For most of us, retirement is something we dream about for many decades. And, hopefully, we accompany those dreaming years with the discipline to save as much as we can for when the time finally arrives.
But, no matter how large our investment portfolio may be when it’s time to retire, there’s one additional step we should possibly consider: holding on to the budgeting approach that may have worked so well during our working years.
Retirement may not be the ideal time to change financial approaches.
Throughout our careers, we may not even have noticed that we perfected the art of managing our finances on a monthly basis. Like clockwork, we most likely knew how much income we had coming in each month, which bills needed to be paid and how much to allocate for various savings and investments — everything from 401(k) contributions to that vacation or new car fund.
Yet, in retirement, all the rules surrounding how to manage our finances may go out the window along with our work routine. Now, we may be expected to dip into our life savings for everyday necessities when we may not know how long we’ll need to make these funds last — especially when retirement can be full of unknowns, including life expectancy, stock market performance and inflation.
Why should we change the financial approach that has served us well over a lifetime? Spending down a savings account may not feel natural because we’ve been conditioned to believe that “savings” are for saving, notspending.