What you spend

Retirement planners and especially those looking to retire early (defined as anywhere from age 32 to 60) are obsessed with budgets and knowing how much they spend.

Gilbert recommended this: “We’ve never really been big budgeters. For a year, we tracked every single penny we spent because we wanted to know as realistically as we could, what our spending was. And then we adjusted it for how we thought things would change in retirement, etc…”

Source: How to Retire Early! 19 Tips from Experts Who Took the Leap!

My answer is how can you not know what you spend?

What you spend is your after tax take home pay less savings of all types. What else could your spending be, unless of course, you are living off credit cards not fully paid each month.

I never lived with a budget nor did I track spending. That’s because we saved first, never paid interest on a credit card thereby being forced to live within our means. That can be true at just about any income level. What varies, of course, is lifestyle.

When planning to retire, making a list of what expenses are most likely to change is a good idea. But in my opinion assuming any significant reduction in spending because of retirement is not a good idea. The one exception may be a mortgage paid off immediately before retirement. Otherwise, no mortgage is not a change. The one major added cost, is likely health insurance, Especially if retiring before age 65.

Assume you will still save in retirement. Perhaps not at the same level as when planning for retirement, but to establish and maintain a contingency fund and if you are so inclined, a travel or fun fund.


  1. A budget is not about where you have been, it’s a plan about where you want to go.

    What Is a Budget?
    A budget is an estimation of revenue and expenses over a specified FUTURE period of time and is usually compiled and re-evaluated on a periodic basis. Budgets can be made for a person, a group of people, a business, a government, or just about anything else that makes and spends money. .”Investopedia”
    Emphasis on FUTURE

    It’s a forward looking plan not a review of the past. It’s important however to know where you spend your money so you can formulate a plan (budget).
    I have been using Quicken to track all my income and expenditures for over 30 years. It is simple for me to pull up a report about how much income or expenses I have accrued in whatever category or time period I want. I can’t say that I have ever made a strict budget for anything but I can see at any moment where I am headed financially. As for entering data, all it takes is a little discipline. I guess its not for everybody though as I have tried to get my kids to follow suit but there seems to be a wall of resistance to keeping track of daily expenses in a computer program even if will make your life so much easier at tax time or when creating a future plan (budget)

    Its hard to predict where you are going if you cant say where you have been.


  2. I never quite understand your objections to a budget. I get that you save first and so do I. That is a great plan. However there are people who do not know where they spend their money unless they write it down. Some people can just look in their back seat of their car and see all the empty Starbucks coffee cups or look at all the tattoos on their arms. Other people cannot see this or it is not as obvious. For example costs with little league are expensive and often not planned for until you have several years or children through the program that you understand that you have to buy “snacks”. One day when you write it all down and you ask yourself why am I spending $80 a month on coffee?

    I never know exactly what my wife spend money on either. I have a good idea, but not exactly. I have one shampoo bottle, I dare not report the number currently in the shower nor will I ever tell her that number is too many. This is how I have stayed happily married. All I know is when the money is gone for the month.

    Budgeting is a good way of see where your money is exactly going. Is it going to the right needs first like food and utilities? Utilities have offered budget payment plans forever. Why, because it help with the seasonal highs and lows and makes the monthly bills more equal. My taxes exceed what is left over in any given month. I budget or save 1/12 of that a month. In order to save first, I must know how much is enough. Otherwise, there are only three other ways to do it. Save what’s leftover at the end of the month (bad idea). Save 100% at the beginning of the month and just keep withdrawing the money every time you spend money on wants and needs. Or, you can have a budget of your required savings (think retirement and emergency fund), your monthly bills (needs), and then anything leftover MAY be available for wants.

    I think paying with plastic has hurt many people too. Back in the day, if I didn’t have cash in my pocket, I didn’t buy it. With plastic, you can buy it anyway and tell yourself that we just won’t go out to dinner next month, I mean the month after that, or after that. If you payoff your credit cards each month, you still have no idea why you can’t do the things you want because you don’t realize where you are spending your money. Maybe you need to save or budget for a vacation instead of buying that coffee?


    1. it’s not an objection, just an unnecessary stressful exercise. IMO If you follow the save first, no credit card debt principle, what’s the difference how you spend your money? By saving first you set your own budget and limit spending. Now, if the saving piece is minimal like less than 10%, you have a point, but know where money is spent may not change the amount spent.


  3. Widow’s tax…

    Married filing jointly, you will begin paying 22 percent on anything over $80,000. As a single filer, the 22 percent begins at $40,000, and your standard deduction will be $12,000 instead of $24,000.

    Less income, higher tax rate. Double whammy.


  4. Also assume if your retirement income includes two Social Security checks and you can live comfortably (and -still save- part of your income), that will change when one spouse passes away. I would recommend, if you can, save at least as much as the smaller SS check. That will make the transition to a smaller income easier as well building a bigger safety net.


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