I actually do follow my own advice!!!

Conscientiously following my own advice, I have just completed a year-end review of my monthly, retirement budget numbers.  And you know what, I’m pretty happy with the results.  I am more or less managing to successfully live within my new means.  Cudos to me!

But less you think me Mary Poppins (“practically perfect in every way”), I have had to make adjustments, upwards as it happens, to two items in my budget. 

Gas for the car and groceries.

My original monthly budget for gas was tight.  Too tight, as it turns out, to accommodate the creeping, incremental increases in the price of a litre of gasoline.  Especially during the summer months, the prime time for out-of-town field trips.  I could have solved the problem by simply not driving as much, by taking public transit more often, for example.  But that would only have been a temporary solution.  Eventually, more bus trips would have slowly pushed my monthly “transit” costs higher (I have a budget category for “transit” as well as gas!)  And since I am still planning to continue to take out-of-town field trips during the summer, I am just going to have to pay the going rate for gasoline, whatever the current price per litre is.  With absolutely no chance of 49 cents a gallon gasoline returning (yes people!  I’m old enough to remember when gasoline was sold by the gallon, and only cost 49 cents!) my only option was to increase my monthly gas allowance.

My monthly grocery budget, as it turned out, was a little tight as well.  I had assumed that a third, perhaps even half of my pre-retirement grocery budget was going to brown bag lunches, so I cut my monthly grocery budget accordingly.   (Mad Retiree tip – if you are not already brown bagging your lunch, start tomorrow.  Besides saving money, it will get you used to eating your own cooking, because once you retire, lunches out are one of the first things to go!)  As it turned out, only a small percentage of my regular grocery shopping was going toward work lunches.  It turns out I had cut my grocery budget too drastically.  So number one, I had to rectify that cash shortfall.

And number two - I am a type II diabetic, so my weekly grocery shopping is all about fresh fruit and vegetables.  Whatever the current cost of those fruit and vegetables, that is what I am having to pay.  And the cost of those fresh fruit and vegetables has been going up in leaps and bounds the past eighteen months or so.  In the end, there was no hemming or hawing about increasing my grocery allowance, either.  

The moral of this story - because I had been tracking expenses and working within a monthly budget long before I actually retired, I already knew where every “dime” I earned was going when I set up my original retirement budget.  So making minor adjustments a year later to that budget was just that, minor, and didn’t involve me breathing into a paper bag because I was hyperventilating about how I was possibly going to make ends meet.

I did not make huge, random dollar amount increases to my gas or grocery allowances either.  I was, and still am, monitoring my monthly expenses very closely and carefully, so I knew when, where and by how much I was "overspending" on gas and groceries.

Oh, and by the way, I always pay cash for groceries and gas. 

No exceptions, ever. 

Actually, none of my monthly, variable expenses go on a credit card.  Not lunches, not tea, not Starbucks, not transit tickets.  I don’t even use my debit card.  Only cash.

Why?  Because it’s the only way to watch your hard-earned money literally slipping through your fingers. 

Actually handling your own money, quite literally and viscerally, puts you in touch with your hard earned cash.  And once you develop a personal, hands-on relationship with your money, you think long and hard about handing it over for a four-dollar cup of fluffy Starbucks coffee or for those to-die-for sandals just because they’re on sale.

And I am probably one of the last customers in the Western world that does not pay any of her bills on-line.  Why?  For exactly the same reason I pay cash when I can.  Sitting down and actually reading your monthly statements, then writing, with your own little, lily white hand, a dollar amount on a cheque and then recording that expense is just another way to put you in day-to-day touch with your money.  (You are recording all of your monthly expenses aren’t you?   And by “recording”, I mean writing them down in a ledger.)

Once you get to know your money, understand exactly where it goes – basically get on a first-name basis with your cash, so to speak – you’ll find it doesn’t step out on you nearly as often anymore!!!

Stop the retirement carousel – I want to get off!

Despite what I have written, you have read, and others have witnessed, my first year and a bit of early retirement was not all rainbows and unicorns.  Once again, in the interests of full disclosure … during my first year of early retirement, in no particular order:

1.     The glass in the marvellous photo gifted to me at my retirement party, cracked on the taxi ride home and had to be replaced.

2.     During the six week period from the beginning of November to mid-December 2012, I cracked two, not one, but two, major fillings.  The second trip to the dentist involved rebuilding a portion of the remaining tooth.  (The lesson here - think carefully about whether or not you want to “buy” into Ryerson’s dental plan when you retire!)

3.     Early one Sunday morning in February, I had to make an emergency telephone call for a plumber. I do not have to tell you how much a plumber costs at 1 a.m. on a Sunday morning.  The call also resulted in a follow-up visit to replace a very important piece of bathroom fixture.

4.     My stove died – or at least the oven did.  The stove itself, a basic, white builder’s stove, was 10+ years old, so there was no up-side to calling, and paying for, a repairman.  So it was off to Home Depot, in the middle of a spring snowstorm to “buy” a stove.  I used the verb “to buy” euphemistically here.  I basically pointed at the cheapest model and said “sold”.

5.     The first Saturday in June, the boiler on the roof of my condo “failed” and flooded the top four floors of my building.  I live on the second floor from the top.  My unit did not suffer any water damage (though while in my pyjamas, I did get to meet a very nice, young Mississauga fireman!)  though I was without power for four days while electrical panels were replaced.  Running water and electricity were eventually restored to my floor, but I lost all of the food in my freezer and refrigerator.

6.     On a July 1^st car trip to Windsor, my car, well, died.   It was several hundred dollars for a new fuel pump, plus the cost of an additional night at the hotel before I was finally able to make my way home to Mississauga.  (This is the fuel pump story I just know everyone is wondering about!)

7.     And then came the Christmas ice storm.  Fortunately, I was without power for only four hours so no provisions lost during this power outage.

8.     And just to kick a girl while she’s down – I toddled down to the underground parking garage one morning in December only to find the right front tire on my car was flat.  Other than having to make yet another call the CAA, this time to get the car out of the garage, replacing the tire was not really an unexpected cost.  I knew all four tires on my car were due to be replaced – it just would have been preferable if I had been able to choose the date the car went into the garage.  In fact, in this long list of misery, the only expense I had budgeted for was new tires for the car. 

 

9.     And oh, by the way, my car was also due for emission testing and registration sticker renewal.

I have witnesses and credit card statements to verify all of the above!

As a home and/or car owner, you can except to have to deal with any or all of the above maintenance scenarios and emergencies.  Just hopefully, not all in the same calendar year.  Or in the first calendar year of retirement! 

When you are working, making a full-time salary, these sorts of emergency expenses hardly cause a ripple of excitement or concern.  You put the repair cost on a credit card, smug in the knowledge that the next pay cheque to drop into the bank will more than cover the expense. 

Except that once retired, you are keenly and painfully aware of just how much money is not dropping into your bank account on a monthly basis.  It is to cover these sorts of emergency expenses and keep the financial anxiety at bay that you need to have a workable budget in place before you retire.

I did have a workable, monthly budget in place before I retired.  And as recommended in a previous blog post, my budget includes a dollar amount that is automatically transferred into a savings account. 

Because I had a working budget and a savings plan in place before I retired, I only had to dip into savings for a few hundred dollars to clear off my December credit card balance.

So today’s words of wisdom from the Mad Retiree, even if you a have a workable budget in place, don’t be too smug and condescending about how well you have constructed that budget, because the powers-that-be will let the air out of your right front tire. 

‘Cause life happens. 

Even when you’re retired. 

So start trying to get a handle on your day-to-day expenses as soon as possible.  Then work hard and conscientiously to establish a workable, monthly before you officially retire. And make sure there is some wiggle room in that monthly budget to cover household emergencies without having to dip into savings to pay off unexpected credit card balances.  The cost of emergency maintenance and repairs to home and auto do not suddenly disappear just because you are now retired! 

(Another Mad Retiree tip - beginning the year prior to your official retirement date, try to learn to live within your new, monthly retirement budget.  Basically, start how you mean to go on!)

P.S.  if you’re a pet owner, don’t forget to include food and veterinary costs for your fish, fowl, or livestock in your monthly budget.  I don’t have any pets, so forgot to include the costs of keeping them healthy and happy in my original financial notes.   Thanks to Helen and Linda for catching the oversight!

Paying it forward

In the interests of full disclosure, I did attend every retirement-related workshop and seminar Ryerson offered.  I am very glad that I did though I did not realize at the time just how practical and useful what I learned was going to be.  In keeping with the interests of full disclosure, here are my five favourite of the many nuggets of advice shared by various retirement panel participants at those workshops and seminars:

1.       If you are not now physically fit – get fit. 

2.       Become involved with something bigger than you.

3.       Schedule your day.

4.       Maintain your social networks.

5.       Learn something difficult.

                                                                    

The Mad Retiree

(Early) Retirement Check List

Money!

o   I really hate that all of the financial planners are right about debt - but ridding yourself of all major debt before you retire is a good plan. If that is not possible, any debt you are carrying, ie: a mortgage, should be offset by other assets you have on hand 

o   Don’t forget about income tax.   Have all income tax deducted at source.  Though if you are planning to continue with Ryerson’s benefits package, the monthly payments are tax deductible

o   Base your monthly budget on your after-tax pension income (and you have to have a monthly budget in place before you retire!)

o   Any budget you concoct should cover all of your fixed monthly expenses (cable, hydro, mortgage), your variable expenses (groceries, gas, etc.), leave a little bit of money left over for “fun”, and leave some cash left over to cover emergencies so you don’t have to dip into savings (hands up anyone who hasn’t heard my fuel pump story!)

o   If you are not already having your bank automatically “slide” some of your paycheque into a savings account – start now so that a portion of your pension cheque will also automatically slide into a savings account.  (Again, hands up anyone who hasn’t heard my fuel pump story!)

o   Strictly adhere to your monthly budget for one calendar year (12 months) so you can “chart” the months of the year when you are spending more, or if you’re really lucky, spending less.  (i.e. probably spending more on gas during the summer months and December is an expense-heavy month for everyone!)  Revisit your budget after twelve months, make any necessary adjustments …… and strictly adhere to your new monthly budget for one calendar year – and then start the process over again

 

Lifestyle

o   A minimum of five (5) years prior to your actual retirement date, start making concrete plans for what you plan to “do” when you actually retire.  If possible, in fact, start seven (7) years prior to your retirement date. That means actually starting a pen and paper list of all of the activities you plan to engage in once you are retired

o   Then start figuring out exactly what you need to do over the next five to seven years (while you are still making a full-time salary) to make those retirement plans a reality.  For example – if you are planning to take up photography, you might want to buy a camera!

o   Do not mock the list

o   Enrol in every retirement lifestyle workshop and seminar offered by Ryerson.  Make notes.  And keep the notes and all handouts.   (I have fallen back on a myriad of hints and information I picked up at one workshop or another many times during this past year)

Social Contact/Networking

I had severely underestimated the amount of social contact I require to keep my sanity intact.  I am a relatively independent person.  I can usually figure out ways to keep myself amuse

Not so, now that I am gainfully unemployed.  I enrolled in all of the retirement workshops and seminars.  I read the handouts.  I actually read a couple of “self-help” retirement books.  I was relatively confident I had enough interests and hobbies to keep me busy 16 hours a days, seven days a week

I can’t do it.  I have had to make an effort to make and maintain contacts with other people.  For example, the ad hoc bird watching group that tramps through the Riverwood Conservancy twice a week, the Ides of Tea luncheons, stitch and bitch.

In my humble option, life style and social networking/planning should be the number one priority when planning for retirement – ahead even of financial planning.  This is especially true of retirees like me – single, no children. 

 

...... next ... and now the really hard work starts!  Retirement!!!!