Balancing the Books and the Beach: Our Retirement Income & Budget Plan

In this first installment of our Income and Budgeting series, we’ll focus on our income and budgeting plan for the first year of retirement. While we won’t dive into specific dollar amounts, we’ll outline our overall framework and approach.

Income for 2025:

• Mr. Retirement-55: Retired on April 1, 2025.
• Mrs. Retirement-55: Will continue working for at least another year until she feels ready to fully embrace retirement.

To supplement Mrs. Retirement-55’s income during this transition period, we’ve set aside enough liquid cash to cover expenses through mid- June 2025.

This liquid cash reserve is incredibly reassuring, especially considering the recent volatility in the market.

While two to three months of cash might not seem like a long time, it’s the first time we’ve managed a completely liquid portfolio. In the past, we’ve relied on our brokerage account investments when extra cash was needed, but current market conditions might make that more challenging. We’re prepared to navigate these bumps and will bring you along on the journey.

After our liquid cash is used up, we’ll begin to draw funds from Mr. Retirement-55’s 401(k) under the Rule of 55. We’ll explore this in more detail in future blogs, but here’s the plan:

• Goal: Withdraw funds without reducing the account balance by the end of 2024.
• Challenge: Managing withdrawals in a way that doesn’t diminish the capital.

This plan presents a challenge we didn’t anticipate when Mr. Retirement-55 announced his retirement in January 2025, but we’re ready to face it head-on.

Budget Overview:

While we’ll dive deeper into the specifics of our budgeting strategy in future blogs, here’s a glimpse of how we’re approaching things in our first year of retirement:

• Large Expenses Included:
  
  • Mortgages
  • Auto Loans
  • Other Debt

Though we’re carrying debt at very low interest rates, we feel confident in our ability to manage it as we transition into this new phase of life. We’re carefully balancing the need to ensure financial stability with our desire to enjoy life right now.

But here’s where we get really excited: retirement is about more than just surviving—it’s about living! We’ve made sure to include ample room in our budget for the things that make life truly enjoyable. After all, retirement isn’t just about cutting back; it’s about maximizing your time and resources for the experiences that matter most. Here’s how we’re approaching it:

• Dining Out with Friends & Family: We love spending quality time with loved ones over a great meal, and we’ve set aside a portion of our budget for regular dining experiences. Whether it’s a casual dinner with family or enjoying a night out with friends, we want to keep those moments alive.
• Travel: Exploring new places is a huge part of our retirement plans. Whether it’s a weekend getaway or an international adventure, we’ve allocated funds for travel. Our goal is to experience new cultures, make memories, and indulge in the freedom to go wherever the wind takes us.
• Entertainment & Leisure: Retirement gives us the time to explore hobbies, attend events, and enjoy the little luxuries we might have missed while working. From concerts to theater performances, local festivals to hobby-based classes, we’ve earmarked money for entertainment and experiences that bring us joy.

While our budget will always be flexible to account for unexpected changes, we’ve made it a priority to enjoy life while we can. Yes, we’re mindful of our long-term financial health, but we’re also living in the now—taking advantage of this beautiful stage of life to pursue the passions and experiences we’ve always dreamed of.