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Based on the feedback I have received on HD over the years mostly directed at my failure to budget or track expenses in detail using spreadsheets, my selection of some high expense investments and to not pay much attention at all to our investments, failure to use financial or retirement planning services, retaining life insurance in retirement, beginning Social Security at FRA while working, buying cars for cash, retiring at age 67(part of my income replacement strategy), paying for our children’s college and maintaining multiple bank accounts … I should be in a financial mess or at least required to a keep a close eye on our lifestyle spending.
Neither is the case, so either we are just lucky or all the worrying, detailed analysis and planning aren’t as important as they appear – at least in every case.
Yes, I have a good pension- the foundation of income in retirement. On the other hand, we were a one income family our entire marriage. I have never stopped saving and investing since my first job at age 18 and I did make foolish and risky financial moves like buying a vacation home with a 9-3/4 % mortgage the year before our oldest child started college.
Is it possible to just be a tad frugal, a prudent spender, a persistent (even if inefficient), investor, not follow conventional ideas on them all and still with success?
While I don’t recommend do as I do, it is possible. KEEP CALM and CARRY ON.
Just goes to show that spending less than you earn is numero Uno. Many arguments can be made about two, three and four. If you invest poorly, the school of hard knocks will gradually steer you in the right direction. It’s just a shame that I could not have found Vanguard in my twenties 🥴
We followed the Dick Quinn method (and didn’t even have to pay him any royalties!). My wife and I decided at the start of our earning lives to save 20% of our income each year in retirement accounts and live off the rest. No financial planning/planner, just hoped/trusted that would be enough. No spreadsheets or budgeting, just being disciplined in spending. Early on we thought we were spending too much but didn’t know where it was going, so we kept track of spending for a few months and discovered we were spending a lot more than we had realized on take-out food, so we cut back on that. Our self-employment income was somewhat irregular so we used a HELOC to smooth it out; somewhat risky but we trusted our ability to earn more $. During the pandemic our income dropped and we just didn’t have enough money to make the full 20% retirement contributions for 2 years, but our retirement accounts had done well to that point so it was ok. We’re planning to 80-90% retire at the end of this year at age 69. At that point I am planning to keep track of our spending for awhile, but for the opposite reason as before: to make sure we’re not spending/giving too little! I’ve witnessed that it can be hard to transition to spending more, especially when you’re drawing down your assets instead of building them (no pensions, only SS will be coming in at age 70).
I am a spreadsheet guy, and like to calculate various scenarios. However, knowing and learning about finances, being disciplined and most of all using a lot of Common Sense, can get you there. It is OK to do it your way, no budget needed. Congrats.
After reading through the comments and
argumentsdiscussions contained therein, I find it a bit strange that the subject contained in the title of this post is questioning the need for either a spreadsheet or planning, yet the main thread of the article is about not needing a budget.I agree – you don’t need a budget. However that has nothing to do with whether or not one should do planning or use a spreadsheet.
Once again, I find myself in strong agreement with the commenters who are calling you out on the points you’re trying to make because they’re based on outdated personal finance assumptions. Pensions are gone for most people. Spreadsheets are free and easy to use. People don’t retire at 65 and take a dirt nap at 70 or 75. Health and longevity greatly change the math on retirement planning. It must be done now.
Give it up, Dick – everyone’s got an opinion (including me). However it seems to me that posting on this blog should be about educating those who are still on their journey to retirement, not a nostalgic look in the rearview mirror about the good old days.
Opinion, challenging traditional thinking perhaps, suggesting alternatives is all it is. Accept or reject as you will.
I would hope that the discussion in favor or opposed to my way of thinking helps some people make their own better decisions.
I make no claim to expertise nor do I encourage anyone to simply do as I do – which is pretty apparent they don’t.
I am very aware how things are different these days, but it’s not because of the lack of pensions.
I have four children in their 50s. Three struggle every day despite having masters degrees. Two work two jobs to keep things going, they have been faced with family medical issues, two preventing their spouses from working. Only one even has a 401k from an employer.
I don’t know the details of their finances, but at least a couple are investing as they can for the future. One who is 54 has three small children and may never be able to retire from selling real estate. One works seven days a week with one child now in college.
I see every day people living very differently from how my life was and is today. In the case of my family I am and plan to do everything possible to help them financially now and as a legacy. Because I think it’s the right thing to do and an obligation.
I believe Mr. Quinn possibly has a life style that lends its self to retirement success. Using spreadsheets and intensely studying investment prospects doesn’t help these folk as much.
Someone that can not, will not separate wants, from needs certainly will have to spend more time and effort in the ol investment research game to nail a healthy retirement.
Both my sons know the value of paying off a loan such as their homes. It raises your net spendable every month. If one paid for home is good, isn’t two better?
I showed my neighbor a leaky wealth bucket illustration and applied the concept to her home payment. At the end she said, ‘I’ll talk to Joan, she’s really smart with mortgages.’ Sigh…of course those people make money from keeping you in debt. Then, just last month she mentioned that she bought a $1200 . . . heated bidet toilet seat.
I think a lifetime of simply living well within means and maximizing any retirement benefits offered will go a very long way for a comfortable retirement.
Mostly because if the means change, the retirees living also will by nature.
During my working years and all of our marriage we had and have a lifestyle based on living within our means.
Over fifty years the means improved, but our lifestyle did not appreciably change in terms of spending. We lived in the same house for 45 years and drove Chevy sedans.
There were two occasions when we took risks, buying a second home and ten years with 1,2 or three children in college. But we found away to get through and those were years when I was a lower level manager. One was starting a small side business. The other renting the vacation home in the summer.
Our big financial break came five years before I retired when I was 62 and my compensation package improved significantly.
I always knew the income I wanted in retirement- my base pay. That way spending would not be an issue. That’s one reason we never lived off any compensation above base pay. It’s also why we made sure mortgages were paid off before retirement and why I worked to nearly age 67.
Now some people look at us and see two wealthy 80 year olds and suggest we don’t know the real world.
Perhaps not, but I suspect many people would not welcome the lifestyle it took to get where we are today – FIRE, but without the E and yeah, no budgets or spreadsheets just fiscal discipline and the lack of misfortune.
No need for a budget? Agreed. Sure. Why bother? If you’re disciplined in your spending. IF. Then you’ll probably be ok and will ‘feel’ when you’re spending too much. We did it that way for most of our earning years and still managed to take some nice vacations and splurge on some purchases. OTOH, we were both seriously frugalista.
As we got to within 5 years of retiring, though, we did start tracking two things: spending and total portfolio value.
With no pension, you really can’t know when it’s time to quit working without these two things. You can’t just ‘feel’ when you have the right amount to last you the next 30-40 years (as in our case). No one can – at least not unless you have $8-10m stashed.
We had nine investment accounts strewn across a couple of brokerages: his/her IRAs, his/her ROTHs, his/her 401k’s, his/her ESPPs (actually, we had 3-4 of those) and a taxable account. Oh, and bank savings and checking accounts. Oh, and two small (<$100k cash value) pension accounts from previous employers.
I never really added it all up for most of the time I was working. A part of me didn’t want to know, because I wanted to be surprised – wake up one day and be ‘rich.’
So we just kept our heads down and worked. Sometime into my early 50s I started really tracking our total pile and teaching myself about personal finance. I played with lots of different retirement calculators and read bunches of stuff about how to figure out when you have enough and how to make it last.
I couldn’t have retired with any confidence at all unless I knew how much we had, how much we would need to spend, and some estimate of how long it would all last. But then again, we had no pension. If you don’t have big mailbox money or expect a big inheritance, you must figure these things out. There is no other way.