In youth, retirement is often idealized as a return to carefree days of leisure. However, as it actually approaches, this ideal fades to reality.

Retirement is a phase of life where there's a limited amount of money and limited ability in determining how long it must last. This is a mathematical problem that requires observant spending in order not to outlive the money, but still have enough for those things that are most important.

Plan Ahead.

Financial advisors highly recommend for retirees and those about to retire to have a current snapshot of what their spending looks like. Advisors also warn that spending often rises at the onset of retirement as individuals begin to do all the things they've deferred while working. As these desired activities get accomplished, leisure spending often subsides. However, other expenses, health care for example, might increase. None the less, it's vital to realize this increased spending stage of retirement and budget accordingly so that your nest egg isn't overdrawn in the process.

Facing Realty Reality.

Often one of the most emotional decisions is whether or not a housing downsize is needed. Many retirees might find themselves realizing that they undertook an unsustainable mortgage or spent too much on rental properties. These over-extensions can create a negative cash flow. While there might be emotional attachments, there needs to be an open and honest conversation about whether existing housing is sustainable or desirable in the long-run. One important point to remember is that selling isn't cost free; there are any number of costs involved, including real estate commissions. The average closing costs were $3,741 on a 200,000 home in 2010. There might also be potentially higher property taxes from moving.

Expense Accounting.

In retirement especially, the golden rule on spending should be to spend what you've planned and plan what you've spent. According to financial planners, one of the most significant retirement mistakes is not having a budget where you know fixed costs and discretionary costs. Discretionary spending is an area where it's fairly easy to cut back on incurred costs during retirement, but you need to know what is discretionary and how much it totals. When tracking this type of spending, many find that dinning out is an area where a significant portion of money can be saved without feeling like a significant sacrifice has been made.

Stay Financially Solvent.

It's natural for parents and grandparents to want to financially assist their family, but this should never be done if it jeopardizes financial solvency. After looking at cash and expenses that are being covered for family, such as private school tuition and annual holiday gifting, and how those expenses fit into the above budget, it might be necessary to make significant deductions to avoid the risk of running out of money.

Decide What's Most Important.

During and before retirement, personal spending goals need periodic reevaluation. Start with core goals - what's most important to you. Then, look at what the financial reality is to accomplish those goals. When the two aren't congruent, it might be necessary to look at discretionary spending or housing. This is when the retiree will need to decide what's most important. For example, some might be willing to give up portions of discretionary spending to maintain housing in close proximity to their family, while others might feel that helping a grandchild through college is worth a housing change. Either way, a game plan must be in place to simultaneously accomplish what's most important and maintain financial solvency.

Bargain Driving.

Outside of housing and health care, vehicles are usually one of the retiree's greatest expenses. Aside from any loan amount on the vehicle, there's the ongoing cost of operating, maintenance and repair, and insurance. Cutting back to just one car, downsizing, and avoiding wear and tear can save money.
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