Do you still save each month if you are retired?

[Ally]

My husband recently retired and I hope to in a little over a year. I keep running our retirement budget numbers, because I have the bag lady syndrome. I still budget to save a couple thousand a month after retirement, even though we have a retirement fund and my husband has a good pension. I can't imagine not still saving, but then I wonder if most people stop once they retire? I think I have an overly anxious personality!


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[martyb]

I've been retired a couple of months now. For those two months, we haven't saved anything extra. However, starting next month, I hope we're able to continue to fund our 2 Roth IRA's at Vanguard. Otherwise, no additional savings. I do however hope my TSP continues to grow. I have not begun taking any withdrawals and don't plan to for the time being. Oh yeah, forgot to mention that while I've retired, wife will work for 2 yrs and is still contributing 30% to her 401k. Don't know how I could forget about that....guess I'm an old senile retired guy....lol. 30% of her income only amounts to $7550 a yr, though.

 

[Telly]

What is the definition of "Saving" when in retirement?

If both spouses are retired (i.e., no wages income), and pension output plus/or SS exceeds living expenses, then I can see the overage not spent as "saving".

But if any kind of capital liquidation is going on, or dividends or cap gains are coming out as cash, then "savings" is moot, right?

The concept of "saving" while in a working environment is clear, but I'm trying to figure out what it really means in a complete retirement situation.

 

[Midpack]

What is the definition of "Saving" when in retirement?

If both spouses are retired (i.e., no wages income), and pension output plus/or SS exceeds living expenses, then I can see the overage not spent as "saving".

I couldn't wrap my head around saving in retirement either. I guess if you have a surplus of regular retirement income after spending (pension/annuity, Soc Sec), the difference could be considered saving. Otherwise you're not "saving," you're just spending less than you can theoretically afford to spend. Our WR is thankfully very low, but "saving" is not a line item in our budget/spending. But maybe I'm missing something...

 

[RunningBum]

No, I don't save. My investments are growing but I don't make more in dividends and interest than I spend nor was that ever my goal. Could be once I collect SS and my small pension and possibly RMDs if I haven't fully converted my tIRA to Roth I will be, but I see no reason to budget for it, other than for vacations, capital replacement, major repairs, and other irregular expenses.

 

[savory]

I do not "save" each month but I do like seeing my net worth grow and my spending to be lower than my 'budget'. It just adds comfort and confidence. The concept of saving however makes sense to me if the goal is to leave an inheritance or charitable donation as a parting gift. While the amount left behind may not be predictable and/or require a formula, spending during your life time must take the donation into consideration. I see this as a form of savings.

 

[athena53]

I retired in May and we haven't had to pull money out of the investments yet because I was paid through July 1 (including unused vacation), DH gets SS and I have a $10K/year pension. Over the long run, we'll need to draw down 2 to 3% of our investments annually (will be less when I collect SS but plan to wait till 70) and I'm comfortable with that.

At this point, I'm not sure what "saving" would mean. I could take more out of the investments than we need every month and then put it back in, but what would be the point? If we spend under budget for the month, it just means it will be a little longer before we have to take more out of the investments.

 

[Lakedog]

Although I have averaged spending only around 50% of my pension over the 6+ years years I have been retired, I really had no plan to save in retirement. I am happy with my lifestyle and spend without worrying too much about expenses so the savings just happened without much thought.

 

[Andre1969]

I couldn't wrap my head around saving in retirement either. I guess if you have a surplus of regular retirement income after spending (pension/annuity, Soc Sec), the difference could be considered saving. Otherwise you're not "saving," you're just spending less than you can theoretically afford to spend. Our WR is thankfully very low, but "saving" is not a line item in our budget/spending. But maybe I'm missing something...

That's how I'm going to end up, as SS and my meager pension aren't going to cover basic living expenses. So I'm going to have to draw down on what I've already saved up. Oh, and I guess I'll be spending dividends as well, whereas right now they're getting reinvested.

Once I'm forced to start taking RMDs, I guess if I don't spend all of the distribution, I might turn around and invest it. So I guess that could be considered saving?

 

[pb4uski]

It takes a while to get used to drawing after so many years of saving. We are ER and have not started my pension and are a few years away from SS being available to us (though we intend to defer to 70) so we have no income other than dividends and LTCG from taxable accounts, which is about 1/4 to 1/3 of what we spend each year. However, due to the robust stock market returns and our 60/40 AA our tax-deferred and tax-free accounts are growing faster than our taxable accounts are declining so our total retirement savings are growing so it has made the transition to withdrawal mode much more comfortable.

I'm still funding our HSA but that will end as we only had qualifying coverage for the first half of 2014. Since we have no earned income we can't fund Roths anymore but we do Roth conversions.

 

[utrecht]

I have saved my butt off while working like the rest of you but I have to admit that for the life of me I cant understand why anyone would continue to save and/or not spend the money they budgeted in retirement (especially if they have a pension).

We are retiring in Jan, and our family budget is more than doubling. Why? Because we saved and sacrificed for the last 25 years so we could be financially independent and not be reliant on anyone. We got here and we have excess money to spend beyond what our normal lifestyle has been and we are going to spend it with no regrets or guilt. We will still have a nice chunk to leave to our heirs. I have no idea why we would continue to save and not enjoy what we have worked so long and hard for.

 

[SJ1_]

My husband recently retired and I hope to in a little over a year. I keep running our retirement budget numbers, because I have the bag lady syndrome. I still budget to save a couple thousand a month after retirement, even though we have a retirement fund and my husband has a good pension. I can't imagine not still saving, but then I wonder if most people stop once they retire? I think I have an overly anxious personality!


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We stopped saving, traveling and enjoying the money we saved

 

[scrabbler1]

When I was still working, I considered any reinvested dividends or cap gain distributions part of any additional "savings." So, even while retired, I count that the same way as I did before. For example, I generate about $40k in investment income and spend $24k so I save $16k, or 40%.

 

[Ally]

Thanks, everyone. I guess I still think about saving for several reasons. One, we won't have to draw from our investments yet, so maybe could save more for the long term. Second, my mom had Alzheimer's and although my parents had lots of money saved, by the time my mom died, there was very little money left for my dad. We had to help him sell some of his things (antiques, art) to pay for his care. Both of them were able to stay at home with daily caregivers, but still, it was scary to try to help him manage his expenses and when there wasn't enough money.

It's hard to make the mental adjustment to spend what you have saved, after all the years we scrimped to save what we did!

 

[Senator]

I hope we're able to continue to fund our 2 Roth IRA's at Vanguard

I believe you can only fund a Roth if you have earned income. Otherwise, only a IRA conversion may be allowed.

 

[Meadbh]

The withdrawal phase, by definition, is the antithesis of saving. If the withdrawal is less than budgeted, that's nice, but it's not saving. I like to put money in my TFSA (tax free savings account) and I withdraw from other accounts in an amount that allows me to do so, but I don't call it saving; I call it reallocating assets.

People with pensions that are more than sufficient to meet their needs are able to save. My mother was one such person. She had two generous pensions and was able to live comfortably, added to her savings every month, and never withdrew a penny.

 

[W2R]

My spending money in retirement from has been like a paycheck. Most of my spending money comes from my annual withdrawal, which is done strictly according to my pre-determined withdrawal rate. I don't consider my nestegg to be something I can (or would) tap into for unlimited spending. Saving in retirement makes a LOT of sense to me.

I generally do not spend all of my allotted spending money, especially during months when no unusual high expenses arise. I save the excess from those months to use later in the year when big ticket items need to be replaced, or some other unusual big expense arises. If I do not have some extra left over from previous months, I am unlikely to splurge on some unnecessary but expensive discretionary item. These are examples of short term savings in retirement.

I always have several thousand left over at the end of the year, which I effectively return to Vanguard. This could be considered long term savings. However, I am trying to reduce that amount because I can't take it with me, as the saying goes.

 

[scrabbler1]

My spending money in retirement has been like a paycheck. I don't consider my nestegg to be something I can (or would) tap into for unlimited spending. Saving in retirement makes a LOT of sense to me.

I generally do not spend all of my allotted spending money, especially during months when no unusual high expenses arise. I save the excess from those months to use later in the year when big ticket items need to be replaced, or some other unusual big expense arises. If I do not have some extra left over to spend from previous months, I am unlikely to splurge on some unnecessary but expensive discretionary item.

I always have several thousand left over at the end of the year, which I effectively return to Vanguard. This could be considered long term savings. However, I am trying to reduce that amount because I can't take it with me, as the saying goes.

I have a spreadsheet I use to project my expenses for the whole year. I have many months with lower expenses as well as a few with bigger ones so I have to carry forward surpluses in the low months to cover me for the higher months. What's a little odd is that many of those larger, infrequent expenses occur in the same months, such as car insurance, income taxes, and a trip to the dentist, all in April and October. But the spreadsheet comes in handy, enabling me to see when I have "real" surpluses I can invest back into my brokerage account.

 

[W2R]

I have a spreadsheet I use to project my expenses for the whole year. I have many months with lower expenses as well as a few with bigger ones so I have to carry forward surpluses in the low months to cover me for the higher months. What's a little odd is that many of those larger, infrequent expenses occur in the same months, such as car insurance, income taxes, and a trip to the dentist, all in April and October. But the spreadsheet comes in handy, enabling me to see when I have "real" surpluses I can invest back into my brokerage account.

Exactly. So, just as when working for a paycheck, a retiree can and sometimes does save money in retirement that can be used a little bit later in the year or else re-invested at some point.

 

[Mulligan]

I have saved my butt off while working like the rest of you but I have to admit that for the life of me I cant understand why anyone would continue to save and/or not spend the money they budgeted in retirement (especially if they have a pension).

We are retiring in Jan, and our family budget is more than doubling. Why? Because we saved and sacrificed for the last 25 years so we could be financially independent and not be reliant on anyone. We got here and we have excess money to spend beyond what our normal lifestyle has been and we are going to spend it with no regrets or guilt. We will still have a nice chunk to leave to our heirs. I have no idea why we would continue to save and not enjoy what we have worked so long and hard for.

I have been retired for four years living fully off my pension. Unlike you though, Utrecht, I was not as vigilant in the savings while working. So I feel compelled to continue saving at least $1000 a month probably for the next 15 years, until I am 65. Retiring young with a small asset base is the reason I do this. Teeth falling out, old age malady prescriptions, nursing home, etc. are all reasons I feel I need to continue saving. I still live my normal lifestyle and am not really constrained by this saving though. But I assure you I would blow it and have a good time doing it if I didn't feel it was more important to build up my asset base.


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[travelover]

I've been retired 7 years, but DW still has two more to work. I save about $1K a month from my pension and use it max out a Roth and an HSA. I don't see any reason to spend extra money unless I want something.

 

[nash031]

Not yet retired, but I can see phases coming:

Phase 1: ER/Semi-ER - I'm not working or working part-time at an interest (income not important); DW will likely continue working. Either way, I'm sure we will continue saving in this phase.

Phase 2: Total ER - both DW and I are done. No intention to save at this point. We'll have emergency funds, but they'll be replenished from pension/savings as required.

Like others have said, once we get there, I intend to spend and enjoy as our means allow us. The question we're asking ourselves right now is: how much do we want as our "means" and how long are we willing to work to get it?

 

[rodi]

I'm not in savings mode at this point - but might be in the future.

Right now our only income sources are rent and DH's SS. It doesn't cover our spending, so we draw down the balance from savings.

In 2 years I will start drawing a small pension of about $500/month. We'll withdraw less when this kicks in.

Somewhere between 10 and 18 years from now I'll start collecting SS. Also in that timeframe, the kids will hopefully be launched. At that point, we will hopefully be drawing even less.

When RMDs kick in in 18 years I suspect we'll be spending less than the "income"... but RMDs don't have to be spent, they can be reallocated back to taxable accounts.

I can't see "saving" during retirement unless one has a surplus of income from sources like rent, pension, etc. I'm not in that boat.

 

[Sue J]

Our monthly expenses are currently 87% of DHs pension so we save the 13%. Also, I have a small part time job (school crossing guard) that I enjoy so I also save 100% of that income. I don't make much, it's only around $380-$400 a month net pay and it's only during the school year but it allows me to add to the ROTH IRA or our HSA.

I've always been a saver. It's actually in my DNA. Like some others here, I can't find anything else to spend money on. So we save up for the stuff that you know is going to come up as part of life (big medical costs this year) and home ownership (roof, windows and HVAC since DH retired) and being part of a family (out of town wedding) or aging. We just save what we can every month and know it will be there to cover stuff that happens.

 

[CaliforniaMan]

We find having a separate small passbook savings account very useful for budgeting and keeping us within our spending limits. Only been retired since April, but are doing the same as we did before. Each year we determine the monthly amount to put into our checking account, and every month that amount goes into checking and another account set-aside for non-monthly expenses like insurance payments and property tax. Anything extra from checking goes into this savings. We then can use this for extra travel or something special we want to get or to do. This helps us be more frugal, since we want there to be something left to put into our savings account. It is purely psychological of course, but we find it very helpful. And any money we splurge from what we have saved does not feel like we are splurging. So we enjoy it more. Our retirement accounts are separate, and are used only to determine the monthly withdrawal each year.

EDIT: The amount deposited into checking is after state and fed tax.