Is paved with good intentions. In that spirit is this post’s picture:
HAUS-RUCKER-CO, Environment Transformer, 1968. Walker Art Center, Minneapolis.
Apologies dear readers for the long gap (since September (at least it was late-September.) Excuses abound – work, election campaigning, colds. Hopefully we’re back on track and this post will be valuable and enjoyable.
Did we do as we said?
First off, I was gratified that The Balance again listed the budget spreadsheet which I started using last year as one of their best. It’s the Google Sheets ‘Best-Personal-Budget-Planner’ (when used, it says Personal-Budget-Planner-Extended.) The spreadsheet developer named it, not me. I converted it to Excel and have been pretty happy with it.
How did we do with using a budget spreadsheet? I give us an A. As far as use goes, we entered virtually every expense into the appropriate category on the correct date. (Yes, I would like a receipt for my McDonald’s Breakfast Burrito, please. $1.61 to ‘Dining out’.) We entered our data in a timely manner, usually the same week. We reviewed the budget v. actuals together at least every other month.
Great, you say. You used the spreadsheet. Tell us how the budget came out! Good question. Hindsight is always 20-20, so I should have defined my success criteria last year before I started this. I didn’t, but here are the results:
-We reviewed past bills and budgeted pretty accurately. We included mortgage, property tax, homeowners, utilities, life insurance, travel, car payment, taxes, gifts, groceries, gas, subscriptions (Amazon Prime, Netflix), Uber (we only have one car, so Uber is our backup), medical, medications, and personal care (shampoo, health club!). The ‘Best-Personal-Budget-Planner’ developer did pretty good on categories so the spreadsheet required few changes (they are on a template page, so you don’t need to know how to modify spreadsheet ‘code’.)
-We used the retirement budget and came in slightly under budget! The budget was accurate and we adhered to it. Big win because that means with continued good fortune we should not have bad retirement surprises! (Knock on wood.) The expense side of the budget was pretty well documented in my retirement income plan which helped with the initial load of the spreadsheet. The income side is also well documented and that was the base for what we could spend.
-We did find some areas that needed refinement which will push us closer to the retirement income spending ceiling next year. I under-budgeted for home maintenance expenses. Mrs. No Surprises Retirement had a surgery that exceeded the budget for medical, but that should not happen every year.
Many people have proven that written plans go a long way toward making an endeavor successful and this one was no exception. I think we watched our spending effectively and we are pleased with the results.
I have already updated the spreadsheet into a 2019 version that is more tuned to our expenses. We seem to be reasonably well organized to avoid bad retirement surprises (but I am still working.)
Why bother with written retirement income plans and budgets? Well, as you know, the whole focus of this blog is helping you avoid bad retirement surprises.
One bad surprise is finding out that you’re spending more than you expected! A recent study from Global Atlantic found that almost two in five (39%) retirees are spending more than they expected. I suspect that these retirees may not have set up a written and researched budget, ideally pre-retirement. Paraphrasing Andrew Tobias, for some people life is 15% more expensive. Something to consider here is what level of emergency fund you feel comfortable with.
A 2018 study from The Transamerica Center for Retirement Studies found that only ten percent have a written retirement strategy! They noted, “Fifty-four percent of retirees currently have a retirement strategy – but only 10 percent have it in writing, while 44 percent have a plan but it is not written down.” 46 percent did not have a retirement strategy!
Wow, only 10 percent have a written strategy. When I read ‘written strategy’, I think Retirement Income Plan and a retirement budget based on what your really plan to spend. Without those two, you might have a bad surprises retirement!
Budgeted spending must be equal to or less than the retirement income after taxes. If it is not, you need to alter the plan to either spend less or increase income (potentially work part time in retirement.)
I’m a big fan of written plans, preferably reviewed by a knowledgeable critic. I did mine as DIY (do it yourself), but I have quite a bit of background in financial planning. You may want to DIY or check with your trusted financial professional if you don’t have a plan. You can ask them for samples and compare to the RIP (retirement income plan) here.
Something to look forward to
On the plus side, you will likely enjoy retirement. The Transamerica Center for Retirement Studies study found, “Four in Ten Retirees Indicate Enjoyment of Life Has Increased. Since entering retirement, 40 percent of retirees indicate that their enjoyment of life has “increased,” 39 percent say it has “stayed the same.” Nineteen percent of retirees say their enjoyment of life has “decreased” since they retired.”
And the survey says!
I set up an anonymous survey on retirement plans and budgets, so let’s see how our readers are doing! Here is the link to the survey which is completely voluntary and anonymous. I will publish the results in one of the next couple of blog posts.
Just do it
As Nike would say, just do it. My budget and plans have been worked on and revised over about 6 years. Your plan and budget may not be perfect at first, but you’ll be on the way. Budgeting and tracking takes practice, but it all starts with doing it. Good luck!
Actions you can take include:
If you’re part of the 90% without a written retirement income plan, work on one. Maybe set a goal to have a draft by January 15th.
Choose and use a budget spreadsheet and follow a written budget. Compare to your forecast retirement income and see if you’ll be safe from a bad retirement surprise.
And if you have not seen the “Why you should read this blog…WIIFY” post, it’s here
Questions, comments, or suggestions for retirement surprise areas you want to know more about?
-Leave a comment
-Use ‘Contact’, above, to send an email.