Retirement is a New Lifestyle – Not a Vacation

Are you longing for large unstructured stretches of time to do what you want?  You can’t wait to spend all that free time once you’re retired.  Maybe you want to travel, read books, learn an instrument, take classes and meet new people – all on your own schedule.

When you’re not working 40 hours a week anymore, you suddenly have those hours available to spend money – just like you’re on vacation.

Typical retirement planning advice is to plan to replace 70 percent of your working income.  That’s because a lot of expenses should disappear when you reach retirement age. Some retirement experts, like Fred Vettese, say you need even less – not more that 50%.

However, some retirees are seeing an increase in spending – as high as 110 percent of pre-retirement spending, especially those between the ages of 60 and 70.

What Canadian retirees are doing with their time
Activity chart from WealthBar

You’ll probably want to check off those big-ticket items on your bucket list early on. But, just like when you’re on vacation, spending can be magnified.  There’s lots of free time and we fill it by going to places, doing things, and wining & dining along the way.

We want to indulge in interesting and new experiences.  And most of it is planned spending – vacations, hobbies, indulging our children and grandchildren.  

Plus, the long-lasting bull market has made retirees quite free with their spending. 

Most people can’t keep up that spending pace for their entire retirement without blowing a carefully planned budget.

Track your spending

If you track your spending, you always know where you are financially.  If you know your net worth you can calculate what percentage you are spending each year.  The rule of thumb is to keep your spending at 4 percent or less of your retirement savings.

Related:  Estimating Your Retirement Expenses

A good budget gives you a sense of control over your finances.  Make adjustments for your desired retirement activities and determine how you will fund them. You’ll be confident that your retirement lifestyle is affordable for the long term.

The bottom line

Live your retirement as a lifestyle instead of being in constant vacation mode.  That will give you resilience and improve the longevity of your savings.

Retirement is a work in progress.  While you may have done your homework, you may find you might have to do some tweaking.  You’re in charge.  You can decide what to change if something might be a better fit. 

Do you expect your retirement spending to be lower, higher, or the same as your current spending?

If you are already retired, did your spending increase along with all that new free time?

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2 Responses

  1. Gin says:

    Initially, our spending on home maintenance and renewal went up significantly. Non-critical maintenance and repairs didn’t receive attention on top of demanding work schedules. With more time in hand, these are now being addressed to avoid them becoming critical. Given the cost of the repairs and maintenance, the budget hasn’t stretched to discretionary renovations. Exception being a few minor items like new cushions, some new lights to improve lighting around the house, a portable aircon, and a few other bits and pieces to make the home more comfortable since we are spending more time at home.
    In a similar fashion, the repair and maintenance extended into doing the same for our bodies and health. Catching up with tests with some needed follow-up, and increased spending on dental.
    Now that a lot of this has been done, we are hoping our stretched budget for the past 2 years will get a bit of a reprieve.

    • Marie Engen says:

      Hi Gin. Thanks for your informative comment. It’s important to address those maintenance chores – house and self – early on as your budget allows. And it can avoid problems down the road when it could be even more expensive to deal with.

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