Pre-Post retirement Budgeting

[MattB]

I’m amazed at how some people think rental property will just be passive income. The last thing I want to do in retirement is deal with renters and maintenance, that can turn into a royal pain real quick. It’s gotten even worse in some states as they give more rights to renters and squatters than the property owner.

I’ll be taking my chances with the equity investment approach.

The key to rentals IMO is having a good property manager. We have a few rentals and I bet I spend on average 15 minutes a month on them. It can be much more time intensive when tenants turn over but even then it is not more than a few hours. As you suggested, the quality of your tenants is important.

 

[Holeintheheadgang]

Write your known current costs per month on a piece of paper. This will emblazon in your head what you have to spend. Subtract from your income and if you're like me you will be pleasantly surprised by the difference.
Then you will start wondering where all the money is going.

Oh ya, it was never explained to me that when you retire is when the work actually begins.
But on your schedule not a work schedule.

When you start hearing that big clock ticking down and your work schedule is in the way of doing what you want to do you will know it is time.

 

[flathead#2]

The real questions (and problems) come into play when our dollar crashes, and it will crash.

Unless leadership finds the off ramp real soon, we're going off the cliff.

 

[Crusader]

I will retire at the end of August this year; most recently, 15 years of fed government (AF civilian) preceded by 20 years in private sector. Wife of 35 years and I have always lived WAY below our means; I was blessed to be raised in a frugal household and it caught on with me. Wife didn't have that upbringing but she quickly adapted to it when we married. She was a stay at home mom until our kids got into middle school, then held some lower paying jobs since then. She retired last year from full time work, and last week from part-time. We never really had a budget, it just sort of came naturally. I'm in the science field, very analytical, and have been planning out our retirement for a number of years. I've utilized/incorporated a number of the processes and ways to go about things that have already been mentioned in this thread. One that I really agree with is you have to know what you spend; I have tracked all of our spending for the last three years. I then built in additional spending in retirement (more travel, grandkids, etc.). Retirement outlook seems good, between my gov pension and two SS incomes, we shouldn't have to touch our 401k's and IRAs, though when we're older we'll have to take RMDs from our non-Roth accounts. My challenge will be to adjust away from frugality and spend some of what we've built up, the rewards for decades of conservative living below our means. Looking forward to that challenge!

 

[rayporter]

. My challenge will be to adjust away from frugality and spend some of what we've built up, the rewards for decades of conservative living below our means. Looking forward to that challenge!

this was harder than i thought.

 

[DmrbigEshotT]

I would trust the financial advisor you’re working with as they should be fully aware of your situation and be giving you guidance based on such.


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[Novahunter]

The key to rentals IMO is having a good property manager. We have a few rentals and I bet I spend on average 15 minutes a month in them. It can be much more time intensive when tenants turn over but even then it is not more than a few hours. As you suggested, the quality of your tenants is important.

We do all our own rental management. Since we spend enough hours each year managing it, our rentals qualify as an "enterprise" which gives significant tax advantages.

Requiring background checks, direct deposits, and using the turbotenant app to manage the rental enterprise has made things much easier, and all those things help us keep our quality of tenants high.

 

[Crusader]

this was harder than i thought.

I get it, I know it will be hard for me. It totally goes against my grain and lifestyle thinking. Have to force myself to loosen up. It's not like my wife and I have been/are stingy; we helped put two daughters through college and graduate schools, paid for their weddings, give 10-12% of our income each year to church, outreach, missions, other charities, etc. (we believe in the Biblical concepts of tithing and you reap what you sow). Just never really spent much on ourselves; when we do, it's always used stuff (vehicles, gear, etc). And we do want to leave a lot for our kids and grandkids. But in the meantime, we'll have to learn to treat ourselves!

 

[cnelk]

I learned that as you get older and retire from a career, your world definitely gets smaller.

You have less friends or social interaction that you had from hustle-bustle of work, typically your expenses are less, and you are content with doing stuff around the place or maybe even volunteering or a part-time job.

Even if you are on Social Security, you can make a certain amount before your are penalized [before full retirement age] so that is another plus. Once your are full retirement age, you can make as much as you want.

Bottom line is, retirement means different things to different people.
Some want to sit in a rocking chair with a cardigan sweater all day and others want to stay busy.

No problem with ether one

 

[jimh406]

After Covid, I don't think anyone with a working brain should trust an "expert" including financial advisors unless you are extremely lazy.

There are a lot of videos on YouTube that describe SS scenarios. It would have been better to figure it out before your wife started drawing, but that might not be an issue.

401K/IRA scenarios are different as well. You can spend way more than 4% if you make way more than 4%. Some of the standard "rules" like paying off your house don't make any sense if you actually make money on investments.

Bottom line. Don't expect internet or financial advisors to figure it all out for you. Do think about what you will do if you run out of money after retirement.

 

[5MilesBack]

This is fear stuff. If you try to structure your life around it you'll be miserable and unprepared for the same-old same-oldness of life.

Just as long as you're prepared for it. Then it won't take you by surprise when it does happen. Hope for the best but plan for the worst.

 

[SDHNTR]

Since the subject of budgeting is discussed, (I did not want to hijack hunting budget thread) what app/tool would be a good choice leading up to (and in) retirement?

Background. I/we currently do NOT have a budget. Wife is retired (collecting SS), I am 6-8 years from retirement. (Yes she is a cougar!) Kids are out of the house, mortgage will be paid off in 4 years. And one vehicle payment. I have always been the major breadwinner. (And my job adequately compensates me)

My plan is to identify all expenses (and income) for a 2+ year time period. Biggest fear is "running out of money". Our retirement holdings are currently in decent shape. (Per financial "guy") With 6-8 years of additional contributions and growth, I "think" we will be fine. But I would like to KNOW that we are fine. (And only way to do this, IMHO is to start tracking current expenses.

Thoughts?

Why do you doubt your “financial guy”? Has he not shown you a financial plan? That would show you definitively whether you are fine or not. If you want to “know” and not “think”, that’s exactly what a financial plan can do for you. And if you are not fine, it will identify/quantify exactly what you need to do to get there.

 

[SDHNTR]

I’m amazed at how some people think rental property will just be passive income. The last thing I want to do in retirement is deal with renters and maintenance, that can turn into a royal pain real quick. It’s gotten even worse in some states as they give more rights to renters and squatters than the property owner.

I’ll be taking my chances with the equity investment approach.

This, X 100! Amen.

 

[Rich M]

Just as long as you're prepared for it. Then it won't take you by surprise when it does happen. Hope for the best but plan for the worst.

I knew a bunch of folks telling everyone to cash out of investments, buy gold and silver….

Funny thing was those hollering the loudest did not and some folks got hurt financially. Was good to see, learned a lot.

For the dollar to collapse, the entire country has to fail, including the wealthy and they dont want to fail.

 

[MattB]

Just as long as you're prepared for it. Then it won't take you by surprise when it does happen. Hope for the best but plan for the worst.

The problem is, some people have a completely irrational perspective on “worst”.

 

[bozeman]

Make sure your bunker is fully stocked for 10 years before you even 'think' about retirement.

All joking aside: as others have stated, use a spreadsheet and track 'all' spending......the small $$ add up quickly. Its amazing how much waste you can identify with just tracking for a few months. Helps prepare for how much you actually spend vs how much you think you spend.

 

[5MilesBack]

The problem is, some people have a completely irrational perspective on “worst”.

And some people live with their head in the sand. It's only irrational to some until it actually happens. And even though reality in recent years seems about as irrational as it could ever get, that doesn't change the fact that "the irrational" is actually happening. If someone 40 years ago had told me what we would be experiencing in society these days, I would have thought they were loony.

The only way we get to a cashless society, one-world currency, and one-world government is with the U.S. Dollar collapsing.......IMO.

 

[Ridge Runner]

All this talk about retirement has me dreaming. Working towards pulling the plug in 3.5 yrs at 60. My challenge is talking my wife into me retiring. She has a job she loves and will qualify for full pension in 11 years (Salary for life). Even if she partial qualifies (6 more years) we will have more than enough to retire. Working to get house paid off before I pull the plug although, with the interest rate we have (2.3%) paying off the house may not be the best financial decision. I'll probably find a side gig after retirement just to pass the time. I watched my dad retire and die at 64 and don't want to be in that boat.

How of you that retired with your spouse still working navigated that dynamic? Just can't see myself doing what I'm doing now for 11 more years while I wait on her. Needless to say she is against me retiring before she does.

 

[5MilesBack]

I knew a bunch of folks telling everyone to cash out of investments, buy gold and silver….

There's nothing wrong with diversification in investments. I don't believe in the all or nothing approach. But I also believe that everyone should own at least some amount of precious metals in their portfolio. I retired quite awhile ago and I'm 58. But I've also been investing since I was 12.

Back in March 2020 I bought a bunch of the SLV silver ETF near the lows just above $11/share. There were guys in that stock market thread saying I was crazy for buying silver. Well, it was up 150% in just 5 months. I use those ETF's for easily buying and selling quickly.

 

[Revolting Peasant]

All this talk about retirement has me dreaming. Working towards pulling the plug in 3.5 yrs at 60. My challenge is talking my wife into me retiring. She has a job she loves and will qualify for full pension in 11 years (Salary for life). Even if she partial qualifies (6 more years) we will have more than enough to retire. Working to get house paid off before I pull the plug although, with the interest rate we have (2.3%) paying off the house may not be the best financial decision. I'll probably find a side gig after retirement just to pass the time. I watched my dad retire and die at 64 and don't want to be in that boat.

How of you that retired with your spouse still working navigated that dynamic? Just can't see myself doing what I'm doing now for 11 more years while I wait on her. Needless to say she is against me retiring before she does.

I retired first. It was awesome. Had to put my foot down right away. There was not a honey do list for 50 hours a week. She sees you retired and relaxed, she will not be too far behind. If she really loves her job, let her work. Her dream. Let her live it. You only get one shot at life. Don’t stay at work too long if you are ready. Just be realistic in your planning and expectations, self start activity level. And stay busy. But not too busy.

Read a medical study many years ago. Short version, every year you work past 50 potentially takes two off the other end. Stuck with me. I retired at 57. 50 wasn’t realistic in my situation. Life is good.