A man with a planSaving | August 30, 2010 at 1:23 am
Retirement is a great time to just be you and spend money on the things you like to do whenever you want to do it. An acquaintance of mine certainly seems to believe so strongly and he shows this quite amply in the way he spends money at times (in my eyes most certainly) in meaningless ways. A lot of his money goes towards maintaining and restoring antique cars, an expensive hobby that takes a giant chunk out of anyone’s savings. Hobbies and interests such as this can take its toll on your retirement portfolio, so be aware of this when planning for your retirement.
Let’s carry on with the example of the petrol-head, shall we? If he was making $15000 month prior to retirement, a good 60 to 70 percent of his income would have been going towards meeting his lifestyle needs, a further 20% or so towards taxes and the rest towards his savings. So there’s not a whole lot in there for him to look forward to. It means he would have to bank on collecting benefits from social security on a monthly basis and save up enough to be able to withdraw enough per month to fund his lifestyle and interests. It’s really a case of it being very touch and go, and I don’t even know if he has a mortgage to take care of or not!
Does he have that much money on hand to take care of his needs? If he does, then fair play to him, he’s planned things out very well. If he (like most retirees) has a mortgage he will almost certainly struggle to maintain his lifestyle and expensive hobby that will undoubtedly be a drain on resources. And if he is working himself into a corner, it will take a lot of concerned friends and relatives to get through to him and convince him that he is on the highway to nowhere. I think it’s important to have perfect harmony in having the right amount of money saved up to see to your retirement because one-off expenses like those involved in car restoration projects come about every month or every so often.
People run out of money all the time and it is very hard to impose any sense of austerity on yourself, but this really can be difference between a comfortable retirement and having to tighten your belt every now and then. The need then is to come up with a workable plan that saves you money and then some more to indulge that hobby (car restoration is only an example). The sooner you can work out how to juggle your lifestyle and savings, the better.