Category Archives: Budgeting

Ditch The FIRE Movement? If Dissatisfied Then You’re Doing It Wrong

Budgeting, Frugal Living, Retirement Plan, , ,

It’s one thing to be a conforming consumer. Blind to the trappings of debt and undisciplined spending. Least forget the unending cycle of unrewarding work needed to support it. But it’s another thing when folks walk away from FIRE dissatisfied after they’ve been awakened to the possibilities of financial independence and maybe even an early retirement. If you’re dissatisfied and have decided to ditch the FIRE movement, then maybe you’re doing it wrong. 

Ditch The FIRE Movement? If Dissatisfied Then You’re Doing It Wrong

Photo by Free To Use Sounds on Unsplash

There’s a lot of impressive FIRE stories to be found. 

The FIRE pitch is seductive. A glorious freedom lifestyle awaits all who dare challenge society’s consumption, employment, and retirement norms. We can be inspired by other’s FIRE success. There are some amazing people who are in their 20s, 30s, and 40s saving as much as 70% of their incomes to build a portfolio that’s at least 25 times their annual lifestyle expenses. 

They hit their numbers and retire early to live off their chosen safe withdrawal rate doing whatever their passions direct them to do. Many even taking on side hustles or other paid opportunities aligned with their interests. After all, a FIRE Retirement is the absence of needing to work, not the absence of working. It’s easy to fall in love with matching their success formula. 

Stop Keeping Up With The Jones’s and FIRE’s Most Famous

FIRE walkers fully accept the concept of not wasting time and money trying to keep up with the Jones’s. But sometimes that concept is ignored when it comes to creating a FIRE strategy. Especially if trying to reach the common FIRE before age 50 goal. 

The problem is that not everyone can match what some of FIRE’s most famous have done in a long-term sustainable manner. Either because of income or frugality. It’s clear that a plan that goes too soft will mean little seen as financial progress. But pursuing an aggressive FIRE plan based solely on the success of our FIRE superheroes can be a recipe for disillusionment. Go too far for too long and feelings of a living a deprived life creep in. The thought of living that way for the rest of one’s life can be daunting. 

Don’t Ditch The FIRE Movement. If you don’t like the taste, just change your recipe

There are no FIRE rules but you can still be approaching FIRE the wrong way. Not wrong as far as anyone else is concerned, there are no FIRE police. Just wrong as far as how your approach to FIRE impacts you. I came across a post by Ben Le Fort that lists the Ten Commandments of FIRE. Personally I prefer to use Tenets over Commandments but it captures in detail the following for anyone who wants FIRE:

The 10 Commandments of FIRE
  1. Thou Shalt Calculate your Savings Rate
  2. Thou Shalt Track thy Expenses & Create a Budget.
  3. Thou Shalt live a Frugal Life
  4. Maximize your Income
  5. Thou Shalt Not fall Victim to Lifestyle Inflation
  6. Clear your Debts
  7. Thou Shalt max out your tax-Sheltered Accounts
  8. Minimize your Investment Fees
  9. Thou Shalt not try to time the Market
  10. Talk About Money

There’s nothing pushing FIRE walkers to unsustainable extremes other than themselves

These FIRE tenets are not extreme unsustainable principles. But it’s easy to push too hard when being fueled by not only what we see others have done, but also the intoxicating thrill of watching the snowball effect destroy debt and grow wealth. However, we must logically define what we can realistically support and want for the long-term. Our limits in income and frugality need to be leveraged to our full advantage. But that must also come with the goal of living a happy life. 

From the stories I read of folks who decide to ditch the FIRE movement, I see in their complaints that everything they did was concentrated on numbers. They lamented cutting and living without things that brought them joy. Their plan left out that very personal component of a happy and enjoyable life of which only we can test and measure.

Create a plan that allows you to still enjoy the ride

Forget about having a take no prisoners plan. 

FIRE includes making lifestyle choices to optimize our savings rate. We decide what brings value to our life and cut the waste. Figuring that out isn’t always clear. We should push hard against our frugal thresholds without overly breaking them because it leads to feeling like we are living a deprived life. 

I know from experience that I won’t always know what that frugal threshold is until I break it. Then it’s time to adjust and back off a little until the real threshold is revealed. 

The idea is to create a sustainable lifestyle for the long-term that we want to live with now and after we ditch the rat race. Some of us aren’t happy or ready for a life where we never go to a coffee shop, out for a meal, attend a concert, or hit a movie. We should have a plan that allows for the little things we enjoy doing, but done in a thought out balanced way. Constantly test your frugality thresholds. 

FIRE and career can be worked on at the same time.

It’s OK to enjoy and even love what you do for income. Our jobs are key to reaching FIRE. Make decisions that best leverages your personal finances, career moves, and your life’s happiness when pursuing FIRE. We should be driven to improve our career prospects but don’t let numbers alone drive you. Watching a growing portfolio will not make you happy if you hate your budget and/or job.

Stop comparing and trying to keep up with FIRE’s most famous

Sometimes it seems like there’s a race to see who can retire the youngest or spend the least. Extreme stories are amazing and inspirational. But those stories aren’t going to be a one size fits all FIRE solution. Instead they should inspire ideas that can be used in a sustainable way for your own plan. 

We all have unique parameters to work around from income and frugal thresholds to the cost of where we live and family size. You can’t buy back years of regret, for either going too soft or too hard in your FIRE plan. Find your own sweet spot.

Create a FIRE Optimized Lifestyle You Look Forward to Living

I’m no certified expert, just someone who retired early at age 51 nearly a decade ago with an ordinary FIRE story. We did use frugal living to boost our savings rate. Over my 10 year early retirement plan we cut waste and tweaked our budget. We kept the things we valued that added to our happiness. In some cases we found that some things we cut was actually worth paying for and brought them back. Through it all we created a smart frugal and balanced lifestyle that got us the increased savings rate to retire early while still living the lifestyle we wanted to live. Both during the FIRE journey and now in early retirement. 

If in your FIRE journey you have apprehension and concern of forever living a deprived life by pursuing FIRE, then you’re just doing it wrong. Instead of deciding to ditch the FIRE movement, make necessary tweaks when feelings of austerity and deprivation hit. Always make sure that any tweaks are well thought out so that they don’t overly undercut your savings rate. For most of my tweaks it was just a matter of using sometimes instead of never or always to find the right balance. 

FIRE Is A Worthy Goal 

Even if you can’t win a race for the earliest FIRE age, doing the best possible for you is always financially better than doing nothing. Your Future You will certainly appreciate it.

My Early Retirement Spending Miscalculation, It’s Less Than Expected

Budgeting, Early Retirement Lifestyle, Retirement Plan, ,

I was looking at my retirement budget calculations. Just a quick glance at the planned long-term numbers I used pre-retirement to ditch the rat race at the age of 51 on December 17, 2009. I’m happy to see that after 9 years of monthly retirement budget tracking I made an early retirement spending miscalculation. Happy because it’s in my favor.

Overestimating early retirement spending is certainly a good thing. When we plan for retirement we have to figure out how much retirement income we need. It comes down to estimating what our retirement budgetary needs will be and applying inflation to the equation. To get our starting number we guess what costs will go up and what costs will go down once we dance our way out of the workplace. But it’s all an educated guess. We won’t know until we are actually living our desired retirement lifestyle and the real inflation rate is revealed down the road.

My Early Retirement Spending Miscalculation, It’s Less Than Expected

Photo by Andre Hunter on Unsplash

It’s Easy To Make A Retirement Spending Miscalculation

The default advice is you’ll need 70% to 80% of your salary in retirement. That didn’t make sense to me as I was saving a high percentage of my income for retirement. I also expected to pay less taxes. I took the approach that I needed 100% of my pre-retirement frugal living budget minus estimated savings of work related costs like commuting, clothes, and the alcohol I had depended on to counter work induced stress. Then I added 10% to cover my tax obligations. That final estimated figure was far less than using the salary based calculation.

Once I settled on the budget amount I then applied a reasonable yearly inflation factor of 3%. That is except for healthcare. I pulled that amount aside and applied a 6% inflation factor against it to get a closer estimate. Running the numbers through a retirement calculator and coming up with good results is the green light to take the leap.  

The high level retirement spending miscalculations –  

My early retirement spending reality is that healthcare went way up over that 6% inflation amount each year while some others were less than the 3% I used. Some things I initially budgeted for have even disappeared. That’s because things change as we live and experience retirement doing the things we want to do. We settle into an entirely new way of living and our taste for certain things changes over time. Here’s some of my early retirement spending findings.

Healthcare – Medical Insurance

Nobody should be surprised that this went way higher than inflation for everything else. It’s my biggest retirement spending budgetary item and pre-retirement miscalculation. When I retired in December 2009 my retirement health insurance benefit cost $476 a month. For 2018 it was $1,064 and in 2019 it will rise to $1,340. Ouch! The difference between 2010 and 2018 is 123%. That’s a huge healthcare cost increase over 9 years. It should be easy to see how this one will skew anyone’s retirement spending calculations.

I thought doubling to 6% would be high enough when I separately calculated inflation costs for this item from everything else. I figured it was a reasonably obscene inflation percentage to make sure this expense item was covered. The reality is it should have been calculated using a 12% inflation rate. Aside from the company killing this retirement benefit (as they occasionally threaten) and our going on ACA if it still exists, I see little relief from this until our medicare years. I have adjusted future budget projections to reflect that realization.

Cable TV and Entertainment

When I retired we had a basic cable plan. That was our family’s frugal living compromise. Our retired parents all said with more time in retirement you will want to have a good paid TV package. Thinking our basic cable plan was plenty, I included it in our retirement spending calculation. When I retired my cable cost $35. Over the first 6 years of my retirement the same cable service slowly climbed to $92 a month with all their higher channel and fee increases. That increase was well above the 3% inflation rate I used.

We found in our retirement the opposite of our parents retirement experience. We were satisfied with local TV viewing and really only watched a handful of cable channels. It didn’t justify the cost. The nationwide analog to digital TV transmission upgrade and new antenna designs made cutting the cord easy to do. Streaming development also made paid cable or satellite service an easy retirement cost to eliminate.

We have also eliminated other entertainment cost.

We’ve started using our library where DVDs are free to check out. We also connected to our community’s event online calendars to get event email notifications and have enjoyed free concerts near us. Having time also allows us to go to the movie theater or other venues during off hours at a discount.

Retirement brings more spare time but it didn’t raise our TV and entertainment cost. It instead lowered them.

Mortgage

I retired with a modest mortgage still on the books. I calculated our monthly payment into our retirement spending calculation without thinking I would ever pay it off. But then I started a short but sweet encore career. Since I was basically living off of my retirement funding I simply directed 100% of my paychecks to the mortgage and cleared it within 18 months. This move is what made the insanity of rising healthcare cost a near wash for my early retirement spending miscalculation. This is a case of you won’t know what will impact your retirement budget until you are retired. You simply don’t know what you will do until you do it. I had no idea this would happen when planning my early retirement.

Eating Out

Even with all the free time, restaurants didn’t call our name any louder than they did before. In fact they are even harder to hear. Initially we took advantage of happy hour discounts but soon got over it. We prefer home cooked healthy meals and we now have the time to make them. We spend 50% of what we initially modestly budgeted for this.

Travel

We had a decent travel budget. We try to save money when we travel and have done that for decades. With retirement we have time to look for deals and can travel off-season. We also can make reservations and lock into deals months in advance. Another thing we have experienced is our appetite for travel has decreased over the 9 years of retirement. We simply like where we live and play. As far as travel goes we prefer quality experiences to quantity of travel. Although the cost of travel has increased over the years, I’ve found that we travel as much as we want to but are spending the amount we started with. Our travel spending has seen a near 0% inflation increase over these 9 years.

Fuel

I calculated a 50% drop in fuel cost once I retired. Simply thinking that I would be using some of my extra free time to go places but also subtracting out my 20 mile (200 miles a week, whoa!) work commute costs. In actuality the drop has been closer to 75% of our pre-retirement cost. We shop local and travel shorter distances and prefer to spend most of our time outdoors, not driving somewhere. We are lucky that we have outdoor recreation and everything needed within 5 miles of our home. Not only is fuel cost down but so is all auto maintenance like tires, brakes, oil changes, etc.

Taxes

I was paying a large percentage of income in taxes when working so I calculated 10% for my retirement income tax obligation. The reality is when I am not working it is actually only around 5% of total retirement income. Some of that is due to using a more tax efficient withdrawal strategy that I hadn’t considered before I retired.

The Takeaway From This Early Retirement Budgetary Exercise

This exercise wasn’t a yearly spending study.

I merely looked at our initial retirement budget at the end of 2009 with my planned yearly projected increases using our applied inflation estimate. Then I compared that to our spending for 2018 to see how it tracked.

I was happy to see that we are 14% less than what our calculated long-term 2018 budget projection was.

2018 was a year where we did everything we wanted to do. It was also a normal year without any catastrophic events.

For the between years there was one that did go over budget projections. It was a bad year due to a medical crisis. But the other years came in under spending calculations, some much more than others depending on retirement life events. For instance the year we paid off our mortgage and a couple of the following years before health insurance had risen so high came well below the earlier budget calculations.

Having a plan matters.

I believe this shows that having a reasonable plan along with purposeful living and spending discipline, even crazy stuff like obscene healthcare increases won’t necessarily derail one’s retirement plan.

It’s good to have an emergency fund or access to other funding in retirement.

Having the means to carry us through a bad spending year is important. The medical crisis year that we experienced could have caused problems if we only had a fixed monthly income to depend on. We need funds beyond our sunny day budget projections to get through any rainy years.

Retirement life happens and things can change.

During retirement we will do things, stop or decrease doing other things, and make decisions that we couldn’t know to plan for. In my case starting that encore gig and casually paying off my mortgage was a decision that had huge implications in the outcome of this exercise. Had I instead invested my salary, my retirement spending would have been ratcheted higher by healthcare. I would however have more money in my portfolio. Hopefully doing that would have provided higher income to counter the retirement healthcare spending increase. I think I made the better choice.

Inflation is tricky to predict but plays a huge role in planning and outcome.

I admit that my first nine years of early retirement came with many lifestyle cost items having an actual low inflation rate. Healthcare’s massive increase ate solidly into what should have been a stellar lower than expected retirement spending amount. However, had I correctly applied the higher 12% inflation rate to my healthcare calculation the results of this exercise would be off the charts in my favor. The opposite is also true. If we begin to see hyper inflation increases across the board then we have to recalculate our budget going forward. Hopefully investment income can keep up but if it can’t then spending control or possibly returning to a paid opportunity is our best defense.

Having more free time doesn’t necessarily mean spending more to fill it.

I thought we would spend more than we are for travel, entertainment, and all else we do when we are out and about. Although this was partially true in the first couple of years of our retirement, it didn’t stick. In our case having time allows us to save money while still doing everything we enjoy doing.   

Retirement Comes With All Kinds Of Spending Variables

Everyone’s retirement experience will be different. Things like retiring with a child at home that causes spending changes as they age, experiencing a health crisis, or finding out during retirement that you are a passionate travel freak, can throw all projections out the window. If that happens it will hopefully be short-term and you can find yourself back on track or find a way to adjust your budget to meet your retirement’s new spending needs.

Retirement lifestyle cost is a concern for most people when they decide to retire.

What I have found is that as long as there is a reasonable plan based on the lifestyle we want to live and can afford to live, we have a retirement funding cushion available for any bad years, and we  monitor our spending, we can overcome most challenges before they become a huge retirement financial nightmare.

There are no guarantees in life or budgets, but worrying too much about things does no good. Instead know that planning well and tracking our spending gives us the best chances. If the worst should happen then it won’t be due to head-in-the-sand financial recklessness.

Level Setting: What Should Your Post-Retirement Spending Habits Look Like?

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Level Setting: What Should Your Post-Retirement Spending Habits Look Like?

One of the major factors that will determine how enjoyable your retirement will be is how much you planned for it. There are, of course, many variables that you cannot control (say, how much you will be earning from returns on your investments). However, there are also some you can.

 

Perhaps the most important thing that you can control is your post-retirement spending habits. Understanding your financial situation as a retiree won’t just help take away the stress of knowing what you can and cannot afford, but will also allude to when you can consider retirement in the first place.

 

To get an idea of what you’ll need to make the most out of your golden years, consider saving up enough money to account for the average annual costs you can expect to see as a retiree.

 

Housing: $15,864

 

A recent report from the Bureau of Labor Statistics shows that housing is the largest expense among American retirees—even accounting for those with no mortgage payments. This is likely due to the regularity (and costliness) of household-related expenses, like state property taxes, homeowners insurance, utilities, and repairs that do not go away even after your mortgage does. It’s generally advised to factor at least 1% of your home’s total value into your budget for yearly maintenance. You never know what alterations you might need to make your house more accessible in your old age!

 

Transportation: $6,804

 

The cost of transportation was the second largest expense among retirees in the U.S. On average, individuals at the age of 65 and older spend approximately a third less than the average household on transportation in the U.S. Without the need to make your daily commute to work, you’ll save big overall. Nonetheless, the regular maintenance and upkeep of automobile ownership (which includes gas, car insurance, repairs, etc.) can put strain on a retiree’s budget—especially if you plan to buy a new one.

 

Health Care: $5,988

 

Health care can be a volatile expense as you age, especially in lieu of increased need and current market conditions that have catapulted insurance premiums. You can expect to pay around $6,000 per year on average for health care, but even more should you have the misfortune of developing a medical condition in need of attention. Some reports even suggest setting aside a whopping $280,000 to cover your total health care expenses throughout the duration of your retirement.

 

Food: $5,796

 

Say hello to senior discounts! Your grocery bill and restaurant budget is one area where you can expect to see a decline in spending. Albeit, food remains a constant expense whose amount can increase quickly if you fancy frequent social gatherings with your family or friends. That said, with the extra time available to you in your new life as a retiree, it might be a great opportunity to polish off your culinary skills!

 

Miscellaneous: $3,000+

 

Miscellaneous costs include any unexpected or infrequent costs that may amount to little when factored individually, but a lot when factored aggregately. Therefore, it’s necessary to make sure they’re accounted for. Some of these expenses—like charitable donations to a nonprofit organization—are of benevolent intention and are encouraged in your retired life. However, other expenses—like bank fees—are entirely unnecessary. According to Bank Fee Finder, Americans spend an average of $329 in bank fees every year (many of which go unseen by the account holder). However, you can eliminate this cost entirely by switching to a no fee bank alternative. But that’s just one example—and another reason why keeping track of what you’re paying for can help you save big in your retired life.

 

Entertainment: $2,364

 

One of the best parts of retirement is saying goodbye to the hustle and bustle and living your life how you want to! But since you probably won’t be staying indoors all the time, you’ll need to factor entertainment costs into your budget. You probably can take a good guess at how much you’re currently spending on hobbies, but if you’re ever wanted to do anything more grandiose—like travel the world or buy a motor home—you’ll have to budget accordingly. For a full list of exciting things you can look forward to when you retire, click here.

 

This informative food for thought post was contributed to Leisure Freak by Chime

How Multi-Purpose Skincare Can Help Contribute To An Early Retirement

Budgeting, Health, Saving Money, ,

In the last three months alone, 1.35 million Americans spent $500 or more on skincare products. As we age, we tend to spend even more on products that promise to keep our skin looking vibrant and youthful. Those trying to cut back on costs or budget for an early retirement know the importance of considering every angle to increase savings, but being frugal with skincare products doesn’t have to mean sacrificing overall skin health. For those looking to enjoy an early retirement, here are some cost-effective strategies to maximize your skin’s appearance while keeping your wallet happy.

 

How Multi-Purpose Skincare Can Help Contribute To An Early Retirement

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Apple cider vinegar for internal and external benefits

When you think of apple cider vinegar, chances are a salad pops into your mind. While apple cider vinegar is commonly used as part of a dressing for some leafy greens, it also boasts many internal health benefits, such as aiding the digestive process. If you already have a bottle of this vinegar in your home, you can easily incorporate it into your skincare routine as a topical treatment for skin health. Simply dilute the apple cider vinegar with equal parts water and use it as a cost-effective toner. Once it dries, just rinse, pat your face dry and enjoy your glowing skin!

 

How Multi-Purpose Skincare Can Help Contribute To Saving For An Early Retirement

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Coconut oil in cooking and as a moisturizer

While coconut oil can be more expensive than sunflower or canola oil, its multi-purpose qualities make it a better bargain in the long run. As a medium-chain saturated fat, coconut oil is actually the ideal type of oil for cooking in high heat as it does not oxidize, making it healthier overall. It is also an ingredient in many delicious dessert recipes, making it a 2-for-1 in terms of use. However, the benefits of coconut oil don’t end there. It can be used as an effective face and body moisturizer and also offers a modest SPF of 4. One container of coconut oil can be efficiently used in delicious savory and sweet recipes, and as a replacement for unnecessary and expensive moisturizers with its natural skin benefits.

 

Enjoy coffee and exfoliate with the grounds

Many skincare products include caffeine for its numerous benefits on the skin, especially as a result of its anti-aging properties. But you can simply reuse your coffee grounds once your coffee is made to energize and exfoliate your skin–from head to toe! Once you’ve made your morning coffee, simply let the grounds cool off and put them aside in a container. Mix in some coconut oil and apply generously to your body and face after a shower, letting it sit for a few minutes. Rinse it off and enjoy skin that is not only smooth and free of dead skin cells, but also soft and moisturized. An added bonus is that caffeine also combats cellulite, making this scrub all the more useful.

 

As we plan for our future and the not-so-distant prospect of retirement, it is important to take a hard look at our spending habits if we truly want to save money. As skincare alone accounts for so much of our hard-earned income, using natural products that are multi-purpose not only prioritizes our savings but also our skin.

 

This article is a contribution to Leisure Freak from freelance writer Jackie Edwards. Thanks Jackie for these money-saving natural skincare tips!
Now working as a full-time freelance writer, Jackie Edwards is also a busy mum of two small children. In any free time she has (which isn’t much) she likes to volunteer and do charity work and take the family greyhound Bertie for long walks.

Retiring Soon? Prepare For The Coming Retirement Twilight Zone

Budgeting, Funding Retirement, Retirement Plan

Once the date is in sight there are some pre-retirement must dos. Whether you are prepared for it or not, once you skip out your employer’s door for the last time you will be entering the retirement twilight zone. A place where you are neither here nor there. It’s a place in the middle ground between employee and retiree. Unnoticed or unaccounted for, it can disrupt what could have been a beautiful experience and cause us to kick ourselves for missing it.

In the weeks before retiring there is much on our minds. We occupy our thoughts about controlling our happiness and trying to make sure we get everything at work done or handed off in time. All our years of retirement planning are now set into motion and being realized. However, in the weeks before retirement there are a few details to manage. Little details that are easily overlooked until it becomes obvious that we should have paid closer attention to them. It’s about small picture things that if missed have financial impacts and possibly having a large annoyance factor during a time when we just want to celebrate and start our next phase of life.

Retiring Soon?  Prepare For The Coming Retirement Twilight Zone

Photo by Aziz Acharki on Unsplash

Countering the Retirement Twilight Zone: Easily Overlooked Moves In The Weeks Before Retirement That Should Be Managed

So much of our lives is on autopilot. We get scheduled paychecks, bills are due on certain dates, and we pay little attention to details because as long as things remain static, it all works out. But retirement is a change to things. A big change. Autopilot will no longer apply and assumptions can sting you. The moment you walk out the office door for the last time everything changes. Even though you and everyone in your orbit knows you are retired, the rest of the world hasn’t got, or shall I say, processed that memo yet. You are in the retirement twilight zone. Here are some things to add to your checklist in the weeks before retiring.

Start By Having Enough Cash Available

Do you have enough cash available to cover your retirement funding for up to 3 months? This is all about being able to transition your bill payments during the start of your retirement. Your retirement twilight zone time-frame may not last 3 months, but depending on your unique circumstances it just might.

We usually plan intensely and way ahead for our long-term retirement funding. We know what income to expect coming to us and what our budget is or will be. The problem is that a lot of the systems and processes we will depend on to make it happen takes time to implement. Although most of us get paid in the rears and will at least get a partial paycheck after retiring, maybe even some unused vacation time, it may not be enough. We need to have readily available cash to cover this retirement twilight zone while we are still transitioning from employer paychecks to our retirement funding to keep our bills paid. The time when this digital financial world sees us as neither here (employed) nor there (retired). We’re in the in-between place and it takes having enough cash to get through it. 

Give Attention To Your 401K

This autopilot retirement savings platform will come to a crashing halt no matter what you do. But there may be ways to leverage the most from of it if your plan was to roll it over to an IRA. If you get a company match, do you know when that match is made? Is it with each pay period or at the end of the month? Does it depend on your employment or just having an active 401K account? Are there special rules associated to retirement like prorated match, etc?

Use the weeks before you retire to check. Find out and set a plan. Don’t do anything like closing it out too early with a rollover and causing you to miss a match-payment. If you have no 401K match to gain, make an active decision whether you still want to contribute to it on your last paycheck. Decide if getting that extra cash on your last paycheck is more beneficial for your short-term retirement twilight zone funding. If retirement account rollovers are part of your long-term retirement funding strategy, then be aware that it can take a week or more to complete everything in order to begin your retirement funding plan.

Auto Account Debits Need Looked At

Many of us have automatic debits against our savings or checking accounts to fund all kinds of things. I had a monthly debit to fund both mine and my wife’s Roth IRAs. That and auto transfers from my checking account where my paychecks were auto deposited to my savings account. It’s necessary in the weeks before retiring to make a conscious decision to look at our autopilot account debits. Decide whether to conserve immediate cash or stay the course to continue funding or top-off the other accounts.

Will You Be Depending On A Pension?

It is a fortunate thing to have a pension to help fund our retirement. But many have some very detailed rules and long processing time-frames. If you are depending on that monthly pension check then your retirement twilight zone is certain. Don’t assume a seamless income experience. Expect neither a paycheck nor a pension check for a period of time. Find out every detail about your plan’s retirement processing.

For example, the company I worked for had rules like the first pension money would be released on the last day of the second month after retirement. Ok, we’re on our own for 2 months. But it also said that any retirement pension request processed after the 15th of the month would be considered processed in the following month. What!!? So, depending on what day you sent in your paperwork you may have added to your retirement twilight zone time-frame.

Even Social Security has some processing lag time. In the weeks before your retirement reaffirm your knowledge of your pension plan’s ins and outs and strategically send in your paperwork.

Health Insurance Transition

Do you know when your employment based health insurance ends? Most plans end on the last day of the month you retire in. If you retire at the end of the month, then you need to be ahead of this since you will immediately lose coverage. You may need to apply for your company’s Cobra benefit to bridge past your retirement twilight zone. Even Medicare takes time to begin if you were in job lock waiting for your eligibility. Know when your new retirement health insurance coverage will begin. Also, don’t forget to use up your Healthcare FSA (Flexible Spending Account) money before you retire. Its “use it or lose it” rules means anything left in your FSA goes away when you walk out the door for the last time.

 

Everyone’s retirement is unique. There are all kinds of little details that need attention. Inventory everything you have on autopilot and how much cash you have available to use while things work through their processes. Figure out how to cover any financial gaps because there will always be lag time between your last day in the rat race and when your big picture retirement plan can start doing its thing.

In the weeks before retiring, concentrate on and manage the little picture details to get you through the retirement twilight zone, that in-between place retirees experience until everything catches up and recognizes us as retired.

Hotel Hacks: How to Get the Best Room without Paying Top Dollar

Budgeting, Early Retirement Lifestyle, Saving Money, Vacationing in Retirement, ,

Doing your research really does pay off, but if you are still unable to find a great hotel then you may have to resort to alternative measures. After all, it is more than possible for you to find a great hotel without paying the high price, and these travel hotel hacks will help you to do that.

Research

When you do your research, try to use sites such as Trivago. All you have to do here is enter your destination into the search box. The site will then ask you to fill out your travel dates and before you know it, you could be well on your way to booking your dream hotel. You can even put down the board requests that you have as well. This is great if you have some really special requirements. The main thing that you have to remember here is that not all hotels are on sites such as this. Make sure that you compare prices on other websites too as this will show you hotels that you never even thought existed.

Before pulling the trigger, always try to find your target hotel’s direct online site and compare prices. Sometime the hotels run specials that the hotel broker-site’s don’t know about.  Ever consider an exotic vacation to Mexico? If you want to save more money while still getting a great room, why not consider the Courtyard Leon at The Poliforum? Sometimes going somewhere not as well-known can save big bucks.

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Cashback

Did you know that it is more than possible for you to earn cashback on your next hotel stay? All you have to do is sign up through a cashback website. When you do this, you can then purchase something listed on their site. Every time you do this, you will get some money back. If you use sites like this for every aspect of your vacation, you’ll soon find that it isn’t hard for you to really get a good result out of your travel and it is a great way for you to take some extra holiday money with you.

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Trade for a Villa on Family Holidays

When you go on a family holiday, instead of booking a hotel, consider going for a villa. You can save hundreds by doing this and this doesn’t just have to apply if you are going abroad. It is more than possible for you to stay at a B&B and it is also possible for you to rent some seriously luxurious hotels out of season. You can always haggle with them as well. In some instances you may even find that they are way nicer than the chains you have looked at. You can also try to work with the person who owns the B&B to ask them if they would be willing to give you a discount if you write a review or even if you shared their site on your blog. Publicity is always a great tool and hotels are usually very happy to take advantage of it.

Lastly, don’t forget to check sites like Airbnb and VRBO. People all over offer great homes and rooms for lower cost than many hotel chains and offer great value.

 

It’s more than possible for you to get a great hotel and at a very low price. The only thing that you really have to do is your research while also making sure that you look into all of your options. No matter where you go to stay, always check their reviews first!

Create A Bright And Colorful Garden On A Budget

Budgeting, Do It Yourself, Early Retirement Lifestyle, Frugal Living, Passion, , ,

Do you dream of spending lazy afternoons in a beautiful, fresh and inviting garden now that you’ve retired early? Americans are spending more time than ever in their gardens, with 1 in 3 households now growing their own vegetables in their outside space. Spending time in the garden is a relaxing, peaceful and enjoyable pastime for many retirees and it’s a pure luxury to be able to put your feet up and enjoy your surroundings on a warm summer day. Entertaining family and friends in the confines of your garden is a perfect frugal activity for retirees, therefore creating a bright and atmospheric space while sticking to a budget is essential.

Create A Bright And Colorful Garden On A Budget

Photo by Marie-Sophie Tékian on Unsplash

Open up the garden

A simple tidy up and trim of the bushes can be all it takes to turn the garden from a cluttered, overgrown, unappealing mess to a spacious and attractive part of the home that you want to spend bundles of time in, and it doesn’t cost anything to have a bit of a spring clean. During the autumn, crisp leaves which have fallen to the ground will soon become a damp, soggy annoyance. Cleaning these up with a leaf blower will instantly make the garden appear bigger and, while it may be a bit of an investment, there are numerous alternative uses for a leaf blower which make them a good multi-functional tool worthy of the initial outlay.

Inject color

Colorful gardens are fun and bring a smile to your face when you step outside. Fences, planters and wooden pieces of furniture can be painted in an array of colors to instantly brighten the area. Opting for plants and shrubs in different colors, purchased from discount retailers, creates a lively atmosphere which anyone will enjoy relaxing in. While scattering pretty cushions on benches and chairs will make them comfortable and stylish. You can recycle old tin cans by painting and decorating them and filling them with beautiful low-cost plants, too. Or, get the grand-kids to transform the rocks at the bottom of the garden into animals and dot these around the lawn.

Bring the garden to life

Invite friends and family round for a get together and ask they all pitch in to spruce up the garden at the same time. This is a great cost saving method and way to get jobs completed swiftly, while enjoying time together. Someone can mow the lawn, while others trim the bushes and pot some new plants and all you’ll need to do is dish out some ice-cold drinks and pop a few burgers on the barbecue to keep everyone happy. It’s also worth asking your loved ones if they’ve got any old pieces of garden furniture in their sheds that they no longer want, or packets of seeds stashed away that they’re not going to use which you could recycle and put to good use in your own garden.

There is no need to spend a fortune on doing up the garden when there are so many ways to brighten and liven the space up for very little expense.

 

This timely spring-season related article is a contribution to Leisure Freak from freelance writer Jackie Edwards. Thanks Jackie!

Now working as a full-time freelance writer, Jackie Edwards is also a busy mum of two small children. In any free time she has (which isn’t much) she likes to volunteer and do charity work and take the family greyhound Bertie for long walks.

Don’t Forget To Do Your 2018 Retirement Tax Planning

Budgeting, Taxes

Being retired means being smart about our income. Retirement Tax Planning should be a big part of that. Managing our retirement income to pay the least amount of income tax means we can stretch our savings to go farther. I use a combination of taxable IRA income and non-taxable accounts to keep my tax rate as low as possible.

It all starts with knowing the new tax brackets and deductions. Here is what the TRUMp – GOP tax cut ended up with.

 

2018 Tax Brackets For Your 2018 Retirement Tax Planning-

Married couples filing jointly, starting Jan. 1, 2018 and ending in 2026, the income tax brackets are:

10 percent up to $19,050

12 percent on $19,051 to $77,400

22 percent on $77,401 to $165,000

24 percent on $165,001 to $315,000

32 percent on $315,001 to $400,000

35 percent on $400,001 to $600,000

37 percent above $600,000

Single individuals, starting Jan. 1, 2018 and ending in 2026, the income tax brackets are:

10 percent up to $9,525

12 percent from $9,526 to $38,700

22 percent on $38,701 to $82,500

24 percent on $82,501 to $157,500

32 percent on $157,501 to $200,000

35 percent on $200,001 to $500,000

37 percent above $500,000

Other Income Tax Changes to plan for-

Standard Deduction

This tax cut architects decided to increase the Standard Deduction. The new amount to be subtracted from your AGI –

Single Individuals

Goes from $6,350 to $12000 for 2018

Married Couples

Goes from $12,700 to $24,000 for 2018

As promoted, they doubled the standard deduction but don’t get too excited when starting your 2018 retirement planning. At the same time they quietly did away with your Personal Exemption of $4,050 per person. So the overall tax cut benefit isn’t as HUGE as being sold.

For an individual- It’s not the new $12,000 – $6,350 = $5,560 increased overall deduction. Its that $5,560 – $4,050 (lost exemption) = $1,600 that is your increase in deduction.

For a married couple- It’s not the new $24,000 – $12,700 = $11,300 increased overall deduction. Its that $11,300 – $8,100 (lost exemptions) = $3,200 that is your increase in deduction.

Basically they moved personal exemption amounts into the standard deduction with a slight bump to provide a little tax relief, but at the same time produces a larger move against the itemized deduction thresholds. That threshold is now higher than they were by way of magic tax cut deduction manipulation.

Child Tax Credit

Doubled to $2,000 per dependent child under age 17. It has a refundable portion of $1,400. This means families can lower their tax bill to zero and still get a refund for the remaining value.

Mortgage Interest

Homes purchased from 1/1/2018 – 12/31/2025 will have their deductible mortgage interest capped at $750,000 in loan value. But hello, the new tax plan also does away with home equity loan interest deductions. There is no grandfathered exception for home equity loans being deductible going forward.  For those who retired with a vacation or second snowbird home, that mortgage deduction is also gone.

State and Local Tax Deductions

Your State and Local Tax are now capped at a maximum deduction of $10,000. That includes home property taxes within this deduction grab bag.

 

These are the primary changes to use in your 2018 retirement tax planning. Remember, these personal tax changes will expire after 2025 if not renewed by our all-loving government leaders.

What else can I say. Good luck, enjoy the small tax cut to those that will find one, and to the folks in charge telling us this is the biggest tax cut ever, c’mon man, really? Thanks for the peanuts!

Holiday Season Hacks: Christmas Can Be Thrifty

Budgeting, Frugal Living, Saving Money, ,

When the holiday season gets into full swing; it can be a challenge to reign-in your finances and keep track of your spending. There will be travel costs, gifts, food, and decorations to invest in, and these can end up spiraling, causing you to head into the new year feeling out-of-pocket and strapped for cash. By the time you get to January; you’ll know that you overspent, but you might not be sure what you’ve bought, and why everything cost so much. Therefore, it’s worth putting some time and effort into your frugal living over the holidays, and focusing on saving money where you can. A little planning and savvy preparation can go a long way.

It’s not about becoming the Grinch of the family over the festive season; however, there’s nothing wrong with making wise financial decisions regarding what and where you spend. If you do it right; nobody in your family will even notice that you’ve made an effort to cut back and pocket the savings, but your wallet, retirement fund, and bank balance will be extremely grateful.

The following are some tips, ideas, and advice for those who want to save their money over the holidays, but still want to enjoy the time with their loved-ones and have a very happy Christmas.

 

Holiday Season Hacks: Christmas Can Be Thrifty

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Holiday Season Hacks

Plan Your Gift Giving

 

The cost of Christmas gifts is probably one of your biggest extra-expenses over the holiday season. Therefore, it’s worth working out a set budget for each person, and really sticking to it. Better yet, paying less than expected and saving the excess. Sites like DontPayFull.com are the perfect place to start, as you can pick up some discounts and special offers that you wouldn’t find in the retail shops, so check them out and do your research to price compare.

Wrapping paper and cards can also add up to a large sum; if you haven’t already, utilize the January sales to stock up on greetings cards, bows, ribbons, and paper so that you never pay full price. Check the attic or your home’s storage closet for anything left over from last year that could be used. Don’t overspend on things that you may already have. You may be surprised at how many things you can find and put to purpose that would later be destined for the recycling bin if unused.

 

A Homemade And Recycled Approach

 

Decorations, food, and drink will be next on the list of things you’ll be forking out for over the holidays. Therefore, it’s worth putting some time into using what you already have, or investing in some affordable elements, to create things yourself at home.

Homemade decorations will always look festive and unique and you can get the whole family involved. It’s amazing what you can create with a hot glue gun, some ingenuity, and re-purposed decorations that may have been unused for years. Check out sites like Pinterest.com for some inspiration.

The same goes for food and drinks. It can be so expensive buying ready-made edible items. Try and make as much as possible using ingredients in your cupboards and get baking from scratch. The homemade approach will always go down well will friends and family, and perhaps if you’re feeling crafty; homemade gifts is something you can consider too.

 

Christmas can still be festive and fun, and saving cash during the holidays could even add to the experience. Don’t overspend and instead head into the new year having saved money where you can.

KNOW Your Retirement Budget Before Retiring By Living It First

Budgeting, Early Retirement Lifestyle, Funding Retirement, Non-financial Aspects of retirement, ,

How accurate do you want your perceived retirement budget to be? Nobody wants to mess this up because it can result in blowing through the nest egg quicker than planned and your retirement ending badly. That’s why it’s a good idea to actually KNOW your retirement budget before retiring. At least knowing as close as possible. That is best done by living your retirement lifestyle before retiring. The best way of doing that is by living as much of it as you can.  

We all run our numbers through a trusted retirement calculator based on our perception of what we will reduce our spending on in retirement. We may also add a bit to the budget to support our retirement travel desires. But there can be a big difference between perception and reality once living it. Here are a few pointers to help you KNOW your retirement budget is reality based.

Proving Conventional Retirement Spending Wisdom Right or Wrong

Everyone believes they will spend much less in retirement. We tell ourselves that because the notion that we all need 80% of our working income in retirement is a tall order to fill. That and it is far from being true for a lot of people. But the only way to KNOW is by living it first while you are still collecting that paycheck. Chances are if you can’t do it when still in the grind then you probably won’t be able to live with that budget in retirement either.

People do a lot of things because they either really enjoy it or they can’t live without the convenience it provides. Living your retirement lifestyle and budget before retiring is as much a personal mentality check as it is a retirement budget reality check. Some habits are harder to give up than others. That being said, this all should happen long before ditching the rat race. Getting this right is about the rest of your life in retirement. One should give themselves years of practice to work through this as it may take a gradual approach by incremental spending reduction and lifestyle changes instead of going abruptly cold turkey on the day you happily skip away from the job.

 

KNOW Your Retirement Budget Before Retiring

Giving Frugal Living A Shot

Frugality may be the last thing on your mind, but like it or not, most retirees do embrace an element of frugal living to stretch their fixed income and savings. Retirement budgets usually assume cuts in all kinds of spending. Adopting your more frugal retirement lifestyle in advance will not only allow you to understand how you will live but get you closer to knowing your retirement budget and whether you can live with it. Doing so in pre-retirement will also free up more money for debt elimination and retirement savings.

Nobody wants to live a life feeling deprived. Finding your frugal thresholds helps set a sustainable retirement budget and lifestyle to base your plan on. The first step is tracking where your spending goes. Then trimming back things you won’t include in your retirement lifestyle. Why wait until retirement? If it isn’t going to be important to your happiness in retirement then shed that crap now. Otherwise you may make a bad retirement budget assumption that will end up straining your plan.

Obviously there is employment related costs that can’t be cut in pre-retirement. Commuting, work clothes, occasional lunches out, etc. But tracking what you are spending allows you to accurately subtract that out of your retirement budget projections. It also lets you see how much you could save by trimming workday lunches eating out or other little things. Like parking your car and instead going for mass transit or carpooling and maybe saving even more money now.

Keeping it real

Living more modestly before retiring will get you closer to understanding what is realistic in your retirement budget. Thinking you will have time in retirement to clean your own house or mow your lawn to save money in retirement after firing the maid or landscape contractor will only happen if you can be happy doing that stuff yourself. If your perceived retirement budget isn’t including luxuries you pay for now, then live like you can’t afford what you freely spend on while working. Trim it away before retiring.

Sometimes we use the excuse of having little time to justify our convenient luxury spending choices when it might actually be we hate doing that stuff ourselves. Find out before you retire so your retirement budget reflects the truth.

Give Your Non-Essential Living Expenses Careful Review

Unfortunately retirement can and will mess with your mind. We just don’t go from career to retired without some mental transition effort and time to happily get there. Besides unintentionally connecting our self-worth to what we did for money, we also attach it to other things that may have a high cost. Like the county club, sports, hobbies, fitness club, over-spoiling the grand-kids, etc. Saying you are going to cut back spending once retired in areas you have connected with in this manner may be far harder than you can imagine.   

Instead of just assuming you can cut things in retirement, trim it back now and find out for sure. This will allow you to try out your assumptions.

 

Give up the gym and try working-out at home or other forms of exercise. Use public golf courses, scale back expensive hobbies or sports. Match your lifestyle now to try out your perceived retirement levels.

So much of what we enjoy gets attached to our self-worth. It can also be a big part of our social life and what we are retiring to. Both of which will also need to be shifted and worked on. There is no better time than pre-retirement to test your assumptions.

Some Retirement Costs Require Having a Plan B

Some costs can increase far above the inflation rate we use in our budget planning. You can’t always just raise your retirement budget when something you planned for or you really need ends up escalating in costs beyond projections. It will require making some big adjustments in retirement spending and lifestyle. It is a good idea to establish a Plan B and when possible practicing it before retiring. Some areas that have risen far above the inflation rate in recent years and have a huge impact on a retirement budget are:

Health Care –

If you retire before being Medicare eligible and things continue like recent history then expect double-digit increases year after year.

Property Taxes –

As home values recovered since the real estate bubble caused recession, property taxes have drastically increased.

Home and Auto Insurance –

Insurance companies pass their losses due to natural disaster to the customers whether you have had a claim or not. Tornadoes, hail, biblical rainfall, wildfires, and hurricanes across parts of the country are happening more often.

What you can do

When living your retirement budget, pay attention to these increases and identify where you can cut back in other areas if they bust your retirement budget once retired. For example, find out if you really can handle skipping or trimming vacations. If traveling is a huge part of your pre-retirement life and will also be in retirement then cut way back or suspend travel for one season. Then bank the savings.

Park the car and use mass transit or bicycle every weekend or when off work for a while. Understand that you may not be physically able to that in older age. Could you live without a car? Would you consider moving to a more mass transit friendly location to save your retirement budget?

Are you assuming that you’ll keep your huge entertainment cable or satellite TV package in retirement? Cut the cord for a while and see if you can live without that if you had to.

Can you consider reentering the workforce? If so, do have a plan to stay employable by keeping and/or gaining skills? How about staying physically and mentally fit?

These kinds of things should be part of your Plan B if things go awry.

If you find that unappealing then you must ramp up your needed portfolio savings target to accommodate the possibility of having to raise your retirement budget for these kinds of uncontrollable cost increases. That may be a turnoff if you’re already struggling to save enough as it is. But it’s always a great idea to over save than under save for retirement to handle all kinds of budgetary surprises.

Last Words

Living your retirement lifestyle and  budget before retiring is about getting it as close to reality as possible. In both your financial numbers and the assumed retirement lifestyle you are planning for.