New Year’s Check-Up: Money and Time10
January 3, 2017 by Jean
When I retired in 2014, I didn’t have any doubts about doing so. I did have some anxieties, however, about the unknowns of managing money and time in retirement. As my third year of retirement begins, it seems a good time to consider how I’m doing. This “New Year’s Check-Up” post will focus on money and time; a second post will consider physical and emotional well-being.
Assessing how I am doing with finances is easy because I am a compulsive budgeter who keeps track of every penny I take in and spend on a spreadsheet that I designed for this purpose more than twenty years ago. One of my New Year’s Day rituals is to balance my household accounts and set up my budget for the new year. I create a year-end summary sheet in my spreadsheet that shows how much I budgeted for each category in the year just ended, how much I actually spent, the balance in that category at the end of the year, how much of that balance I will carry over into the new year, and my budgeted amount for the new year. This year’s summary sheet showed that I had overspent in some categories (food, education, garden) and underspent in others (clothing, entertainment, household). Overall, however, I had spent hundreds of dollars less per month than I had budgeted. This gives me confidence that I can live very comfortably on a budget of $2600 per month. This meets all my needs and wants, with something left over for a few luxuries.
I’m anticipating some financial changes in the next two years. For the six years before I retired (the years after the financial crisis of 2008), I saved as much money as I could. My plan was to live primarily on savings for my first three years in retirement, letting my retirement savings continue to grow and maximizing my monthly Social Security benefit by waiting until age 70 to start collecting. Those savings have lasted through the first two years of retirement and into the third. In this third year, however, my savings will cover only about 2/3 of my budget and I will need to begin taking withdrawals from my retirement funds. In the following year, 2018, the three years of health insurance coverage from my former employer that were part of my retirement agreement will end, and my expenses will increase to cover Medicare Part D and a Medicare supplement. Also in that year, however, I will begin to collect my monthly Social Security benefit and I will need to start taking required minimum distributions from my tax-deferred retirement funds. Happily, the organization that holds my retirement funds, TIAA, offers some free financial advising; I have an appointment to meet with their local financial advisor later this month in order to begin planning for these changes.
All in all, I am entering my third year of retirement with a sense that my finances are in order and under control.
I am generally as good at time management as money management, but getting a handle on my time use in retirement has been a bit trickier. In the first year of retirement, my life was taken over by a combination of major construction on my house and a winter with record-breaking snow and cold. In addition, my plans to structure my life around a regular volunteer activity didn’t work out. By April of 2015, when I signed up for a choral workshop and a Senior College course, I was suffering from cabin fever and feeling a bit socially isolated.
In the second year of retirement, I overcompensated. In the fall of 2015, I set up a weekly dinner with my next door neighbor and taught a course at the Senior College. As winter began, I was happy to have the weekly dinner in place as a hedge against social isolation; and I also learned that I had been accepted to the Master Gardener Volunteer certification course, which would begin in February. In January, in a surge of “new beginnings” energy at the New Year, I inquired about auditioning for the Maine Music Society Chorale and filled out an application to serve on a committee for my local government. The result of all this was a crescendo of activity through the winter and into the spring, including my weekly three-hour Master Gardener class and its accompanying homework, and frequent singing rehearsals along with daily practice on my own as the chorale prepared and sang two concerts. To add to the flurry of activity, I took a course at the Senior College in April-May and began taking courses at the Coastal Maine Botanical Gardens toward a Certificate in Native Plants and Ecological Horticulture. In May, I began serving on my town’s Conservation Commission. Also in May, I completed my Master Gardener certification and began working on three different Master Gardener volunteer projects. Whew!
In my third year of retirement, I’m trying to move toward a “just right” mix of activities and time for relaxation and solitude. The question is what to cut back. I am continuing my weekly dinners with my neighbor from fall through spring, an occasion that we both enjoy and that provides me with needed social interaction during the winter months. I also find that choral singing enriches my life more than I could have imagined. (I made a decision, however, not to try out for the Maine Music Society Chorale’s smaller acapella group, which would have added many more hours of rehearsal and singing commitments.) I’ve learned that lifelong learning makes me feel more alive than anything else, which means that I will continue my involvement with the Senior College as both a teacher and a student and my course work at the Coastal Maine Botanical Gardens. One place I expect to cut back this year is on my Master Gardener Volunteer activities. One of the three projects I worked on in 2016 will be completed by spring of 2017. Of the remaining two, I hope to devote my volunteer hours to the one I enjoy most and enlist another Master Gardener volunteer for the other. I have not yet decided whether to continue my service on the Conservation Commission, which I have not found very satisfying, when my term ends this June.
Overall, retirement is turning out to be much less “retiring” than I had expected. I seem to be turning into one of those retirees with a life so full that I can’t remember how I found time to work!
Living on $2600 a month, I must ask if you travel? One of the things I looked forward to in retirement was to be able to travel (and not only in summer). I’m finding that travel is my big expense. Because my house is paid off and because I saved like crazy, I’m doing well. Ever so thankful that from day one of my teaching career I stashed $$ in TIAA. It is the reason I can travel and the reason I don’t have to worry about money either.
Also….living in Maine, do you have an enormous heating bill?
Hi Bernie, Almost 10% of my budget is designated for travel, but I haven’t been traveling as much as I thought I would. For 25 years, I taught in southern Pennsylvania, spending school breaks in Maine and longing to be living here year-round. Now that I’m here, I haven’t had much desire to leave. The result is that I have several thousand $$ accumulated in my travel fund. I’m thinking about planning a big trip for my 70th birthday next year.
I heat with wood and electricity and budget $170 a month for both, which includes all other electrical use (e.g., lights, cooking, hot water) as well as heat. I don’t think of it as an “enormous” amount. Like most people in cold climates, I wear warm clothes in winter and keep the thermostat set in the low-mid 60s. A compensation for our heat needs is that we don’t need air conditioning here.
Jean—-if you haven’t ever been, may I recommend Santorini for your 70th. I went last May and it was magnificent and magical. Being retired you don’t have to visit in summer when the masses arrive. Early May and October are wonderful times to go.
Hi, Jean. Loved your re-cap. I am glad that you are doing well!
When I resigned from the corporate world (for good!) in 201 — not exactly “retired,” but not exactly “working” either — I was really excited when this realization bubbled-up into my consciousness:
The key to living simply and happily is being open and eager to keep learning.
That’s one of your main themes too! You said it very well:
“I’ve learned that lifelong learning makes me feel more alive than anything else…”
In my work as a teacher, coach, and parent (my kids are grown), I always wished I could help more kids to stay excited about learning. It’s so unfortunate that so few seem to “catch on” at how learning is the gift that keeps on giving.
Uh, I meant 2014, not 201 !
When I was teaching, I sometimes wondered if education, like youth, is wasted on the young. 😉
I wish I could keep such a careful record of my living costs and spending. At tax time I do add everything up and know what I’ve spent but I don’t budget. I live on what I have coming in which slightly more than your monthly budget but my electric alone can be over $280 a month this time of the year and my water bill in the summer can be that high for three months. I have not dipped into savings but next summer (or the next) I will need a new roof, furnace and hot water heater, so I will need to do it then. No point in waiting because if I decide to move, or need to for health issues, the house will sell faster and easier.
My biggest fear regarding money is changes in Medicare, my insurance, Social Security or pension. During the financial crisis of 2008 we came close to losing our pension and insurance and would have if Obama hadn’t saved the auto industry and it was a scary year. We did have to take cuts so I worry it could happen again. I got obsessed with paying off the mortgage back then and managed to do it.
I’ve been looking at senior communities to move to, but most of them cost around $3,000 a month and that’s too close to my incoming money for my comfort. I don’t need a house this big. It’s a catch-twenty-two for me.
Jean, Wow! That’s a big electric bill — and our governor claims that our energy costs in Maine are much too high. When I did my first retirement budget, I worried about the issue of saving for big expenses. Something I read recommended budgeting a certain % of the value of your house for maintenance and repairs each year. (I can’t remember what the recommended amount was, but I’m doing about 1%.) I won’t spend this amount every year, but I will save what isn’t spent in any given year against those big expenses like a new roof or new windows or having the outside of the house painted.
I am reassured that the amount I am living on is less than I will get in monthly Social Security benefits when I begin collecting at age 70. Like you, though, I worry about changes to Medicare and health care inflation.
I was amazed by all the activities you were in involved in this past year. I also am learning to adjust commitments so that I have enough down time for slow, thoughtful pursuits (such as doing nothing). Your comment that you haven’t had much desire to leave Maine since moving here resonated with me. For the first time in my life, my travel desires have subsided here in Maine. I just don’t want to leave. And when I do leave, I cannot wait to get home. It’s a bit like living in a perpetual vacation. Lucky aren’t we?
Brenda, I did get a bit overextended this past year; we’ll see how well I do at cutting activities down to a more manageable level in the coming year. I find it reassuring that I’m not the only one who is finding it difficult to work up the motivation for travel away from Maine. Guess that’s what happens when you live in ‘Vacationland.’