You’ve put your time in and the day you’ve been waiting for has finally come. It’s time to retire! You’re done working 40+ hours a week and ready to enjoy the money you’ve been saving for years. Slow down for a minute, though. It can be tempting after working for so many years to start checking off all the items you’ve been adding to your bucket list throughout the years, but this can lead to some severe overspending. It’s a nice gesture to invite your entire extended family on vacation or help your children pay off some of their debt, but you still need to focus on the future.  When you’re working, you have a steady stream of income along with a healthy savings to fall back on when unexpected expenses pop up. When you retire, it’s like someone just threw a half million dollars at your feet and said “Enjoy!”  But that savings is your job now. You have to manage it as you managed your job before, albeit with much less time and stress.

You can avoid overspending by cutting back on certain luxuries you’re used to having. The balance comes with developing a smart financial plan to ensure you live within your means while still enjoying the quality of life you’re used to. Here are some essential tips to get you started on the right path.

Create a Budget

You should be no stranger to a budget by the time you retire, but you’ll need to start tweaking it to adjust to your new financial circumstances. Know how much money you’ll have coming in between social security, pensions, and your retirement plans such as a 401k. Split your expenses into those that are required, such as housing, food, and vehicle maintenance, and another category for discretionary purchases like vacations. Re3view all your insurance plans to see if a new provider might offer similar coverage at lower prices.  In the working years it made sense to pay for convenience.  Now you are that convenience.

Develop a Withdrawal Strategy

Once you know how much you need to live comfortably every month, you can determine how much you need to take from your retirement every month. The standard 4% withdrawal rate should last at least 30 years, but will vary based on your savings, the financial market, interest, and hefty expenses such as healthcare.  Keep in mind tax consequences of the accounts you draw from as well.

Cut Back on Expenses 

Cutting back on spending is painful if you’re used to getting what you want when you want it, but it’s a necessary part of smart financial planning. Evaluate whether you can make changes to the two highest expenses: housing and health care costs, too. Every regular monthly payment you make should be evaluated, and now hey – its OK! You’ve got the time to do it yourself!

  • Healthcare: Retirees spend roughly 11.4% of all income on medical care because Medicare only covers 80% of costs. That 20% responsibility can swallow up your income. It also fails to include eye exams, orthotics, and dental care. Find a supplement plan to help ease your financial burden. If you have a pension, most pensions pay for life, so the better your health and the longer you live, the more that pension is paying off for you. Be healthy and be happy!


  • Housing: Did you think you would have your home paid for by now? The average retiree 75 or older spends 43% of income on housing and related expenses. It’s beneficial for many to downsize to a smaller home or move to an area with a lower cost of living than where you are currently. And that includes much more than just your rent or mortgage.  Many communities dominated by retirees have significantly lower property taxes. Utility expenses can be lower in more moderate climates too. These adjustments can free up income for discretionary purposes. Other basic actions such as cooking at home more often or capitalizing on discounts and specials for seniors can also keep your wallet a bit thicker.

Hire a Financial Planner

Seeing a financial planner annually can put financial responsibility in someone else’s hands, but this cost money too. They can look at your investments, determine an acceptable withdrawal schedule, and examine your current and past spending to give you helpful tips and advice. It’s smart to fix an overspending problem sooner rather than later, which financial planners recognize and work quickly to remedy. Their goal should be to help you have the most money to enjoy the golden years that you’ve worked so long and hard for, without charging you more than they are saving you.