Your expenses do not just represent your spending, they represent who you are. Are you the type of person who only eats out once or twice a week, or are you the type of person who takes joy in paying for your entire extended family when you dine out? Do you purchase expensive items at full retail, or do you wait for them to go on sale? These may seem like comparatively small matters, but everything you do impacts your life expenses in retirement.
Here at Miramontes Capital, clients occasionally ask whether we advocate a lifestyle change after retiring. It depends on many factors, but the biggest lifestyle change we might advocate is to be doubly aware of your expenses, and if you are not retired yet, it begins now. Those who are a bit lax in managing their finances tend to be more likely to feel the pinch when funds become a fixed amount.
We had our first meeting with Kelly about one year before her scheduled retirement, after which she disclosed that she had 16 credit cards from various retailers. Kelly’s greatest fear was that this debt might make it impossible for her to enjoy her retirement, and that it would prevent her from passing anything on to her heirs. We had work to do with regards to her life expenses in retirement, and we started out by assuring her that she had options. Kelly was able to sell her investment property, which was experiencing a negative cash flow. This immediately put us on track to paying off the debt. In addition, we incorporated a structure to her plans so that she could afford long term care and life insurance. With this plan in place, she has been living life the way she always wanted.
This story illustrates how important budgeting can be, and the potential consequences of living outside a budget. Budgeting is comparatively simple, and undeniably healthy for all of us–but always a challenge to actually do. A Gallup Poll put the percentage of Americans who do not budget at all at 68%.
There is a wealth of good budgeting websites and apps that can assist you in organizing your finances. One that is firmly established and growing in popularity is mint.com, which uses your account information to automatically generate a wealth of reports, tips, and suggestions to assist you in staying on track. You can also find other budgeting resources at www.miramontescapital.com.
Below are a few signs that indicate your budgeting system needs to be revisited:
- You have a 401(k) through your job with an employer match offer, but you feel you cannot contribute the maximum.
- There is no way for you to easily total your fixed monthly expenses.
- You have tried more than once to accurately budget your variable expenses, but were not able to stick to the plan.
- You do not think of the amount you and your partner make until you have to.
- Your budgeting or savings goals are erratic or they change too often.
- You are spending more than you are making.
For more help regarding your life expenses in retirement, contact Miramontes Capital.
Schedule an in office or over the phone consultation to discuss how Miramontes Capital can help you with your new beginning through retirement planning.
Miramontes Capital is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Miramontes Capital and its representatives are properly licensed or exempt from licensure. This video is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Miramontes Capital unless a client service agreement is in place. Miramontes Capital is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Miramontes Capital and its representatives are properly licensed or exempt from licensure. This video is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Miramontes Capital unless a client service agreement is in place.