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The Retirement Topic Nobody Likes to Talk About

There’s plenty of investing advice out there, but not much on becoming thriftier without being a skinflint. Here are a few tips.

By Chris Farrell

Like many journalists, I get plenty of surveys about retirement readiness (or unreadiness) among boomers. The picture painted by the surveys is uniformly gloomy and often coupled with useful steps for saving more, taking better advantage of 401(k)s and the like.

Personally, I think the gloom runs too deep. Still, saving is a good idea — who doesn’t feel the need to set aside more for the last third of life? I know I do.

Yet in my experience, one topic doesn’t get enough emphasis in retirement planning: spending.

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I’m talking about the need to systematically spend less in the decade or so leading up to the moment when you wave goodbye to your colleagues.

“People need to focus more on spending,” says Ross Levin, certified financial planner and president of Accredited Investors Inc. in Edina, Minn. “That’s where the real retirement gains lie.”

Spending less, after all, means having more money to last the rest of your life.

One reason we don’t hear enough about the relationship between thrift and retirement planning is that the financial services industry makes its money by managing our savings. It’s far more lucrative to promise lush rates of return and to attract dollars based on them than to focus on reducing expenditures.

Then there’s the widespread assumption that becoming more frugal in your pre-retirement years means reducing your standard of living and a sense of deprivation. That's not a welcome prospect when you feel the time to do all those things you've postponed is running out. People equate spending more wisely with becoming a compulsive tightwad, clipping coupons and never picking up the check when out with friends.

Do You Want to Be a Cheese-Parer?

One book published in 1920 quoted Simon Wilson Strauss, then president of the American Society for Thrift, describing a commonly held view at the time: “Penny-counting, cheese-paring, money-hoarding practices were looked upon by the public as the ideals sought by those who tried to encourage thrift."

Who wants to live a “cheese-paring” life? It even sounds bad.

What’s Wrong With Our View of Thrift

Thing is, the popular perception of thrift-as-miser is deeply wrong. In my opinion, reforming your spending as retirement nears is really about what Strauss called making “judicious expenditures.”

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“In some ways," Levin says, "that's what financial independence is. You don’t have to answer to anyone because you have enough.”

Late last year, I visited Continuum, the design and innovation consultant headquartered in Newton, Mass. (Think Reebok pump sneaker and the Swiffer.) It's now working on bringing a design sensibility to services, like banking. When chief executive Harry West showed me around, discussing prospects for boomer retirement, he noted the lifestyle flexibility that comes from keeping expenses and debts minimal. “Freedom is a low overhead,” he said.

He’s right.

The Real Definition of Spending Wisely

What spending less should mean is matching your outlays to your goals and values.

When I traveled around the country during the depths of the economic crisis, I was struck by how many people told me about a moment they had while looking around their home, wondering: Why did I buy that? Is this how I want to live? I’m paying off credit-card debt for that?

They also told me wonderful stories about how they’d begun putting greater effort into spending time and money on meaningful experiences, friends and family.

Marrying your values to your retirement planning takes work and a little experimentation.

I think you might find it useful to create a budget and track it well before you quit full-time work so you can begin changing your spending patterns before you retire.

How to Keep an Eye on Your Spending


Fortunately, technology makes it easier than ever to keep an eye on your spending. There are several excellent computer programs, like Intuit’s Quicken. I find the new generation of online budgeting services even easier to use, thanks to programs like Many banks, credit unions and other financial institutions also offer customers basic online budgeting programs.

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Of course, there’s nothing wrong with simply monitoring your spending with a notebook, pen and calculator.

No Need to Go Overboard

How long should you gather this data?

I have several friends and acquaintances who love looking at the flow of money in their household every month and in one big annual review. Personally, I don’t get it, but they find doing this somehow reassuring.

For most of us, a budget should be treated as a tool, not a goal. I think keeping meticulous records for a few months will do the trick.

You can learn a lot about your spending habits during that time and won’t need to put in a lot of effort. Maybe an annual breakdown of where your money went, category by category (food, transportation, entertainment, clothes, etc.), would be wise, too.

Why You Might Consider Downsizing

Sometimes, the desire to spend smartly calls for a more dramatic step, like downsizing. Yes, I’m talking about leaving behind the home you raised your kids in for a place with a smaller footprint. Try thinking of it as rightsizing.

Moving into a smaller home with a fraction of your current square footage can be financially smart. Larger homes cost significantly more to maintain. Property taxes and insurance are higher, too.

The savings you’ll accrue from a smaller home compound over time, offering you the prospect of greater lifestyle freedom and flexibility.

Several years ago, I lived in a modern two-bedroom condo in a beautiful, wooded Minneapolis neighborhood, with winding streets and architecturally intriguing homes. But after I moved into an old, duplex apartment that was about 300 square feet smaller, I was able to cut my rent and utility bill by about half. What’s more: I love my new community, which has plenty of terrific restaurants and shops.

What the Recession Offered Us

In his book, The Great Reset, urban scholar Richard Florida looked at potential economic changes in the United States following the Great Recession. I found his forecast compelling, especially for boomers: “The promise of the current Reset is the opportunity for a life made better not by ownership of real estate, appliances, cars and all manner of material goods, but by greater flexibility and lower levels of debt, more time with family and friends, greater promise of personal development and access to more and better experiences.”

That’s as good a definition of thrift as I’ve seen — and wise words to live by as you plan for retirement.

Photograph of Chris Farrell
Chris Farrell is senior economics contributor for American Public Media's Marketplace. An award-winning journalist, he is author of the books "Purpose and a Paycheck:  Finding Meaning, Money and Happiness in the Second Half of Life" and "Unretirement: How Baby Boomers Are Changing the Way We Think About Work, Community and the Good Life." Read More
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