468 – Spending: 2026 Retirement Challenge (Part 2)

If there were no spending, there would be no need for investments.

No portfolios.
No Monte Carlo simulations.
No withdrawal strategies.
No Social Security timing debates.

Because the entire purpose of money in retirement is spending.

I

Articles, Links & Resources:

Rocket Money
Monarch Money
Parker-Financial.net

Transcript:

468 – Spending- 2026 Retirement Challenge (Part 2)
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Announcer: Welcome back America to Sound Retirement Radio, where we bring you concepts, ideas, and strategies designed to help you achieve clarity, confidence, and freedom as you prepare for and transition through retirement. And now here is your host, Jason Parker.

Jason Parker: Uh, America. Welcome back to another round of Sound Retirement Radio.

So glad to have you tune into the show today. You’re listening to episode number. 468, and this is episode number two of the 2026 Retirement Challenge, and today we’re talking about spending, which is the most important number in retirement. If there was no spending, there would be no need for investments.

No portfolios, no Monte Carlo simulations, no withdrawal strategies, no social Security timing debates because the entire purpose of money in retirement is spending. But before we get into today’s show, I like to start the day by renewing our mind. And the verse that I highlighted this morning was from Psalms 68 verse 19.

Praise be to the Lord to God our savior, who daily bears our burdens. And then, of course, something fun for the grandkids. What did the squirrel say to the other squirrel on Valentine’s Day? You drive me nuts. What? What did the paper clip say to the magnet? I find you very attractive. What, what, what kind of flower do you never give on Valentine’s Day?

Cauliflower

retirement is ultimately about cash flow, making sure you have enough income coming in to cover your expenses. Now, I’ve worked with people who have substantial guaranteed income from pensions and annuities and very modest investment portfolios. They live very comfortably. I’ve also worked with people who rely mostly on social security plus their investment accounts for income, and they live great retirements too.

Where people tend to struggle is when income sources are limited and savings are thin. Another group that struggles are those with solid assets, but little spending discipline because without a spending plan, even good resources can feel insufficient. Retirement success isn’t just about how much you’ve saved.

It’s about how well your income and your spending work together. The whole idea behind retirement is to save enough money so that you can buy back your time. A friend of mine likes to say that most people have either time or money during their working years, but rarely both. And retirement is about reaching the season of life where you finally have both.

And yet, even though knowing how much you spend is the most important number in a retirement plan, this is the one number most people don’t know. They don’t measure it. They try to avoid it. Frankly, they don’t wanna look at it. Tracking your spending is nowhere near as fun as tracking your investments.

Today. We’re tackling what I believe to be is the single most important number in your retirement plan, your spending. In addition to helping you think about spending in a new way, I’ll also share with you some tools that you can use to track your spending and really get a handle on where your money’s going.

Most retirement conversations focus on how much have you saved? What rate of return will your investments earn? Um, is your portfolio diversified? How much can you withdraw from your investments? But in my experience, retirement rarely fails because of investment performance. It usually fails because spending is misunderstood or spending was underestimated.

Or spending is out of control. You can have millions and still feel like it’s not enough. I’ve met people that feel that way, and you can have modest income and still have a full life. The difference is not returns. The difference is spending and spending is hard to track. Tracking your income is easy.

Tracking your net worth is easy, but spending The challenge is we spend so many different ways. We have cash, debit cards, credit cards, there’s multiple checking accounts. Uh, oftentimes spouses have separate accounts. Sometimes there’s hidden accounts between spouses. There are automatic subscriptions, there’s online shopping, there’s tap to pay.

There’s one click, Amazon. You have prepaid cards, gift cards. You can send money with Zelle and Venmo and PayPal and Apple Pay and online bill Pay a CH transfers, auto withdrawals, crypto wallets, app store charges, and the list goes on. Remember the good old days when we just had a checkbook and a debit card and you actually had to leave your house to spend money.

We’d go to the record store, the grocery store, the movie rental store and restaurants spending Today. It’s just. Fragmented, it’s automated. Sometimes it’s invisible. It’s always been very emotional. It can be done from your couch and. It’s easy to not think about trying to pull off a cash envelope.

Budgeting method in 2026 is gonna be difficult. We were visiting Arizona recently and I took my daughter to visit a university there that she’s thinking about attending, and we went to a breakfast place that only accepts cash. It was a good thing that they had an ATM in the lobby because I don’t carry cash anymore.

And then the little cafe here near my office where I often eat lunch is now cash less. They don’t accept cash. Spending can be complicated. Now, there’s some spending that’s pretty darn predictable, things that you’ve been paying for your entire adult life, and this is the easy part of putting together your retirement spending plan.

Here are some examples of things that you need to consider. Number one, under housing and utilities, you’ve got mortgages, property taxes, insurance, your electric bill. Garbage. Water, sewer, internet, propane, landscaping, pest control. Um, you’ve got insurance, things like auto, home health, dental life, possibly long-term care insurance.

You have a cell phone, entertainment, streaming services, appeal box, gym memberships, haircuts, vehicle license renewal. These are the known numbers. You already know what they cost because they’ve been showing up for the past 40 years now, one thing to be mindful of is that not all of these fixed expenses will continue forever.

For example, your mortgage principle and interest payments may be coming to an end at some point in the future, but your taxes and insurance will continue even after the mortgage loan is paid off. We need to account for that. The other thing is that inflation is a real thing, and we’ve all experienced inflation the past few years.

Inflation is not the same for all expenses. Some expenses like food might go up at the average CPI consumer price index every year, maybe 3% per year, but other expenses like property taxes or health insurance. Those have been increasing at a rate greater than inflation, and we wanna account for that variability in our planning.

Now, variable spending is where things get tricky, but don’t worry, I’m gonna share a few tools that will help you track this. Spending variable spending includes things like dining out groceries, Amazon orders, home improvements, spending cash, toll bridges, and ferries. Christmas, birthdays, pet food and vet bills, uh, car repairs, tires, oil changes, travel and vacation.

These don’t feel like monthly bills, but they add up fast and most people underestimate these by thousands per year. I was talking to a woman recently who told me that she stopped buying clothes for one year and saved more than $10,000. The other thing that people often forget when planning for retirement are one-time expenses, and these often are things like weddings.

Helping the kids with a home down payment, helping grandkids with college, buying a new car every couple of years, buying a vacation home. Downsizing costs, such as hiring a moving company or purchasing new furniture if you’re gonna move from, you know, a big house into a smaller house. Major renovations like a new roof or a kitchen or bathroom remodel or even new windows in the house can be significant one-time expenses.

These aren’t monthly, but they’re absolutely belong in a retirement spending plan. Now there will be some things that we don’t think about in advance, and that’s to be expected. But if you wanna achieve a high sense of confidence that you’ve saved enough to last the rest of your life, the more time you invest in understanding your spending, the more confidence you’re gonna experience when you step into retirement.

We have an intern working in our office right now, and he recently sat in on two different meetings. One was with new prospective clients and the other with people who have been clients with us for more than 10 years. Afterwards, he shared an observation that really stood out to me. He noticed how much more uncertainty and tension the perspective clients carried compared to the longtime clients who spoke with a calm sense of confidence and clarity about their future.

And I often talk about the goal of achieving clarity, confidence, and freedom is so rewarding to have him witness the difference firsthand. He could clearly see the contrast between two very different retirement experiences, one filled with unanswered questions, and one supported by a thoughtful plan and years of discipline follow through.

Now, you’ve probably heard me talk over the years about the go-go, slow go and no-go. Years of retirement. These years reflect the fact that you’re spending changes depending on which phase of retirement you’re in. The early years, the go-go years spending often goes up initially, especially for people that just retired and for a lot of people this phase of retirement can last anywhere from 10 to 15 years depending on how old you are when you retire.

And of course your health. They spend more on things like travel and experiences. They wanna have fun. They’re experiencing freedom and dining out and trying new things, and they’re spoiling the grandkids the during those magical years before they become teenagers. I had some clients send me a note recently after hiking the Cino de Santiago, um, which they had trained for more than a year to accomplish.

The early years of retirement will likely be some of the best years of your life, and we don’t wanna squander this time. It’s absolutely precious. The next phase of life is this logo. Mid retirement. This is the season when you don’t really wanna take your shoes off at the airport anymore. Your mobility isn’t what it used to be, and sitting on an airplane for 14 hours on an international flight just doesn’t sound exciting.

It actually sounds exhausting. You simply don’t do as much, and that’s okay. When you go out to dinner, you might split a meal and by eight 30 at night you’re tired. And being home with a good book and a hot cup of tea watching the sunset feels like a perfect evening. Knowing the grandkids are coming over in a few days, that’s about all the excitement and adventure that you need.

The slow years can last 10 to 15 years depending on when you retire and your health. What’s interesting is that during this phase, we often see spending slow down. Sometimes significantly. People already have the things they want. They feel content. They don’t travel as much. They volunteer more. Their lifestyle simplifies.

They split a meal when they go out to dinner, and because spending drops, it’s not uncommon for me to meet with retirees in this phase and see their net worth actually growing instead of declining. In other words, retirement doesn’t always mean running out of money. Sometimes it means spending less and watching assets start to grow again.

Now, this last phase of retirement’s, the no-go years, these are late retirement and spending shifts again, usually to healthcare long-term care and support services. I call this final phase the no-go years. Often in married couples, one spouse has passed away. The idea of traveling the world alone feels intimidating or simply unappealing.

Most people don’t get healthier as they age, and a growing portion of time is spent going to the doctor’s appointments and managing medications and navigating new physical limitations, cognitive issues can begin to surface in the season as well. The no-go years are typically the last five, maybe 10 years of retirement.

Your vision fades. Hearing declines. Movement slows. You get irritated at how expensive everything has become. The music at church seems too loud. Young people seem like they’re from a completely different planet. You have pill organizers labeled by the day of the week, and unfortunately, this is also the phase of life where many people spend the most on healthcare.

For some, this means moving into an assisted living facility. For others, it means having a caregiver move into their home, and I know it’s hard to imagine that this is ever gonna be you. None of us picture ourselves aging this way, but after walking alongside retirees for 20 years, I can tell you this, that getting old happens to the best of us.

My father-in-law used to tell me that getting old isn’t for wimps, and they call it your golden years because it literally takes a mint to just maintain those years. Unfortunately, the no-go years can be a time when spending begins to increase. In some unfortunate situations when long-term care in either an assisted living or a nursing home comes into play, a large portion of wealth is transferred to care facilities.

At the end of your life. I don’t know about you, but to think that you’re saving all these years just to transfer a large portion of your money to healthcare facilities at the end of your life. Well, that just doesn’t seem very fulfilling way to spend your money. It’s honorable, it’s responsible to be able to care for yourself and not become a burden to, to your family physically or financially.

But I don’t think it’s how most of us envision spending our money. I’m a huge fan of a long health span. I mean, if you’re healthy and fully alive, that’s awesome, but I’ve too often seen people who are optimizing for lifespan. The key to health span is it’s often tied to the choices we make over a lifetime.

Our money can’t buy back our health. The best that it can do is to treat the disease and the brokenness when it arrives. And I heard a quote that says A healthy man has 1000 wishes. A sick man has only one. Another shift I often see in the no-go years is that leaving something to family becomes more important.

Early in retirement. Legacy planning usually isn’t the top priority. People are more focused on lifestyle and experiences and enjoying their freedom, but later in life perspective changes. It becomes less about being remembered. More about wanting to make a meaningful difference for children and grandchildren.

One of the great advantages of working from a comprehensive retirement plan is that you can identify early on whether you’re on track to leave more than you intend. When that happens, it creates a wonderful opportunity and you can begin giving earlier at a time when the money may have a much bigger impact on the lives of the people that you love.

I oftentimes say it’s better to give with a warm hand than a cold one. You get to see the benefit. You get to participate in the joy and your family receives support when it can truly help. And then there’s also the practical planning reason to pay attention to here, depending on where you live. Dying with too much money can trigger either federal or state estate or inheritance taxes.

For example, I live in Washington, and last summer our legislature passed new laws, and now Washington State has the highest state state tax system in the country. Largest states can face tax rates in my state that climb as high as 35%. So even if you don’t have a federal estate tax, you could end up with a state estate tax.

Most people, if given the choice, would rather see their wealth go to their family or favorite causes than lose a significant portion of taxes simply because no plan was put in place. Thoughtful planning gives you options, not just for how you spend while you’re alive. But also for how and when you give.

Now, another thing that we need to consider in spending are subscriptions. It’s pre-committed spending, it’s spending in advance. Some examples are Netflix, Amazon Prime, audible, music services, software, gym memberships, car safety features, streaming platforms, security systems. Pickleball subscriptions? Yes.

Yes. Some of us have a pickleball problem. Subscriptions are easy to start and can be emotionally hard to cancel. There’s nothing worse than having your income hit your bank account only to see a big chunk of it gone after the first couple of days because of all the subscriptions you have. When my dad retired, he canceled all subscriptions.

Then added things back only if they truly mattered, because every yes to subscription spending is a no to something else. Now, I originally created the retirement budget calculator because off the shelf financial planning tools didn’t provide the level of detail I was looking for, but it’s important to understand what the RBC is and what it isn’t.

Retirement budget calculator does not track your spending. It projects your spending. It helps answer the question based on what we know today, are you on track to run out of money in retirement or not? And as you know, the retirement budget calculator is now available exclusively to households working directly with us at Parker Financial.

If you’re preparing for retirement or you simply feel unsure about where your money’s going each month, you need a true spending tracker. You need real data, not estimates. Two apps that I often recommend are Monarch Money and Rocket Money. These tools connect directly to your checking accounts, savings accounts, and credit cards, and they automatically categorize your transaction so you can real see real time spending patterns after just one month of tracking.

Many people are surprised by what they discover, and if you’re not measuring your spending, you’re guessing and guessing, or relying on rules of thumb is a poor way to build a retirement plan. If your goal is to have confidence heading into retirement, the next thing that we wanna do is we want to identify which of our expenses are essential and which ones are discretionary.

Essential spending means that if you don’t pay something bad happens. Like if you don’t buy food, you’re not gonna be around long. If you don’t pay the mortgage, they’re gonna boot you outta the house. Um, if you don’t pay your electric bill, they’re gonna turn off the electricity. If you don’t pay for insurance and something bad happens, it can wipe you out financially.

By understanding your essential expenses, we can understand your survival number. It’s the bare minimum that you need. It’s your non-negotiable number, and I found that for most people about to retire. Social security income covers a lot of the essential expenses. Discretionary spending is not required to survive.

That’s your spending on things like travel, entertainment, dining out. If you have to cancel your pickleball membership, I mean, I don’t think life would end if you couldn’t play pickleball a few times a week, but then again, maybe the pickleball membership is an essential expense for you. The great thing about your spending is that you get to decide what’s essential and what’s discretionary.

Your essential expenses represent your survival number. The amount required to keep the lights on and maintain your core standard of living. When you add in discretionary spending, the travel, the hobbies, the fun, spoiling the grandkids lifestyle choices, that becomes your best retirement number, your flourishing number, your freedom to live, your best life number.

One of the things we need to address is overspending. Because overspending usually isn’t about need. It’s usually not about essential expenses. Oftentimes, overspending can be about dopamine. That little rush. You get in your brain when you buy something, or it can be about comfort or status, fear of missing out identity, avoiding discomfort, wanting to feel successful, wanting to feel generous, wanting to feel fulfilled.

Spending is often emotional. Self-medication. Now, most of our expenses are gonna fall into seven categories, and they are number one, housing. Number two, loans and liabilities. Number three, personal care. Number four, insurance and medical. Number five, vehicles and transportation. Number six, travel and entertainment.

And number seven, giving and miscellaneous. So here’s your assignment. Set up a spending tracker like Monarch money or Rocket Money. Track one full month. Identify what was essential, what’s discretionary, what surprised you? What subscriptions are you paying for? You didn’t even, you didn’t even realize you had them anymore.

What’s on autopilot? Calculate your true survival number and calculate your best retirement number, and then let’s talk about it. Because once we have an understanding of spending, we have the information that we need to calculate If you’ve saved enough to retire. Most retirement problems aren’t income problems, and most of the time it’s not about which investments you own.

It’s not about ETFs or mutual funds or Bitcoin or gold or market timing. It really boils down to spending. A life with too much stuff is often lean on. Meaning a better way to think about spending is to spend on experiences and memories and time with the people that you love. Be cautious spending on stuff, status, things that rust and decay, things that create maintenance, things that become future burdens.

Things that require you to buy storage units because experiences become memories. Stuff becomes clutter that our kids are gonna have to deal with someday. Subscriptions become chains that can keep us stuck. And here are a couple of quotes I thought you might enjoy. Benjamin Franklin says, beware of little expenses.

A small leak will sink a great ship. A budget is telling your money where to go instead of wondering where it went. Every dollar you spend is a vote for the life you want. The goal of a budget is not to restrict joy, it’s to fund it. Plan your money or it will plan you. Spending in retirement is not about guilt.

It’s not about cutting back. Spending in retirement is about freedom, fulfillment, experience, flourishing, helping, designing the life you’ve always dreamed of, spending your time and your money to enjoy the people who mean the most to you. If we get spending right, retirement stops being about fear of running out of money and starts being about all that’s possible.

If you want help turning your retirement vision into a real measurable plan, our team at Parker Financial would be honored to help you. You can request a consultation@parkerfinancial.net. And we will start with a conversation about where you are and where you want to go.

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Information and opinions expressed here are believed to be accurate and complete for general information only, it should not be construed as specific tax, legal, or financial advice for any individual. And does not constitute a solicitation for any securities or insurance products. Please consult with your financial professional before taking action on anything discussed in this program.

Parker Financial, its representatives or its affiliates have no liability for investment decisions or other actions taken or made by you based on the information provided in this program. All insurance related discussions are subject to the claims paying ability of the company. Investing involves risk.

Jason Parker is the president of Parker Financial LLC, an independent fee-based wealth management firm. Located at 9 2 3 0 Bayshore Drive Northwest Suite 2 0 1, Silverdale, Washington. For additional information, call 3 6 0 3 3 7 2 7 0 1 or visit us online@soundretirementplanning.com.