Financial Planner: Options to stop overspending during retirement
We've been having Tim do a short series on "Overspending During Retirement".
We've already talked about how this problem is a tough one to deal with, but today we are going to give people the 3 general options that they have to overcome this spending addiction, and then how to maintain it.
First, we have already mentioned the 3 main options.
1) Adjust your retirement goals and expectations. Like any other budget, a retirement budget needs to written down and followed. Allow for the necessities, and then, if you have extra money, budget for your wants. If you want a boat, make sure it fits in the budget, or maybe get a smaller boat. If you want to travel, make sure it fits in the budget. And, like an other living skill, a spending plan takes practice for those who have never done it before. One way of doing this is to start PRIOR to retirement. Figure out a budget and learn to live within it. Try it for several months prior to retirement and then you will get an idea of how realistic that spending plan may be. You may wind up saying "What was I thinking? I cannot retire yet", or you may find out that you are completely prepared for that special day.
2) If you find out that you cannot live with that new "spending plan", you may need to re-think your retirement plans. You may need to work longer. If you do, you should probably look at several things. First, think about your health. Get a basic checkup to be sure you are healthy enough to continue. Think about nutrition and exercise. Next, consider getting a part time job outside of your regular job. Not only will this create a little more income, but it really gives you a good sense of what is "out there" if you decide to quit your full time job and plan to work just part time during retirement. Don't be surprised at how little you may be able to make in that part time job, though.
3) Stop overspending. Sounds easy, huh? Not really. This may be where you really need some help. Work with someone, like a financial planner or a budget expert, to formulate a spending plan that will work in your own situation. Believe it or not, you may even need to visit with a counselor. Maybe even do a chart of your budget with your expenditures written in red. Having a visual depiction of the impact of your overspending may help you understand how far you have deviated from your plan. Don't be afraid to ask for help from someone.
Finally, Make yourself accountable to someone. If you have to face someone every week and fess up to overspending habits, it may just give you that extra incentive to stop. Then, eventually, it may just become second nature to you.
Having an expert work with you may give you the confidence and the incentive you really need to make this all happen.