Does My Budget Ever Change in Retirement?

Tom Vaughan is a Certified Portfolio Manager and CEO of Retirement Capital Strategies. Retirement Capital Strategies is a registered investment advisor located in San Jose, California.

The opinions voiced in these presentations are for general information only and are not intended to provide specific advice or recommendations for any individual(s). The information provided herein is obtained from sources believed to be reliable, but no reservation or warranty is made as to its accuracy or completeness. Statements and opinions are subject to change without notice. Asset allocation and portfolio diversification cannot assure or guarantee better performance and cannot eliminate the risk of investment losses. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. Accordingly, you should not rely solely on the information contained in these materials in making any investment decision as the material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments or strategies mentioned in this presentation. Before acting on information discussed in this presentation, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment advisor. Prospectuses, investment objectives, risks, charges and expenses of any investment product should be reviewed carefully before investing. This platform is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Retirement Capital Strategies and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Tom Vaughan or Retirement Capital Strategies unless a client service agreement is in place. “Likes” are not intended to be endorsements of our firm, our advisors or our services. Please be aware that while we monitor comments and “likes” left on this page, we do not endorse or necessarily share the same opinions expressed by site users. While we appreciate your comments and feedback please be aware that any form of testimony from current or past clients about their experience with our firm is strictly forbidden under current securities laws. Please honor our request to limit your posts to industry-related educational information, comments and questions. Third-party rankings and recognitions are no guarantee of future investment success and do not ensure that a client or prospective client will experience a higher level of performance or results. These ratings should not be construed as an endorsement of the advisor by any client nor are they representative of any one client’s evaluation. Investment positions mentioned in these videos may be held in some of our existing portfolios. Tom Vaughan and Retirement Capital Strategies are unaffiliated and separate from those companies whose investment positions are mentioned and is not liable for their products or services.

By participating in any of these live streams, you agree that any questions submitted by you might be used by us in the future on this YouTube channel. We will not share your personal information.

If you have questions, please write to us at: asktom@talkmoneywithtom.com.

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Transcript:

Easan Arulanantham:

Does budget ever change in retirement? As I get older, I expect to travel us and should I plan around just having a lower budget when I get home in my advanced years?

Tom Vaughan:

We have not seen dramatic decreases in budget based on age, mainly because people have a certain lifestyle, and a certain amount of money to spend. And they continue to do that. It just sometimes the money goes to different places. So exactly what the question talked about, for example, with travel. So oftentimes, we’ll we’ll call it early travel and late travel. And we’ll have two different budgets for that. So first, whatever number of years of retirement a lot more money for travel. And then after age 80, or something, you know, or whatever it is, in the this is personal, I have clients that are way already traveling a lot. So it depends. But theoretically, you know, we have quite a few clients that will reduce that budget, but it’s often offset. So as you get older, there’s more things that might happen. So for example, maybe you need to pay for hearing aids, you know, or more dentistry cost, those are things we run into quite often, right. And so, or I’ve seen older clients that have excess money, going a lot more charitable, either with a family, right gifting to family members. So maybe some of the money that was going to charity is now going to their son, daughter, whatever, for Christmas, you know, gifts are not gifts, but you know, money gifts, or their other charities, you know, that they’re getting into. So I haven’t seen a big drop off in the overall cash outflow per se. You know, because that can be offset by some of these other things.

Easan Arulanantham:


Yeah, a lot of people just like having that one number, that one budget number, they stick to it, and they know that works for them. And we’ll throw in other expenses a lot of times on the plan. So, you know, hearing aids, dental work, those are some things that Medicare tends to not cover and or covers, but not enough. And so we’ll see that out of pocket, you know, you’re gonna have a little bit extra cost.

Tom Vaughan:


Yeah, it’s gonna be offset by medical. That’s for sure. You know, but it’s, it’s a good question, actually, you know, because it goes in tandem with, you know, the whole life planning component of the retirement plan that I think is really important to kind of understand. But, you know, I’ve done about 6000 plans, this is my 35th year, I’ve walked through 35 years of watching how these plans play out. I personally haven’t seen a big drop off in expenditures based on age per se, mod on an average basis, that’s for sure. There’s always one off situations or unique situations. But now they’re that whatever money’s coming in, tends to go back out that they’re used to spending for something.

Easan Arulanantham:

But we’ve also seen, you know, some people are like some other planners have, what they call the Go Go years, the slow go years, and then the no go years. And if you’re like an avid traveler, and you’re going to travel really hard in the early retirement phase, maybe that’s something that you want to talk about with your planner is that, you know, we will be really aggressive in our early years with our budget.

Tom Vaughan:


Yeah, yeah. And see how it plays out, there’s a work, because it’s one thing to want to do that as another thing to go broke. So I want to make sure it works. And if it does work, I think that feels great, right? And then you look at it every six months, like we do, and the strategy sessions, make sure it’s still working and markets change, things change. But I think there’s a big comfort there personally, that if I knew, hey, I’m spending a lot on travel this, you know, five years after retirement or whatever it is. But I can do it, it works. You know. And again, I’m checking that every six months to make sure but I feel good about that. And I think that makes it enhance the travel. I mean, personally, you know, if I’m going to spend some massive amount on travel, I’d like to know I can afford it. Because if I am worrying about whether I can afford it or not, at least in the back of my mind, it takes away from the benefit of the vacation.

Easan Arulanantham:


Yeah, are you are you’re in pinch pennies here, like on a meal or stuff like that. And during that travel, right, are you gonna get guilty that Oh, I can’t buy the souvenir because it’s a bit too expensive.

Tom Vaughan:


It’s nice to know, I think that’s one of the power of what we bring to the clientele is that, you know, retirement plan and using Monte Carlo simulation, we know and then we can keep adjusting and keep looking to make sure that what we know is still accurate, but it’s really, I think that’s super important. Personally, I you know, for me, I would struggle to not have that structure there and just guess what I could spend

Tom Vaughan is a Certified Portfolio Manager and CEO of Retirement Capital Strategies. Retirement Capital Strategies is a registered investment advisor located in San Jose, California.

The opinions voiced in these presentations are for general information only and are not intended to provide specific advice or recommendations for any individual(s). The information provided herein is obtained from sources believed to be reliable, but no reservation or warranty is made as to its accuracy or completeness. Statements and opinions are subject to change without notice. Asset allocation and portfolio diversification cannot assure or guarantee better performance and cannot eliminate the risk of investment losses. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. Accordingly, you should not rely solely on the information contained in these materials in making any investment decision as the material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments or strategies mentioned in this presentation. Before acting on information discussed in this presentation, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment advisor. Prospectuses, investment objectives, risks, charges and expenses of any investment product should be reviewed carefully before investing. This platform is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Retirement Capital Strategies and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Tom Vaughan or Retirement Capital Strategies unless a client service agreement is in place. “Likes” are not intended to be endorsements of our firm, our advisors or our services. Please be aware that while we monitor comments and “likes” left on this page, we do not endorse or necessarily share the same opinions expressed by site users. While we appreciate your comments and feedback please be aware that any form of testimony from current or past clients about their experience with our firm is strictly forbidden under current securities laws. Please honor our request to limit your posts to industry-related educational information, comments and questions. Third-party rankings and recognitions are no guarantee of future investment success and do not ensure that a client or prospective client will experience a higher level of performance or results. These ratings should not be construed as an endorsement of the advisor by any client nor are they representative of any one client’s evaluation. Investment positions mentioned in these videos may be held in some of our existing portfolios. Tom Vaughan and Retirement Capital Strategies are unaffiliated and separate from those companies whose investment positions are mentioned and is not liable for their products or services.

By participating in any of these live streams, you agree that any questions submitted by you might be used by us in the future on this YouTube channel. We will not share your personal information.

If you have questions, please write to us at: asktom@talkmoneywithtom.com.

  • MoneyGuidePro®
  • Advent Software/Black Diamond Reporting
  • Riskalyze, Inc.
  • thinkpipes®
  • Right Capital
  • YCharts, Inc.