The Most Important Number – TME

TME – Total Monthly Expenses. I have clients that will live very comfortably on $4,000 every month in retirement.  How can they do that?  The first, an most important step, is to determine what it’s going to cost for the basics every month in your retirement budget. This is a critical step that many advisors take lightly or brush aside.  If you have property it will require regular tax payments, and maintenance and utilities….etc.  Debt can be an issue going into retirement.  If you’re under 50, then we have a longer glide path to the finish line but, if your within 5 years of retirement, then understanding the consequences of debt are very important. We’ll go deeper in a later post on the issue of debt. For now, make your list of expenses and check it at least twice.  Grab your phone now (because it has a calculator) and start adding up what it will cost for the basics every month.   Cell phones, TV, internet and on the list goes. If you like upgrading your phone every few years then you need to add $30 to your cell phone bill in the budget. Are you a dog lover? (Cats, snakes, or any other non human in your house) It is more than feeding them everyday.  You need to budget vet trips and ongoing medical needs for your pets. We will also deal with the fun stuff later, but for now just focus on bills that you will absolutely still have in retirement.  Finish your math homework and don’t try the lame “My Dog Ate It!” excuse.  Once we have the TME, then we will look at how do we cover these expenses in retirement.  That will be handled in more detail under the heading “Income”.  News Flash – Lottery tickets will not be an option.