The budget-less, automated financial life of two retirees living paycheck to paycheck-sort of, okay, not really

According to the Federal Reserve, 64% of current retirees age 65 and older have a defined benefit pension. That includes me and today (last work day of the month) is payday as Connie calls it. Our “house” checking account as it’s labeled, is replenished. The pension deposit has not changed in fifteen years and will not change in the future.

The second and fourth Wednesdays are also paydays when our Social Security arrives at our bank. Those payments are to a separate account once used for travel, but now I’m not sure, except when we are on “vacation” – the retiree jokingly said – we use that money. 

As I do each month I just paid the balances on our two credit cards. 

Our bank has transferred a pre-determined amount to an account we label “fixed expenses.” From that account is drawn, mostly automatically, the bills for utilities, all forms of insurance, property taxes, HOA fees, internet, etc. That amount has changed slightly over the last few years as expenses have risen. The key is that at the start of the month all living expenses are covered and the money isolated.

A pre-set amount is also transferred into what we call “Connies checking.” How that account is used is up to her. However, most of the checks written are to charities. Other than that it is her personal care treatments and supplies – cosmetics – and birthday and holiday gifts to family. 

A $1,000 is transferred into a savings account for emergencies. 

What remains in the house checking account receiving our “pay” is used for all other (generally discretionary) spending including cash from the ATM. 

After all that is accomplished – automatically remember – we know what we spent for the month, how much was left at the end of the month and exactly how much we have to begin the next month. The bank does the work for us. 

Should I have the urge to know more about our spending – a rare occurrence – our bank and Amx websites give me all I need to know. They can’t show how we spent ATM withdrawals, but given that is money available to spend, it doesn’t matter.

In a strange way given each of the checking accounts are close to empty at month end, you could say we live paycheck to paycheck. Of course, that is not true as we also fund 529s and add to emergency savings each month. And, I am not counting monthly investment income reinvested. 

I find the process simple and stress free. I keep a watchful eye on the credit card balances during the month making sure payment in full can be made and I make incremental payments during the month too just because I don’t like seeing high balances. 

I don’t feel I need to know any more about our spending or the need for other than this de facto budget based on net income (after taxes) each month. This has worked for over fourteen years. 

What keeps us from spending too much from the ATM, overcharging on cards we can’t pay in full, not saving for emergencies?

Well, we are too (very) old people with lots of experience and common sense, a good measure of personal financial responsibility and we made sure at retirement there was no debt and a surplus of income – and weirdly, retired at age 67. A tradeoff we feel was well worth it, but obviously many people feel differently. 

Note: substitute any retirement income stream for pension and this still can work.