When MoneyTips.com surveyed 510 retired and semi-retired persons about their financial habits, I was surprised that just 30 percent considered themselves “frugal” before retiring, whereas 67 percent said they spent “enough to live comfortably.”
Now that they’re not working or working a lot less, the numbers haven’t changed much: 65 percent live comfortably and 35 percent live frugally.
Those numbers should give hope to people who might fear they won’t have the resources to retire. That’s because terms like “comfortably” and “frugally” can mean just about anything you want them to mean.
To some, “comfortable” means buying whatever they want, whenever they want it. To others, it means the option of buying things they truly want, i.e., making very informed choices and saying “no” as often as they say “yes.”
Perhaps you think living “frugally” means mean eating in restaurants as often as at home because you use BOGO coupons or early-bird specials, and taking multiple vacations each year thanks to frequent flier miles and hotel rewards program points.
Contrast that with those who cook almost all their own meals and save carefully to get an annual or semi-annual trip, using trip-finder sites and relying on staying with family or friends.
That doesn’t necessarily mean the first group is rich and the second group is poor. True, it could mean that the former has more disposable income, but it could also indicate a simple difference in personal tastes.
Paying attention to money
Some people are homebodies and wouldn’t take six vacations a year if you offered them up paid-for and tax-free. They truly love where they live and find plenty to fill their days without constant external stimuli.
Others can’t wait to make their next trek. Earlier this week DF and I took a driving trip around Alaska; while in Denali National Park, he overheard a man say, “Next week we’re going to Nairobi.” If I had to guess, I’d bet that Alaska and Africa weren’t the only two places they visit this year.
This is where budgeting can be as important as income. Before retiring, 70 percent of those surveyed lived on some type of spending plan (daily, weekly, monthly, annual). The more attention you pay to money during your earning years, the more you can set aside for the post-work world.
Whether you’re a new college grad or a happy retiree, your everyday dollars bear watching. Free online resources like Mint.com and PowerWallet make tracking your funds bonehead-simple. Having an emergency fund is vital, so build a weekly or monthly automated withdrawal into that budget.
Should an unexpected expense arise, amend a few categories and shift that money toward the whatever-it-is that might otherwise bust your budget. That could mean something as simple as eating one lunch less out per week, or as major as postponing a home improvement project.
Your mileage may vary, obviously. If you really don’t have enough money saved or have extremely high medical or housing expenses, then cutting out a daily latte just won’t cut it. That’s why I personally choose to live frugally rather than comfortably.
But here’s the beauty part: To me, the two terms are not mutually exclusive.
Frugal, comfortable and happy
DF and I have a marvelous life together. We eat well, laugh often, enjoy cultural activities and help our families.
We also cook almost all meals at home, buy many clothes from thrift shops, grow a garden (and preserve some of the result), drive a 15-year-old car, buy foods in bulk, and use rewards credit cards and programs like Swagbucks and MyPoints to purchase many holiday and birthday gifts.
Are we frugal? Yes. Are we comfortable? Oh, hell, yes.
We have a nice big kitchen (old appliances but they still work just fine) where we enjoy preparing meals together. The living room’s fireplace insert provides marvelous ambiance and nearly free heat (wood from cut-downs in friends’ yards, and once every couple of years we rent a log-splitter). DF’s piano is a gem: He loves to make music and I love to listen. Our library has two comfortable armchairs where we talk, read and listen to the radio.
And I defy you to find as delightful a bed as ours, clad in cozy flannel sheets and comforter that smell of the fresh outdoor air in which they were dried. DF got it for free because somebody wanted to upgrade a practically new queen-sized bed to a king-sized model. The sheets were on sale at Fred Meyer and we had a coupon for 20 percent off. I paid $5 for the comforter at a rummage sale in 2004.
Things that truly matter
So don’t look at frugality as a life sentence in NoFunEver-Land. Instead, think of it as the road map to freedom. Frugality doesn’t mean you can’t spend money. It means making sure you get top value for every dollar.
It also means spending intentionally, not mindlessly. Both before and after you retire you should view potential expenditures in terms of their true benefits to your life. Not insisting on having every single thing you want the same day you want it means that later on you’ll be able to get the things that truly matter.
Incidentally, this can mean “next month” as well as “after I retire,” since frugality can let you do things like start a business, pay cash for your next car, save for a down payment on a house or help a child through college. In other words, options. Flexibility. Freedom.
(Note: The survey findings plus input from a number of PF bloggers will be published as an e-book called “The Retiree Next Door: Successful Seniors’ Surprising Secrets.” Pre-order before Sept. 30 and you’ll get the book for free.)