Nicole Spector's piece, carried by Yahoo Finance, looked at the three categories wealthy retirees spend the most on in their first year: travel, home projects and healthcare. Even well-funded retirees can get into trouble in year one, because the spending patterns of a working life do not survive contact with unlimited free time.
My contribution was about the bucket list. Wealthy retirees often have big, exciting plans to kick off retirement: the adventure trip or the major renovation they never had time or money for while working. Those are good things to do. My advice is to set solid boundaries around them so they can be enjoyed without taking on debt or setting a spending pace the portfolio cannot sustain.
What I told Yahoo: the best ways to save without feeling like you are cutting the fun short are to put simple guardrails around travel and home projects so they do not become the new normal, and to keep a clear line between essential spending and discretionary spending so you have flexibility if life or markets change.
The first year of retirement is often the most expensive year, and that is fine if it is planned as a one-time surge. The problem is when the surge becomes the baseline. A $40,000 travel year that everyone understood was a celebration is a memory. A $40,000 travel year that quietly repeats is a withdrawal rate.
Read the full article at Yahoo Finance →
