Like the seasons of the year, habits and patterns offer predictability, but they can result in automatic, not thoughtful behavior patterns. This is true in choices retirees make in the activities they get involved in but also how they value and use their money.
Money is necessary for supporting the ongoing expenses households incur on a regular basis, also knowns as necessities—which are determined by the standard of living someone chooses and can afford. Money is also used to pay for extras—things that provide extra enjoyment or pleasure (often with others), provide a sense of achievement or offer a feeling of making a positive impact on others. It is difficult to change the “overhead” of required monthly expenses, but changing the discretionary patterns of how money is spent on extras is relatively simple, just requiring an adjustment in the discipline of spending habits.
How money is spent (both on overheads and on extras) reveals how one values money and the role it plays in their lives. I urge my clients to be strategic about how they do life, aligning their financial resources with whatever is most important to them. It’s a process I call Bringing Your Money to Life, where financial resources can support their highest priorities, (the apex of this is when one’s money empowers their life goals, hopes, and dreams). This requires a more thoughtful approach to how people do life.
Certainly, everyone is in a different financial position. On one extreme, some have no financial flexibility and spend their money on truly basic necessities. Others give virtually no thought to what they spend their money on and how much. Most are somewhere in between. Regardless of one’s financial circumstances, a thoughtful approach is to consider one’s values and which parts of one’s life are most important. What would make life truly amazing? Is it experiences and relationships, accomplishments, or making an impact in the lives of special people or causes? What would that look like and what resources of one’s time or finances are needed to bring them about? If money is sparse, it’s vital to think about the core values and people that give meaning to one’s life, then look at building into those without financial expense. If a retiree has the luxury of expendable income or a portfolio that could be realigned, then it’s time to consider financial strategies. What results are needed from a portfolio—income or growth to fund future needs and how much risk is necessary and prudent to take? How can taxes be reduced to provide more money to spend or transfer to others?
By spending one’s time and money in a way that will allow retirees and non-retirees alike to realize these amazing moments uncovers new possibilities in life—just like springtime reminds us, something new is possible. It’s valuable for retirees to be thoughtful about how they do life and how they can bring their money to life—the life they want for themselves and the special people who share it.