Reflections From The Early Days of Spending In Retirement, Part 1

Patricia Gass

By Patricia Gass, CPA, CFA

Special to the Financial Independence Hub

I need to get this right. I’ve only got one chance.

Running out of money in retirement is NOT an option, especially for the “conservative accountant” in me. I refuse to be a burden to my children (or anyone else for that matter)!

It’s been 10 months since my husband and I received our last “official” corporate paycheque. Early retirement has been a true blessing: complete control over our life, time and money. We know there will be bumps in the road but so far so good. We are both happier than we’ve ever been. Life is great!

Our unwritten pact 

When will things change? Did we save enough? Time will tell. Our unwritten pact to each other is that if our money runs low, we must both return to some kind of paid work. A scenario that is entirely possible if we spend too much early on or if something goes wrong. After all, we are only 56 years old and retirement could last a very long time.

My husband feels totally free; not a money worry in sight. I wish I could say the same! He tells me he has the utmost confidence in my financial and investment capabilities. Sounds like a lot of pressure to me!

Here’s What I Know

We are very fortunate, have worked hard, done well and been lucky. We are educated, smart enough (but not mensa material), good savers to date and relatively healthy. We have always lived within our means and, over time, have enjoyed an increasing standard of living. But, we do like (some) nice things and want to travel. An expensive proposition! We no longer have health insurance:  a definite “wild card” and risk. Our assets (and income from them) must cover this risk. The longer our retirement, the more “slush fund” or cushion we need.

Here’s What I Don’t Know

Bubbles can burst at a moment’s notice. Are we prepared for the storm when it arrives? How bad will it be? Poor health, unforeseen expenses, bad luck, lower than expected investment performance, higher than expected inflation, etc. The unknowns seem greater than the knowns to me.

The Plan

I am an avid reader of all things personal finance and investments. Lucky for me (and my husband) that I enjoy this stuff.

I have done many (likely hundreds of) retirement projections. I know they will all be “wrong.” There’s nothing like a good spreadsheet to keep me busy! With so many uncertainties and variables, the outcomes are all over the map. No wonder most people are confused about retirement!

It’s very hard to know what/when we will spend in retirement. Will we need a new roof in six months or six years? Therefore, I will be watching our spending quite closely (each month) and making adjustments when needed. I hope my husband will be on board?!

We are also fortunate to have a good investment advisor that we trust — he will continue to be an important partner as we navigate our investments in retirement.

Will it all work out for us? We’re counting on it.

One of my life philosophies is to hope for the best but plan for the worst. I doubt we’ve adequately planned for the “worst” scenario. But, isn’t every plan really a work in progress?

Stay tuned for more as we continue to navigate the realities of life and spending in retirement.

Proud founder of the blog, Let’s Talk About Money, Patricia Gass, CPA, CA, provides personal finance coaching and education to improve your money skills. Follow her on linkedin, twitter or pinterest.

One thought on “Reflections From The Early Days of Spending In Retirement, Part 1

  1. Hi Patricia,

    In speaking with many hundreds of investors over the years, I have come to believe that most people have a very hard time determining the amount of risk they can tolerate.

    This results in an anxiety which seems to peak during periods of volatility and bear markets.

    I created this Asset Allocation Guide to help investors get a better understanding of what is possible during bear markets.

    I have also come to realize that successful investing is 90% psychology and perhaps 10% math.

    It is also difficult to estimate retirement spending, for example I have an 85 yr old client who does not even spend her full pension. I have to transfer her RIF payments to her TFSA and Cash accounts.


    Mike Bayer

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