Yesterday, we unpacked the surprising reality of reverse mortgages and how—used strategically—they can offer income flexibility in retirement. But let’s zoom out to something even more basic and far more dangerous: your monthly retirement budget.
Too many hardworking Americans finally step into retirement with relief, but then discover—too late—that their spending plan was built on fantasy. No one wants to think they’ll overspend in their golden years. Yet study after study shows that’s exactly what happens when retirees underestimate the real cost of freedom.
What’s worse is that this mistake rarely hits all at once. It happens gradually, over months and years, as your savings quietly evaporate—death by a thousand swipes. The cable bill you never cut. The restaurant visits that felt “earned.” The unplanned help for kids or grandkids. The taxes that weren’t calculated right. And then, of course, inflation comes along and pushes everything further out of reach.
Most people assume their expenses will drop dramatically in retirement, but that’s not always true. For many, health insurance premiums rise. Travel costs go up. Home maintenance becomes less predictable. And yet, too many retirees stick to the “70% rule”—the outdated idea that you’ll only need 70% of your pre-retirement income to live comfortably. That might work in theory, but it collapses under real-world pressure.
The key to survival—and long-term success—is building a realistic retirement budget before you need it. That means looking at what you actually spend now and projecting future needs with inflation in mind. It also means being brutally honest about discretionary expenses and understanding that taxes don’t stop just because your job did.
It’s not just about cutting back—it’s about staying in control. Smart retirees treat their retirement income like a paycheck. They set “buckets” for fixed expenses, discretionary spending, healthcare, and long-term savings. Some even run two budgets—one for lean years, one for when markets are booming—so they’re never caught off guard.
The elites? They’ve got accountants doing this math for them. But you don’t need a six-figure planner to get this right. All you need is discipline, good data, and a willingness to revisit your budget every few months. Because the biggest threat to your retirement isn’t a stock crash or housing bubble—it’s spending more than you realize while believing you’re being frugal.
If you’ve already retired and feel like the money’s not stretching as far as it should, now’s the time to recalibrate. Start fresh. Look at every expense, track every penny, and decide what truly matters. Retirement should feel free—but freedom isn’t free when your savings are under siege.
Tomorrow, we’ll continue this conversation by diving into a tool that can anchor your retirement budget: fixed annuities. We’ll look at who they help, who they hurt, and how they’ve changed since your parents’ generation.