Creating a paycheck in retirement

[MrSmee]

Let me start with this: DW and I are NOT good at controlling spending. If we have money in our pocket, we spend it.

So I have always controlled our spending by limiting how much we had each month. For a while we even went to cash only.

In retirement I would like to replicate that. Generate a weekly pay check from our withdrawal buckets and split it into His, Hers and Ours. That would not include the lumpy items from the budget like large purchases or travel, but just the impulse buys and discretionary stuff.

I'm curious how others manage the retirement paycheck. Do you have scheduled withdrawals into spending accounts? Set amounts? How do you manage it as a couple? What are the technicalities of doing that from multiple providers(Fidelity and Schwab)?

"Discipline" might be the answer but I only get that by imposing it systematically.

I will have a short, medium and long term bucket strategy but I don't want easy access to that short term bucket all at once.

 

[pb4uski]

I keep about a year of spending in an online savings account at Discover Bank and have a monthly "paycheck" transferred to the checking account that we use to pay our bills. My pension and DWs SS also go into that checking account and combined it covers our normal spending.

I replenish the online savings account annually.

 

[W2R]

Let me start with this: DW and I are NOT good at controlling spending. If we have money in our pocket, we spend it.

So I have always controlled our spending by limiting how much we had each month. For a while we even went to cash only.

In retirement I would like to replicate that. Generate a weekly pay check from our withdrawal buckets and split it into His, Hers and Ours. That would not include the lumpy items from the budget like large purchases or travel, but just the impulse buys and discretionary stuff.

I'm curious how others manage the retirement paycheck. Do you have scheduled withdrawals into spending accounts? Set amounts? How do you manage it as a couple? What are the technicalities of doing that from multiple providers(Fidelity and Schwab)?

"Discipline" might be the answer but I only get that by imposing it systematically.

I will have a short, medium and long term bucket strategy but I don't want easy access to that short term bucket all at once.

My method probably wouldn't work for you! But here's what I do.

I have my monthly Social Security, mini-pension, and RMDs all deposited into my checking account. They arrive at different times of the month from different sources. I keep very close track of exactly what I spend (to the penny!), and how much I still have in the bank. I don't buy discretionary stuff if I am not happy with how much I have in the bank. If I know I have something like property tax coming up, I put the brakes on spending until I have enough to cover it.

I am single, though, and couldn't do this as a couple! I remember those days and it was hard to keep from over-spending. All I can say is "good luck", and remember that controlling spending is easier than controlling income in retirement.

 

[audreyh1]

As soon as we retired I arranged monthly transfers to our checking account. That felt exactly like getting a paycheck.

 

[Out of Steam]

It's taken a bit for us to get the process right, but we now have monthly draws from three accounts spread between the 10th of the month and the 25th, to provide income around my pension which comes in on the first business day. It will need to be adjusted again this summer, as my wife's Social Security is starting.

Still have some room for improvement on tax withholding, as we've consistently had too much money withheld since retiring.

 

[Toocold]

We've have a banking account that we use for everyday expenses.

We have our cash account at our brokerage that receives funds from various sources, such as our dividends, interest, NQDC distributions, rentals. Every month, we transfer our monthly "budget" amount to our banking account. We also use this account for fun stuff like travel outside of our budget or emergencies.

We also have a separate brokerage account for retirement and once in a life time bucket items, like a round the world cruise.

We lived this way, even when I was getting a paycheck, so the transition was easy.

 

[momoftwo]

Been retired 3 years.
We maintain a checking acct at a local brick and mortar bank. Savings acct at Ally online.
IRAs at Fidelity.

Our two SS checks and small pension are deposited first week of month.
Automatic IRA withdrawal hits checking third week of month.

Pretty much the same as when we had bi-weekly paychecks.
Still working on tax witholding. Ive adjusted it down each year as we seem to owe less than I've guesstimated.

 

[racy]

Similar to others: retired and have SS checks deposited in our checking account the second week of month and an IRA withdrawal the 4th week of the month. The IRA withdrawal is a very safe percentage of the portfolio.
If you need 'his, hers & our', you could divide this among 3 checkbooks.

 

[Badger]

Let me start with this: DW and I are NOT good at controlling spending. If we have money in our pocket, we spend it.

So I have always controlled our spending by limiting how much we had each month. For a while we even went to cash only.

In retirement I would like to replicate that. Generate a weekly pay check from our withdrawal buckets and split it into His, Hers and Ours. That would not include the lumpy items from the budget like large purchases or travel, but just the impulse buys and discretionary stuff.

I'm curious how others manage the retirement paycheck. Do you have scheduled withdrawals into spending accounts? Set amounts? How do you manage it as a couple? What are the technicalities of doing that from multiple providers(Fidelity and Schwab)?

"Discipline" might be the answer but I only get that by imposing it systematically.

I will have a short, medium and long term bucket strategy but I don't want easy access to that short term bucket all at once.

Until and unless you focus on the crux of the problem and understand the difference between need and want, no amount of games and juggling will be effective because you will always be able to override them when you get the "I wants".

Cheers!

 

[rwdflynavy]

Several years before retirement my wife and I decided to set up our own accounts for a monthly "allowance". This is money we can spend in any way we want.

Any large purchases we want to make not involving our allowance we have to discuss first and see if the budget will support. We never argued much over money, but this one move ensured we have nothing to argue about when it comes to money.

We put everything on various credit cards to take advantage of cash back, miles etc. and pay them off at the end of each month.

 

[FLSUnFIRE]

A couple years before my FIRE date, I had my paycheck deposited to my investment account and had regular withdrawals from my investment account to my CU checking account to cover my expenses. I have a good grasp on my spending but this allowed me to prove to myself that I can indeed live off my "allowance." Day to day financial life was exactly the same once I quit; I just didn't have pay being deposited into my investment account.


I still have an automatic transfer of my "allowance" at the beginning of the month and only make other transfers for rare lumpy expenses (that I track/maintain sinking funds for) and my property tax bill.

 

[Alex The Great]

No SS or IRA distributions yet. Established automatic earnings transfer every month from Fidelity investment checking account into Alliant CU checking which is the one designed to pay for everything.

 

[DrRoy]

For years we have had a pretty well developed plan for managing our money, including a couple years of home remodeling projects (that are done), and extensive travel. Once a year I put a year's worth of needed cash into the money market "spend" account, and we keep an eye one it as the year goes by. Never had a problem.

 

[COcheesehead]

No pension or SS.
I built a tax free ladder in my taxable account. It pays us monthly - sometimes twice a month. We live exclusively off that income. I don’t have to sell anything. The interest goes into our core account. Bills get paid from that. Easy.

 

[Dash man]

Our expenses are too lumpy to have any kind of regular transfer into our checking account. Between estimated quarterly Federal and state income taxes, and property taxes from the townships, counties and school districts our properties are in, and other lumpy expenses like repairs of cars and homes, we can’t predict closely. So we just pull funds as we need them. Some months my SS, small pension and dividends and interest in our taxable accounts are enough. Other times we sell a little and take some capital gains. We reinvest everything in our Roth and tax deferred accounts. DW will start SS in a little over three years at 70. We do keep an eye on our investment totals to make sure we aren’t depleting them too quickly.

 

[MarieIG]

I transfer a set amount of funds from a taxable brokerage to one of my "operating" accounts (a checking account). I use that for monthly type expenses. Out of that I transfer a smaller sum to my tax account, which I keep for the sole purpose of paying taxes. I also add to the tax account directly from the brokerage accounts several times a year. I'm not taking SS yet, but when I do, I'll just add that to my operating account.

Currently, I'm not withdrawing from IRAs, but am doing conversions.

DH gets monthly payments in the form of a pension & annuity. They go into an interest earning account, from which he transfers a portion into his operating account leaving some behind for lumpy expenses. (He got the idea from me.) He pays monthly bills such as utilities, car insurance, food, buys stuff for me from the store etc. out of his operating account.

 

[pacergal]

DH and I each get a cash withdrawal on the first on the month, for our "fun spending/eating out" money. Cash has worked well for us for years. We know if we spend it all the first week, we go without the rest of the month. That is how we control our personal spending.

We withdraw from the checking account used for bills. We have regular monthly deposits into the checking.
I know exactly how much we need every month for our budget and we don't vary too often.

 

[Trailwalker]

We have no social security, pension, or annuities. We use a bucket approach and have the short term bucket divided into three sub-buckets: Treasuries, a Marcus savings account, and a local bricks and sticks checking account.

I move money from Marcus to the checking account about once per quarter to cover the next quarter's expenses. Treasuries are reinvested except what I need to fill the next year's expenses.

I guess it's like getting a quarterly paycheck, and it's worked for us.

 

[scrabbler1]

I am not yet old enough to collect SS or my frozen company pension although I am barely old enough to take withdrawals from my rollover IRA. My income comes from monthly dividend payments from a large holding in a corporate bond fund. I treat that like a monthly paycheck which I use to pay the bills. I have been using this system since I FIREd in late 2008, nearly 15 years ago.

 

[tmm99]

As soon as we retired I arranged monthly transfers to our checking account. That felt exactly like getting a paycheck.

Same here.

 

[audreyh1]

As soon as we retired I arranged monthly transfers to our checking account. That felt exactly like getting a paycheck.

Same here.

Once I got that set up it felt similar to when I was working and we left it that way with a fixed amount for many years. It certainly helped me get used to living off investments - no SS (yet) or pension here.

After a few years I became more flexible dialing up and down as needed. Lumpy expenses were handled directly from higher interest savings accounts and just enough sent to checking each month to cover typical expenses.

These days I typically put a year’s worth of budget into high yield savings, and transfer monthly to checking from there, as well as pay lumps and taxes from savings.

 

[wdwwildbill]

I'm getting close to no regular paycheck. This has helped so much thanks

 

[tmm99]

Omce I got that set up it felt similar to when I was working and we left it that way with a fixed amount for many years. It certainly helped me get used to living off investments - no SS (yet) or pension here.

After a few years I became more flexible dialing up and down as needed. Lumpy expenses were handled directly from higher interest savings accounts and just enough sent to checking each month to cover typical expenses.

These days I typically put a year’s worth of budget into high yield savings, and transfer monthly to checking from there, as well as pay lumps and taxes from savings.

I do something similar. I fund my high-yield savings account twice a year with my 401K or my rollover IRA - in the early part of the year and around October. Depending upon how much I need, I adjust the amount to add in October. Tax installments usually come out of my dividend earnings. Any special stuff (a car, roof replacement) will come from elsewhere (reserve funds, investment accounts, etc). No SS for me for a few more years. I get a small pension ($4,000/year) but that's just my fun money.

 

[NW-Bound]

No periodic transfers for me. I just pull money from investment accounts to the checking account as the latter's balance gets below $10K. This money transfer is done very irregularly through the year. However, I do keep an eye on the IRA/401k withdrawals in order to keep track of the taxable income level. And I also keep track of our WR as a percentage of investable assets through the year.

As I have been doing Roth conversion to the top of the 22% bracket for MFJ status, I am now thinking about moving the whole annual allocation from tax-deferred to the Roth at the beginning of the year to get it over with. I then take money from Roth to spend as needed.


PS. I just realized that with interest rates being higher, having too much cash in the checking account keeps me from getting a bit more gain out of my money. A $10K balance in the checking account means missing $100/year for every 1% in interest rate.

I need to get my wife into managing this cash transfer to manage the checking account balance. She's the one taking care of paying all the bills, while I spend a lot of time managing the investment accounts. I can make $100 by selling an option contract, and I try to do 10 to 20 contracts each day. Hence, I often neglect the management of other cash accounts.

 

[marko]

We move a chunk over to our main checking account at the start of the year. It pays all the bills.

From that, every week we have $X transferred to separate debit cards for DW and I. That is our "weekly paycheck" and it covers groceries, gasoline, eating out and miscellaneous small expenses.