True Confessions: Budgeting for Retirement

Susan is 73 years old, living in the DC metro area, and using YNAB to float through the tricky maze of managing her money in retirement. Here’s her story.

My Unexpected “Retirement”

In 2010, I became “retired”—a little earlier than I had planned. After a successful career, my former employer did some restructuring and I was laid off in the process. This was during the recession—and it seemed no one wanted to hire a 63-year-old woman, no matter how successful I had been.

While I wasn’t in financial distress—I had an IRA and a living cushion—I couldn’t shake the nagging worry that the retirement savings I had might not be enough.

I ended up finding a job two years later—it paid $50,000/year—but it was brutal. My son urged me to quit. This stressful job wasn’t worth it (the company has since gone into bankruptcy). So I quit, and I moved to Washington D.C. to be near him.

When I moved across the country, I basically went from one expensive area to another. And with all the unexpected expenses of moving and setting up life, I ended up drawing more retirement income out of my Roth IRA than I anticipated. The worry about my monthly expenses and retirement accounts was back.

I remembered many years ago when I was on my own in Los Angeles, newly divorced, and making $13,000 a year. When you have to watch every penny, there’s something about that feeling that sticks around—that fear of being overdrawn or running out of money for basic living expenses.

I knew I needed to do more retirement planning—but first, I needed a budget.

I Needed a Retirement Budget That Fit My Life

I’m no stranger to budgeting. Sixty years ago, I remember my mother had envelopes in her dresser drawer—all marked with categories. When Excel came out, I taught myself how to use it with my budget. I would print off my budget worksheet, fold it up, and carry it in my purse.

Then I used Quicken for a long time, but it wasn’t helping me. It was just telling me what I had spent in the past instead of what I could spend in the future.

So, I looked online to find a personal finance system that would better fit my needs and lifestyle. I remember reading about YNAB—the reviewer said if you don’t have a lot of financial intricacies, that YNAB was the app and method you should use.

I liked the idea, and it lined right up with the envelopes my mother used to keep in her dresser drawer, just in virtual form.

So I signed up, I took some of the live workshops, and I got rolling on budgeting for retirement.

My Budget Gave Me Control

Between disbursements from my IRA and social security benefits, I had a monthly sources of income and I was sitting just fine. But by having a budget, I saw that if I could make an extra $1,000 a month at a job, I would be sitting real pretty in my golden years. So, I decided to get a part-time job to cover more “fun,” non-essential expenses (like travel, memberships, and subscriptions).

I had always wanted to work at The Container Store. They hired me, and I worked three days a week. It was fun, and most importantly, it was a new income stream! Sometimes budgeting would come up while talking to customers and I always mentioned YNAB. It has made such a big difference for both my retirement nest egg and peace of mind, and I am always quick to tell others!

Here’s how I use YNAB (and I’ll even tell you some of my sneaky tricks):

• Transactions are entered manually. With Quicken I had things uploaded automatically, but I didn’t want to do that with YNAB. Entering manually helps me reinforce each spending decision I make.
• I use my budget on my computer. I’m always worried about losing my phone, so I stick to the web version for my retirement budget.
• I keep my checking and savings accounts very simple. I use a workaround for some things like credit cards (they were confusing). Because I pay off my credit card each month, I just treat my spending like a debit card.
• Sometimes I play a game to stay on the budget. If there are four days left in the month and I’m low on grocery money, I see what I have in the pantry and come up with something creative. It feels good. It reinforces being mindful of where your money is going.
• I’ll admit that sometimes I’ve gone to the grocery store on the 30th and posted it on the 1st just to avoid breaking the budget (shhhhh…)
• I made YNAB’s Rule Two (Embrace True Expenses) part of my spending plan. I know home repair expenditures, sneaky health care costs, and increased health care premiums will arise at some point in the future, so I started stashing away money for them little bits at a time.
• Sometimes I squirrel money away: If I get a windfall of any size, I hoard it to cover future retirement expenses and use as discretionary income. I put it in a separate off-budget account and just keep it around. This just feels nice that I have some extra stashes around that I can tap into if needed.

My Budget Gives Me Peace of Mind

I’ve used YNAB for many years. The thing I love the most is I don’t have to worry when a bill comes in. I know the money is already allocated in my checking account. I just pay it right away without stress.

When I didn’t use YNAB, it was this horrible, sinking feeling—there was a check missing and you didn’t know where it went. I hated that feeling. With your retirement budget, that won’t be an issue anymore.

I’m now 73. I don’t need as much now, I’ve backed down my hours at work—it’s not like I’m saving up for a bigger TV. I spend more time journaling, tracing my genealogy—the things that bring me joy.

Retirement can sometimes be a guessing game, but having a budget is better than any financial planning advice I’ve received—and such a huge relief.