There's No Magic Retirement Number

Hello friends! Welcome to Notes from the Road, where we crack the code on your 50s and beyond. In this issue:

• Getting a handle on expenses in retirement.

• The hidden danger of bifocals.

• Learning about aging from movies.

• Aging in place is not as great as you think.

• How and when to spend your retirement savings.

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In our house we like to play a fun game called “When should we retire?”

When we were younger and retirement was a distant idea, it seemed easy. It was about your age. You retired at 65 or whatever milestone birthday suited you.

But as we got older we heard that the answer is not in your age, but in your number. Once you achieve that number, you’re ready, whether you’re 45 or 75!

There’s lots of information out there to help you find your number. A simple search on YouTube gets you dozens of videos: Can You Retire with 1 Million Dollars? or Retire with $500,000: How It Works or How’s Life Different (better?). Retiring With $500k, $1M, or $5M.

But when you sit down to watch these videos, you’re flying blind if you don’t know exactly how much money you’re spending every month. You won’t know if you can retire with 300K, or 500K, or 1 million dollars or a billion dollars unless you know THAT number.

Am I the only one who doesn’t know that number? 🙄

In the heady days of your thirties and forties, pursuing your career, working long hours, having babies, raising children, caring for parents, and all the rest, maybe budgeting fell by the wayside. But now it’s more important than ever to to dust off Excel and get into the nitty gritty details.

The truth is, you can’t really plan for retirement until you go through this exercise. You need to figure out not only what you’re spending now, but what you’ll spend in retirement. Will you need a new car? Home improvements? What about vacations?

So we’re on a long delayed search to find where every penny is spent. We reviewed our statements and set up a spreadsheet with spending categories. It took a few months to ferret out all of the little holes where money drains out of our pocket (spoiler alert: streaming services and subscriptions), but we have a good baseline now.

This exercise has also led one of us (ahem) down a rabbit hole of budgeting tools. This is a work in progress, but I really like How to Create a Retirement Budget (with a free Excel template!) by Geoffrey Schmidt at his Holy Schimdt! YouTube channel. I’ll be experimenting with this in months to come.

If you’re like me and not totally on top of your financial outflows, this exercise is very much worth it. It’s painful at first, but quickly becomes rewarding and gives you confidence about your financial future.

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How (And When) To Spend Your Retirement Savings

Wondering about what it’s like when you stop saving for retirement and start spending in retirement? That transition can be a little disorienting. As it turns out, retirement is not one single thing. It changes as you get older. Plan on having Go-Go years, Slow-Go years, and No-Go years…and spending differently in each. This video breaks it down.

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