The post of a few days ago dealt with the pressure on the middle class and its effect on retirement. The obvious follow-up to that is what happens when the situation calls for real cutbacks in expenses and life style. Is it still possible to have a satisfying retirement?
Like simple living, frugality is a word that is really open to interpretation. There are folks who think of frugality as being a smart steward of their money. For the most part, wants are replaced by needs in the budget. A free movie from the library replaces the $10 ticket at the local cinema. Dinner out is either the $5 foot long sub at Subway or a home cooked meal instead of the $30 restaurant experience.
For others, the word takes on an almost religious tone. Spending more than is required to stay alive is to be avoided. Living space is cut to the bone. Almost all belongings are given away or sold, leaving a dresser drawer with a few changes of clothes. If possible, a car is replaced by public transportation or walking. Health insurance is dropped, in favor of self-medication and an occasional trip to the emergency room or free clinic.
This second interpretation is not what I think about when I type the word frugal. The dictionary defines frugal as not wasteful, not spending unnecessarily, being economical and thrifty. How many people would not find those words something to strive for? The problem comes when each of us puts our own interpretation on those words. To somebody a 60" LCD TV screen is a necessity. Buying a $60,000 car instead of the $75,000 version could be considered thrifty.
Frugality, like simplicity, is in the eyes of the beholder. Living on $100,00 before retirement and $70,000 after is certainly more frugal. But, for many of us the numbers may be more like $50,000 before retirement and $25,000 after. So, how does a satisfying retirement work when one has to be frugal?
There is no argument that it takes work and a commitment to the goal. It requires reassessing what you need to be happy and content. It demands that you prune those things that no longer fit within your budget. It pushes you to decide what are needs and what are wants.
Of course, a "need" for me could be a "want" for you. I need a high speed Internet connection to be able to blog. Since blogging is my passion and what occupies several hours of a typical day, cutting out the Internet connection isn't an option. I'd give up going out to any movies again if that was the trade off my budget demands.
For you maybe a "need" is a meal out at least once a week at a decent restaurant. Your volunteer work, or babysitting the grandkids, or part time work at the store leaves you drained by Friday. A meal out with spouse, friends, or even alone, is something you look forward to. It is a reward to yourself for the week's efforts. That is a need for you and your budgeting decisions will reflect that.
Frugality may mean that you have to settle for a medical insurance policy that is designed to help you only if hit with huge bills after an emergency or major surgery, but pays nothing for regular doctor visits or drugs. You do your research and find out the hospital and local Walgreens have regular free clinics for blood pressure checks or diabetes testing. Costco or Walmart will sell you a 90-day supply of the generic version of the expensive brand name prescription for $10.
I could cite examples until the cows come home (there is a cliché I haven't used in 18 months!) but instead I'll summarize what frugality in retirement means to me:
- Spending time with my grandkids and family. Except for gas=free;
- Watching a movie or documentary at home from either the library or Netflix. Cost is $17/month (less than one movie out for 2 people);
- Sitting on my back porch, reading and watching birds and clouds=free;
- Cutting my cable TV bill from $70/month to $20;
- Running errands only two days a week. Saves approx. $50/month in gas;
- Cutting meals out to just once a week. Saves $160 a month;
- Not buying new books, only used ones or going to library. Saves $50 a month;
- Keeping an 8-year-old car that squeaks and rattles for another few years;
- Clipping coupons and paying attention to sales on stuff we need thus cutting our monthly food budget by $70;
- Mothballing a computer than has issues rather than replacing it right now. Making do with one that is even older (Sorry Dell);
- Only doing laundry and running dishwasher between 9 P.M.-9 A.M. during the week (rates 66% lower);
- Going on an expensive trip to Hawaii…important to my mental health and well-being.
That last example is important in this discussion of frugal living. For me, that 18-day trip, while quite pricey, was vitally important to me and my wife. It gave us a break from our routine, broke our pattern of stress and over-commitment, and allowed us to add rich memories to our marriage. For me that was a frugal choice because it saved me (and Betty) from problems that were threatening to become disruptive. At that point, it had become a need. It was an investment in ourselves.
The vacation budget is depleted, but we did not borrow any money, leave any balance on our credit cards at the end of the month, or in anyway disrupt our retirement budget. We planned for it, saved for it, and made it happen.
Frugality and retirement do work together. It requires being flexible. It means you know yourself well enough to understand what you need and what you can adjust to being without. It doesn't have to mean leading a bare-bones, sterile, hand-to-mouth existence at all. It is about rebalancing what you have and how you will mold it into what you need.