belt... so you’ll have more money to spend on the fun stuff...
This is the Help Me Retire Podcast… with your host… Mike Brown… Senior Wealth Advisor with Raymond James Financial Services… and head of Brown Family Wealth Advisors…
Mike is the best-selling author of Your Way to True Wealth: How to Make It Happen, Make It Last, and Make It Matter…
He and his team have been helping clients pursue their dreams of financial independence for the past 30 years… and in the Help Me Retire Podcast… he’ll share his best ideas with you…
And now… here’s Mike…
When I talk with people about to retire... one big fear keeps surfacing...
It’s over-spending... spending too much... too soon in retirement... and risking the possibility that they’ll run out of money one day...
If that thought lurks in the back of your mind... you’re not alone... it IS something to be concerned about... and it’s completely natural to want to do something about it...
But retirement... to me... shouldn’t be about cutting your expenses to the bone... clipping coupons and never taking a vacation...
Heck, if you’re going to be miserable... you might as well keep working, right?
So, we don’t want to go into this... looking for ways to deprive ourselves of the joy that comes with being able to do exactly what you want to do every day... for the rest of your life...
If you can’t afford to retire... don’t do it...
If you think you’ll be living beyond your means... take some time to look at how you spend money... and look for ways to stop wasting it...
I’ve got 10 expenses to put on your list... 10 ways you might be spending money right now that could hurt you in the long run... 10 things you might not even know you’re doing...
Number one... and I’m seeing this more and more... subscriptions...
And I’m not talking about People Magazine... I’m referring to all those things you signed up for... that take money out of your wallet every month...
How many streaming services are you paying for? Are you watching them all?How much are you paying for premium news subscriptions... the stuff that’s behind the pay wall?
How about software... music platforms... meal kits... subscription boxes?
Add up all those recurring expenses... and make sure you’re sitting down when you click the equal button on your calculator... and you may find that you’re spending hundreds of dollars a month... sometimes on services you don’t use much...
Should you cancel them all to save money? Of course, not... but at least ask yourself this question on each subscription you have: Would I sign up for this again today? If the answer is no... cancel it... and plug that spending leak...
Here’s another one... and I call it “convenience spending”... really common for a lot of people in their working years... when you’re just too busy to cook... you just can’t find the time to do grocery shopping...
You are paying... EXTRA... for the convenience of not having to do these things for yourself...
But once you retire... you DO have the time...
You no longer need to pay someone to shop for your food... you don’t have to buy fast food on your way home from work... or worse yet... pay a delivery service to bring it to you...
You might even discover you like cooking... and eating healthy... which could wind up saving you money on medical bills down the road...
The idea here is not to eliminate convenience... but to stop paying a premium for a lifestyle you no longer live...
Idea Number 3... your car...
Next to housing... transportation is the biggest budget item for today’s retirees...
accounting for around 20 percent of total spending... sometimes even more...
So, if you’ve got a car you’re not planning to drives as much anymore... think about getting rid of it... along with the insurance, maintenance, registration, tires, repairs, and depreciation that come along with it...
I’m not saying couples need to go down to one vehicle... although in some cases that might make sense...
I’m saying to think about matching your transportation to your new lifestyle... and if you and your spouse don’t need that extra car... sell it... and plug that spending leak...
Okay... next let’s talk about what you’re paying to stay connected...
You know... your cell phone service... internet... cable TV...
I know, you’re smart... and you’ve got all this stuff bundled together to save money... but when’s the last time you looked at what you’re paying? Heading into retirement is a great time to see what else is out there... based on what you’ll actually use once you’re retired...
You might be able to find a cheaper bundle... and collect the difference every month from now on...
Expense item Number 5... has to do with debt...
We borrow money so we can have things and use things... before we can actually pay for them... and in some cases... you have to... otherwise, none of us would probably ever own a home...
And in an ideal world... we’d have everything paid off by the time we retire... the mortgage... the cars... student loans... certainly credit cards...
Paying a lot of interest once you’re retired... is a bad idea... because it does nothing to improve your quality of life... it simply drains away some of your future income... money you could be spending on fun stuff...
If there’s one reason to consider delaying retirement... it’s to get yourself out of debt while you still have an income... especially non-mortgage debt... and especially high-interest debts like credit cards...
Number six... insurance...
Most people get lazy once they buy insurance... and who wants to spend time thinking about all the bad things that can happen to us... the reason we buy insurance in the first place?
But think about where you are when you retire...
The kids are grown... maybe the mortgage is paid off... maybe the life insurance policy you bought in case one of you died prematurely... isn’t necessary anymore...
Retirement is the time to review your insurance coverages... looking for overlaps... or protection you don’t actually need once you retire...
You probably still need insurance to cover the risks that won’t go away... but now’s the time to decide exactly what you DO need... and what it should cost...
Here’s another common spending leak I see a lot... memberships...
Gym memberships... clubs... warehouse memberships... professional associations... premium loyalty programs...
Hey, whatever you’re still using and enjoying... keep it... as long as they still fit your lifestyle in retirement...
Retirement could actually make some memberships MORE valuable... I mean... you can’t say you’re too busy to go to the gym anymore...
But others become less relevant after you retire... so cut the cost... plug the leak...
When we talk about spending money without thinking about it... does the name ‘Amazon’ come to mind?
I’m not quite this bad... yet... but I know some people who think it’s a bad day when there’s not an Amazon package waiting for them when they get back home...
But it’s not just Amazon...
Online retailers have made is so easy to tap a button on your phone... and get a package at your door a few days... sometimes a few HOURS later...
We buy because it’s convenient... we buy because we think we’re getting a discount... we buy... sometimes... simply as a form of entertainment...
I’m not saying you shouldn’t shop online... that’s the world we live in now...
All I’d suggest is to see what you’re spending online... and consider how much of it is for things you need or really want... and how much of it is random...
It’s random purchases that can cause spending problems... but the good news is that they’re also the quickest and easiest things to fix...
A minute ago, I mentioned that transportation is the number-two expense for the typical retiree today... and do you know what number-one is?
It’s housing... the mortgage... property taxes... insurance... utilities... repairs and maintenance... lawn care... cleaning...
A big house can absorb a surprising amount of money and energy... even after you’ve paid off the mortgage...
So, as you approach retirement... think about where you want to live... how you want to live... and whether it makes sense... both economically and for the lifestyle you want in retirement... to stay in your current home...
My last idea for you today if you’re looking to get your spending in order as you approach retirement... has to do with your adult children...
We all want to help our kids... and sometimes that involves spending money...
Thankfully... we don’t see too many instances of parents totally supporting their adult children financially... at least not on an ongoing basis...
But here’s what we do see a lot... we see clients in retirement who have done a terrific job saving and investing over the years... to the point where they become financially independent... that’s where you want to be when you retire after all..
Yet sometimes... these clients are afraid of enjoying the wealth they’ve accumulated...
They want to leave a sizable inheritance for their adult children... as part of their legacy...
Or they want to convert all of their traditional IRAs to Roth IRAs... for no other reason than so their kids won’t have to pay taxes when they inherit it...
And there’s nothing wrong with that... if that’s how you choose to spend your retirement savings... but be careful...
It’s one thing to do nice things for your family... or support them financially when you need it...
It’s another to put your own retirement at risk if you don’t have to... simply to make life easier for kids you’ve already raised...
Like they say on airplanes... put your own oxygen mask on first...
What’s the common denominator in all of these ideas? It’s not tightening your belt so much you can’t have fun when you retire...
It’s about being purposeful with your spending...
You don’t need a budget that tracks every penny... that feels like a prison...
What you need is a spending plan that reflects your values... and removes waste...
That means protecting the spending that matters most to you... travel... family... experiences... health... hobbies... generosity... the things that truly improve your life...
And the easiest way to do that is to get rid of expenses that are outdated... duplicative... automatic... or just plain sloppy...
So, as you head into retirement... get rid of those needless expenses... plug the spending leaks... lighten your ballast... and set sail for a long... healthy... happy... and financially secure... rest of your life...
Thanks for being with me today... I hope you got a few good ideas... and we’ll see you next time... on the Help Me Retire podcast...
Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC.
Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Brown Family Wealth Advisors is not a registered broker/dealer and is independent of Raymond James Financial Services.
Any opinions are those of Mike Brown and Brown Family Wealth Advisors and not necessarily those of Raymond James. This material is being provided for informational purposes only and is not a recommendation. There is no guarantee that these statements or opinions will prove to be correct. Investing involves risk, and you may incur a profit or a loss regardless of the strategy selected. Past performance is not indicative of future results. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
