I am 56 years old and semi-retired. Although I was a single mother for many years, I have enjoyed considerable success working in corporate America for over 30 years. My total net worth is approximately $3.4 million, including my home, investments, and liquid cash.
I plan to write my final college tuition check at the end of this year. I have no credit card debt and own a car, but I have a $325,000 mortgage on my home at 3.5%. The house is worth $800,000.
I recently got married and have a prenuptial agreement, trust, will, and other related documents. My spouse, who is 64 years old, is also semi-retired and already receives a Social Security widow pension of about $1,400 a month. He doesn’t have much savings to speak of.
We live on about $9,000 a month with income from my small business and my spouse’s part-time job. My question is, are we spending too much? Should you start thinking about spending less so that your hard-earned money lasts for the rest of your life??
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look: I’m 76 years old and have $73,000 in an investment account that hasn’t grown in two years. Should you abandon the 50/50 strategy?
Dear readers
First of all, congratulations. Being a working mom and a single mom is hard enough on its own, but being able to build wealth while doing so is truly amazing.
You seem to be taking care of yourself pretty well, with savings and investments, a home, a small business, and no credit card debt. Of course, a mortgage isn’t considered a “bad debt” unless you’ve taken out too much on your mortgage and can’t live comfortably on that income, but I doubt you’re in that situation. .
I can’t say whether or not you’re spending too much money, partly because I don’t have all the information to understand your financial situation, but here are some ways you and your spouse can feel safe. I can tell you a few things. Decide if you are.
It may sound elementary, but at the end of the day, it comes down to observing cash inflows and outflows. Focus on the short term at first. Then try this exercise long term. Write down all your absolutely necessary expenses for the month, such as your mortgage, utilities, taxes, insurance, and groceries, and compare it to your monthly income.
If I have semi-annual billing, I like to break down the total cost to see what my monthly costs will be. For example, if he has a $1,200 car insurance claim every six months, that would be $200 per month. Then, I write down my monthly budget as if I were paying it myself because I know I can plan ahead because I don’t want to pay a huge bill.
Then add in your monthly expenses for things you really enjoy. This could be a gym or golf course membership, a subscription service, or a weekly trip to your local cafe for your favorite latte.No, it’s not need It’s natural to spend that money, but you worked hard for that money, so you should be allowed to have fun with it. Be sure to take advantage of your gym membership or subscription.
Plan for the unexpected
Create savings items in your budget. Even if you have built up a small fortune, you never know when something unexpected will happen. It’s a blessing to have as much cash as possible to protect yourself and your family.
Do the same exercise for estimating future budgets. For example, you mentioned that your spouse receives widow benefits. Will things change once he reaches full retirement age? When do you expect to claim your own interests? If you are exiting your small business, when do you plan to exit? And if so, how will your income be affected? When is the last time to pay? And how much freedom from spending does it give you?
We asked you a lot of questions, but these are just a few of the questions you need to ask yourself and your spouse to determine if you’re spending too much money now or if you can manage it in the future. Not too much. life. Creating a list of questions and answers will help you figure out if you need to adjust your current spending.
For example, how do your current expenses compare to this expected income, and do you feel confident that you can maintain your current lifestyle with the expected income in addition to your retirement savings?
From there, you can also see how much you need to withdraw from your retirement savings each year to replace your lost income. If it’s a little complicated, a qualified and trusted financial planner can help you make sense of the numbers.
But it’s not that big of a secret. You’re not alone in feeling this way. Retirement planning is never a simple endeavor.
Comfort plays a huge role here. You don’t want to keep your assets locked up forever, preventing you from realizing the fruits of your hard work, but you also don’t want them to deplete too quickly, considering you both need them to extend your life.
And while you’re calculating these numbers, talk to your spouse about all possible possibilities, including how much income and expenses you would expect to have if your spouse were to die before you, or vice versa. Please discuss with me. If it helps, have this conversation over your favorite beverage. These aren’t easy conversations, nor are they quick, so take it easy.
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Have questions about your retirement savings? Email us at HelpMeRetire@marketwatch.com
