How We Allocate & Track Our Retirement Budget


One of my favorite things to read about is how folk allocate their respective retirement budgets. It's so interesting to see the different things people prioritize, depending on their individual needs and interests. So with a great, big disqualifier of Your mileage may vary! this is how we've broken up our retirement budget:

ATM (His Cash)
ATM (Her Cash)
Auto Fuel
Auto Maintenance
Home Dues (HOA)
Home Items
Home Maintenance
Personal Care
Insurance - Auto/Trailer/AAA
Insurance - EQ/Home/Umb
Insurance - Dental/Medical
Registration - Auto/Trailer
Taxes - Personal
Taxes - Property
Utilities - Cell Phones
Utilities - Electricity
Utilities - Gas
Utilities - Internet
Utilities - Trash
Utilities - Water

Our goal is to keep a tight lid on the categories that deliver 'eh' with regard to lifestyle, but that are still clearly important. In these categories currently I would include Auto Fuel, Auto Maintenance, Groceries, HOA Dues, Home Maintenance, Personal Care, and all the categories below the dark line, beginning with Insurance and ending with Utilities. Altogether these account for 45% of our current budget allocations.

The remaining categories are primarily what we consider our fun categories. In these I would include our individual ATM (i.e., Mad Money) amounts, Clothing, Electronics, Entertainment, Gifts, Hobbies, Home Items, Miscellaneous, Restaurants, and Travel. Altogether these account for 55% of our current budget allocations.

Our goal since retiring has been to keep the items necessary to keep us safe, warm, and fed, at less than 50% of our annual budget, so at 45% currently we're in good shape. The reason is that it gives us considerable leverage in the event things go south financially. As an example, when COVID hit and the financial markets took a dramatic turn south last February, we were concerned, very concerned, but we weren't panicked. In other words, while we certainly didn't like what was happening in the market, we knew we could weather it simply by trimming some of the considerable fat from our budget.

It's interesting to me to see how we've moved money around within various categories since retiring in 2012, then moving to the coast in 2017. Far flung Travel was our primary focus between 2012 and 2017, but it began to diminish a bit upon our move. Once here and coastal, we found ourselves increasingly less focused on getting away because we liked it here so much.

Subsequently, the money we've moved away from Travel has been redirected to Restaurants and Hobbies. We have an ever-expanding group of fellow retirees we enjoy spending time with, and getting together for Happy Hour or dinner out is something we much enjoy. Additionally, we love to combine doing something active with going out to lunch, though we generally share in order to control calories. And our beefed up Hobby account allows for more time spent golfing, kayaking, and biking, all new or expanded activities as a result of our move. 

Some people won't find our system to be of value - I get that - but for those who do, it works great. Also, not mentioned above is that I add detailed notes for all of our variable transactions so that I can track exactly where each dollar went. It provides tremendous value to us personally to be able to see the details of our spending lives, which is why even after 10 years I continue to do so. Here's a screenshot showing what I mean, this one from our February Restaurant spending:

(Being active outdoors, and eating outdoors . . . that about sums up 2020, and thus far, 2021!)

With regard to the above, I do set monthly allocations, in addition to annual allocations, for two specific budget categories - Groceries and Restaurants. I know from experience that these two categories work best for us if we keep to their respective monthly budgets (and actually weekly in the case of Groceries) to ensure we don't run through either one to quickly ahead of December.

So for those of you that are spreadsheet nerds like myself, is there anything you would add to what I'm already doing? Or differences in how and what you prioritize, budget wise? Inquiring minds would love to know!

How We Allocate & Track Our Retirement Budget