More About Finances
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Site lists made available by All Things Retired are for your convenience only, and contain links that will take you to other
sites. Please be aware that we are not responsible for the privacy practices of the sites we list, or of any sites other than All
Things Retired. We encourage our users to be aware of when they leave our Site and to read the privacy statements of each
and every web site that may collect their personally identifiable information.
Links to other websites or references to products, services or publications other than those of All Things Retired do not imply
the endorsement or approval of such websites, products, services or publication by All Things Retired
All Things Retired is not responsible in any manner for direct, indirect, special or consequential damages, howsoever caused,
arising out of use of this website, or the reliance on the information it contains.
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Feature Article Continued
Now let’s look at the other side of the ledger. What are your current expenditures, and how will
they change over time? Most financial advisors recommend using an amount equal to about 70%
of your pre-retirement expenses as a rule of thumb for estimating your post-retirement needs. Most
retired persons will tell you that they were surprised to find their expenses in retirement did not drop
as much as they assumed they would. When you stop and think about it, why should they? Just
retiring doesn't’ change anything. You need to change something, or your expenses will be pretty
much what they have been. Still have two cars? They still need insurance (and maybe loan
payments), maintenance and gas. Mortgage payments don’t go away just because you have
retired. They go away when you pay off the mortgage (but property taxes don’t). If you rent, the
rent doesn't go down unless you move to a lower rent residence. The point is, don’t assume
anything about expenses, sit down and figure them out in detail.
If you are computer literate at all, there are several good software programs that can be a big help
to you in the budgeting process. One of the best is Intuits' Quicken.. It will guide you through the
thought processes required to construct a fairly complete plan. It has the added bonus of being
able to track and report your actual income and expenses to compare to your budget. This is
crucial going forward, as a budget is only as good as your willingness and ability to live by it. You
want to know if you are staying on target, as the opportunity for a “do over” in this area is not likely.
If the thought of this whole budgeting task intimidates you, you might want to consider employing
the aid of a professional financial planner. You don’t have to be “rich” to have one, and ignoring
the need for a comprehensive financial budget/plan is not a smart alternative. A word of advice on
this point; be careful when using “no fee” planners. They make their living from commissions on
products (insurance, investment funds, annuities, etc) that they sell to clients. The vast majority are
totally honest, but let's face it, there is a built in conflict of interest there. At the end of the day, they
make their living selling things to you, not necessarily giving advice that is in your best interest.
They have to sell you something, or they don’t get paid. It's better to look for an advisor who
charges you a fee only for his/her advice. (some do both). "Fee only" advisors may seem more
expensive because the fee is usually required in the early upfront stages of the process. However,
the “no fee” alternative can be a lot more expensive if you take into account the cost of up front
“loads” and other hidden fees on the investment products and insurance policies they will sell you.
(Boy are we going to hear from some “no fee” advisors!)
In any case, what you need to end up with is a forward looking budget/plan that accurately
reflects your financial position. Once you have this you can work to make the changes needed to
ensure your long term financial security. Without this, it is not possible to make informed decisions
about other key lifestyle choices, like where to live and how much disposable income you can count
on. You need to know if you can support your leisure time aspirations, or perhaps need to work
after retirement to make them happen.
For additional help in creating your budget go to
they change over time? Most financial advisors recommend using an amount equal to about 70%
of your pre-retirement expenses as a rule of thumb for estimating your post-retirement needs. Most
retired persons will tell you that they were surprised to find their expenses in retirement did not drop
as much as they assumed they would. When you stop and think about it, why should they? Just
retiring doesn't’ change anything. You need to change something, or your expenses will be pretty
much what they have been. Still have two cars? They still need insurance (and maybe loan
payments), maintenance and gas. Mortgage payments don’t go away just because you have
retired. They go away when you pay off the mortgage (but property taxes don’t). If you rent, the
rent doesn't go down unless you move to a lower rent residence. The point is, don’t assume
anything about expenses, sit down and figure them out in detail.
If you are computer literate at all, there are several good software programs that can be a big help
to you in the budgeting process. One of the best is Intuits' Quicken.. It will guide you through the
thought processes required to construct a fairly complete plan. It has the added bonus of being
able to track and report your actual income and expenses to compare to your budget. This is
crucial going forward, as a budget is only as good as your willingness and ability to live by it. You
want to know if you are staying on target, as the opportunity for a “do over” in this area is not likely.
If the thought of this whole budgeting task intimidates you, you might want to consider employing
the aid of a professional financial planner. You don’t have to be “rich” to have one, and ignoring
the need for a comprehensive financial budget/plan is not a smart alternative. A word of advice on
this point; be careful when using “no fee” planners. They make their living from commissions on
products (insurance, investment funds, annuities, etc) that they sell to clients. The vast majority are
totally honest, but let's face it, there is a built in conflict of interest there. At the end of the day, they
make their living selling things to you, not necessarily giving advice that is in your best interest.
They have to sell you something, or they don’t get paid. It's better to look for an advisor who
charges you a fee only for his/her advice. (some do both). "Fee only" advisors may seem more
expensive because the fee is usually required in the early upfront stages of the process. However,
the “no fee” alternative can be a lot more expensive if you take into account the cost of up front
“loads” and other hidden fees on the investment products and insurance policies they will sell you.
(Boy are we going to hear from some “no fee” advisors!)
In any case, what you need to end up with is a forward looking budget/plan that accurately
reflects your financial position. Once you have this you can work to make the changes needed to
ensure your long term financial security. Without this, it is not possible to make informed decisions
about other key lifestyle choices, like where to live and how much disposable income you can count
on. You need to know if you can support your leisure time aspirations, or perhaps need to work
after retirement to make them happen.
For additional help in creating your budget go to
