December 12, 2011

Frugality and Retirement: How Does It Work?

The post of a few days ago dealt with the pressure on the middle class and its effect on retirement. The obvious follow up to that is what happens when the situation calls for real cutbacks in expenses and life style. Is it still possible to have a satisfying retirement?

Like simple living, frugality is a word that is really open to interpretation. There are folks who think of frugality as being a smart steward of their money. For the most part, wants are replaced by needs in the budget. A free movie from the library replaces the $10 ticket at the local cinema. Dinner out is either the $5 foot long sub at Subway or a home cooked meal instead of the $30 restaurant experience.

For others, the word takes on an almost religious tone. Spending more than is required to stay alive is to be avoided. Living space is cut to the bone. Almost all belongings are given away or sold, leaving a dresser drawer with a few changes of clothes. If possible, a car is replaced by public transportation or walking. Health insurance is dropped, in favor of self-medication and an occasional trip to the emergency room or free clinic.

This second interpretation is not what I think about when I type the word frugal. The dictionary defines frugal as not wasteful, not spending unnecessarily, being economical and thrifty. How many people would not find those words something to strive for?  The problem comes when each of us puts our own interpretation on those words. To somebody a 60" LCD TV screen is a necessity. Buying a $60,000 car instead of the $75,000 version could be considered thrifty.

Frugality, like simplicity, is in the eyes of the beholder. Living on $100,00 before retirement and $70,000 after is certainly more frugal. But, for many of us the numbers may be more like $50,000 before retirement and $25,000 after. So, how does a satisfying retirement work when one has to be frugal?

There is no argument that it takes work and a commitment to the goal. It requires reassessing what you need to be happy and content. It demands that you prune those things that no longer fit within your budget. It pushes you to decide what are needs and what are wants.

Of course, a "need" for me could be a "want" for you. I need a high speed Internet connection to be able to blog. Since blogging is my passion and what occupies several hours of a typical day, cutting out the Internet connection isn't an option. I'd give up going out to any movies again if that was the trade off my budget demands.

For you maybe a "need" is a meal out at least once a week at a decent restaurant. Your volunteer work, or babysitting the grandkids, or part time work at the store leaves you drained by Friday. A meal out with spouse, friends, or even alone, is something you look forward to. It is a reward to yourself for the week's efforts. That is a need for you and your budgeting decisions will reflect that.

Frugality may mean that you have to settle for a medical insurance policy that is designed to help you only if hit with huge bills after an emergency or major surgery, but pays nothing for regular Doctor visits or drugs. You do your research and find out the hospital and local Walgreens have regular free clinics for blood pressure checks or diabetes testing. Costco or Walmart will sell you a 90 day supply of the generic version of the expensive brand name prescription for $10.

I could cite examples until the cows come home (there is a cliché I haven't used in 18 months!) but instead I'll summarize what frugality in retirement means to me:

  • Spending time with my grandkids and family. Except for gas = free
  • Watching a movie or documentary at home from either the library or Netflix. Cost is $17/month (less than one movie out for 2 people)
  • Sitting on my back porch, reading and watching birds and clouds = free
  • Cutting my cable TV bill from $70/month to $20
  • Running errands only 2 days/ week. Saves approx. $50/month in gas
  • Cutting meals out to just once a week. Saves $160/month
  • Not buying new books, only used ones or going to library. Saves $50/month
  • Keeping an 8 year old car that squeaks and rattles for another few years
  • Clipping coupons and paying attention to sales on stuff we need thus cutting our monthly food budget by $70.
  • Mothballing a computer than has issues rather than replacing it right now. Making do with one that is even older (Sorry Dell).
  • Only doing laundry and running dishwasher between 9 PM-9AM during the week (rates 66% lower)
  • Going on an expensive trip to Hawaii..important to my mental health and well-being

That last example is important in this discussion of frugal living. For me, that 18 day trip, while quite pricey, was vitally important to me and my wife. It gave us a break from our routine, broke our pattern of stress and over-commitment, and allowed us to add rich memories to our marriage. For me that was a frugal choice because it saved me (and Betty) from problems that were threatening to become disruptive. At that point, it had become a need. It was an investment in ourselves.

The vacation budget is depleted, but we did not borrow any money, leave any balance on our credit cards at the end of the month, or in anyway disrupt our retirement budget. We planned for it, saved for it, and made it happen.

Frugality and retirement do work together. It requires being flexible. It means you know yourself well enough to understand what you need and what you can adjust to being without. It doesn't have to mean leading a bare-bones, sterile, hand-to-mouth existence at all. It is about re-balancing what you have and how you will mold it into what you need.

Related Posts


  1. Very nice Bob. I find there is a real sense of "so this is what life is all about!" when you hit the right balance. Sounds very much to me like you have.

  2. Tamara,

    I do feel things are in balance now. But, I am well aware that is usually a temporary condition. There is always something that throws me off kilter for awhile and requires me to re-balance, but that's life.

    I like your blog "Early Retirement Journey" and have added it to my blog roll.

  3. I think having a written budget has been the key to a satisfying financial life both before and after retirement for us. (I am retired but my husband is still in the workplace.) I am by nature more frugal and more of a planner than my husband so planning and budgeting has been a way for us to be on the same page about finances. We've always lived below our means so frugality in retirement isn't a new concept for us. A big bowl of popcorn and a Netflix movie is just as much of a treat to me as a trip to the crowded Cineplex. We do a moderate amount of travel for birding. (We are both avid birders.) Pack some sandwiches and thermoses and head off to the coast to watch the Sandhill cranes and we are in Nirvana. It just flat doesn't take a lot of expense to keep us happy. Never has.

  4. As Tamara observed, balance is key. I like your explanation of being frugal, which focuses on finding your own individual balance within your financial means.

    I am not really interested in travel anymore, but my big "indulgence" that keeps me sane (my version of your Hawaii vacation) is my cabin in the mountains. It does require some money for taxes and upkeep, but every time I go there, I feel my stress level drop and my heart smiles from ear to ear (if hearts have ears!).

    I did, however, let go of the hot tub. I couldn't justify the cost of maintenance against the infrequency of use.

    Other balances--I shop at a grocery that is slightly more expensive than the mega store, because I can find everything quickly and I get personal service, which I value. But I buy the store brand and use coupons to save.

    I do my own housework, but I pay someone to do the heavy yardwork, leaving me free to plant flowers and weed, the parts I enjoy.

    My daughters save education expenses by going to community college. One daughter will get her two year degree there. The other will transfer to a four year school to finish, leaving only two years to pay for at the university instead of four.

    I drive an SUV because I need an 8 seat vehicle for the whole family, but we are a one car family and I consolidate driving needs to minimize use.

    For my two adult kids still at home (and in school), I furnish housing and food and tuition, but they work for their money to buy everything else, including their own cell phone plans.

    Those are a few examples of how we balance financial decisions in our family. I think it's interesting to see how we choose to spend our money. We can get to know a lot about each other that way!

  5. Florence,

    Good for you! You have it figured out for you. Each person (or couple) has to find the balance that works best. Some need the movie experience in a large theater with lots of other people around while you (and I) prefer being at home.

    Thanks for sharing what your definition of frugality is.

    By the way, my wife and I do occasional birding near Patagonia in southern Arizona. It is quite relaxing even though I don't know what I am seeing.

  6. Galen,

    That is a fabulous summary for others to review for ideas. We all learn from each other. I appreciate your thoroughness.

    We used to have a cabin in the White Mountains that I'd love to have back. But, the expense and lack of use sealed its fate several years ago. I would have a hot tub again, though, if the opportunity presented itself!

  7. You make good sense, Bob. I just finished reading your book as well. We'd thought through most of the issues already, but it feels good to see familiar thinking!

  8. Linda,

    Thanks for your compliment and especially thanks for buying the book. I'd very much appreciate a comment (hopefully positive!) on the Amazon site where you bought the book. Research proves that comments left by readers have a major impact on the decision to buy!

  9. "Frugality is not something you turn to when you are blocked into a corner. It is something you embrace when you have a vision of a better life that you want to see brought to fruition before the sand runs out of the hourglass." This is a quote from Amy Dacyczyn, the original Tightwad Gazette.

    I've been frugal all my life and both my parents were frugal. But we all lived quite well. I'm living my retirement life in my pre-retirement years just to see what it was going to be like. It's not as awful as I thought it would be. In fact, I rather like it. What's so bad about living frugally and making your money stretch further and further? As long as your needs are met (whatever they may be) and you're happy, that's all that should matter.

    Who knew?

  10. Morrison,

    I have been living the same way for decades. I just didn't know it had a name.

  11. The ideas in your blog posts about how to live well but still keep expenses within your annual income have influenced us. We did our annual spending review about a month ago and found that we had spent less than our income for the year. My husband has now decided to stop his 2 day a week counselling practice so there will be changes to our income level for 2012 but we are confident that we can manage within our means -- without compromising on vacations! Thanks for all your great tips. Be well, Jeanette

  12. Jeanette,

    You two are taking a big step but you have done your planning and projections and have every confidence it will work. Excellent!

    I am happy you found things of value to enable you to feel comfortable in your decision. Keep us up-to-date on how it is going in 2012.

  13. Get a post-retirement part-time job, which I did. Rediscover an old passion, i.e., painting, which I did. Refresh a foreign language skill to keep the brain active, which I did.

  14. Anonymous,

    All good ideas. I tried learning some Italian before going to Italy and a little Spanish before a mission trip to good. Leaning foreigh languages isn't my thing.

  15. Steve in Los AngelesWed Dec 14, 10:31:00 PM MST

    Hi Bob,

    I am living frugally now and will continue to do so for approximately the next 5 1/2 years. However, the type of frugality I currently am living is similar to the type of frugality I was living from 1965 through 1969 (although I did not realize it at the time as I was quite young). Both of my parents had to work and both of their incomes were quite low during those years. During those years, there were five of us (my parents, one of my sisters, our pet dog, and I) living under one roof. My other sister, who graduated from high school in June 1965, moved out of the house shortly after graduating from high school. I am the youngest in my immediate family. Things for our family were difficult during those years. (Perhaps things would not have been so tough if my parents did not smoke cigarettes. They could have saved some money if they did not purchase cigarettes. I NEVER have smoked cigarettes and anything else for that matter and NEVER will smoke anything EVER, EVER, EVER!!!)

    I will be age 56 early next year. I live frugally now so that I can get the loan on my residence paid off hopefully by April 2017. I rarely drive my car. I walk and use public transportation almost all of the time. I do eat out (only with my friends and never by myself) once in a great while. The restaurants are cheap or moderate in price. All of my other meals I prepare exclusively at home. After April 2017, my life will get much easier. I am glad that I am single. I very much doubt that anyone else I know would be willing to lead the type of lifestyle I currently am living (even though my current lifestyle is only temporary). I made my current lifestyle decision only out of choice.

    Thank you for reading this comment.


  16. Steve,

    Living through some hardships now to achieve the goal of paying off your mortgage takes tremendous self discipline. You live with a strong sense of personal responsibility. You are to be congratulated.

  17. Living a frugal life is a choice I make. When I was young, I had to live a frugal life in order to have money to save and invest. Now I do have extra money to spend. If I really something I get it, but I don't squander money. I worked hard for money and I spend it carefully. Living this way allows me to give more to give more to charity and to splurge when I want. Living a simple frugal life gives you the freedom of many options.

  18. Steve in Los AngelesThu Dec 15, 10:15:00 PM MST

    One way I live frugally is to keep my utility costs low. Today, I received my Southern California Gas Company bill. From November 09, 2011 to December 12, 2011, the total cost was $10.30.

  19. Steve in Los AngelesThu Dec 15, 10:24:00 PM MST


    Thank you for your most recent comment. I am determined to control my spending drastically now so that I can enjoy my life later on. Although some people may disagree with me, I believe that my later years will be my best years, especially as my health is extremely good. I may be approaching age 56, but I look much younger.


  20. Steve,

    A gas bill for $10.30? I know LA has a moderate climate, but still......

  21. Steve in Los AngelesFri Dec 16, 11:39:00 PM MST


    Believe it or not, that was the amount of my most recent natural gas bill.

  22. Steve,

    I believe you. I'm just amazed. Do you use gas to heat your water and for cooking?

  23. Steve in Los AngelesSun Dec 18, 04:10:00 PM MST

    Hi Bob,

    I pay for my portion of the natural gas just to cook and to run my dryer. Hot water is provided by a boiler in the condominium building where I live. Consequently, I do pay my pro-rated share for the cost of the hot water. My monthly cost, included in my monthly homeowners' association dues, for the natural gas to heat the water, is $12.78. If I add the $12.78 to the $10.30 I paid directly to Southern California Gas Company, my total natural cost gas during the last billing period was $23.08, which still, in my opinion, is very reasonable.

    I would be curious to find out how much people who live in residences that use heating OIL to provide heating how much they pay on a monthly basis to the utility provider. I would think that people who live in parts of the United States where the winters are quite cold probably pay a lot of money as the fuel probably would be quite expensive.

  24. Steve,

    I imagine there are lots of folks who would love to have a $23 bill. They would call that amazing, not just reasonable.

    My understanding is a typical monthly bill for heating oil is hundreds of dollars during the coldest months. In parts of the country a delivery service won't even completely fill a tank because the cost is so high they are worried the homeowner can't afford the bill.

    As a point of reference, my electric bill in the winter is around $75 a month and $200 in the summer. The house uses a heat pump and is all electric.

  25. I am a New Englander and we are born frugal:). As I make my budget for 2014 I am adding a category to track savings by getting deals, using coupons, special offers etc. Should be fun to track it. Thanks Bob for your wonderful blog. It does inspire and reassure me.

    1. That's an interesting idea: keeping track of how much is saved by coupons and such. My wife and I are sure to "price match" at the grocery store each week. It doesn't save a lot, maybe $5, but it is so simple to do. One of our local grocery chains is big on 'buy one steak, get two or three free'..the same with other cuts of meat and fish. Recently we bought one pork loin that is big enough to feed us for 4 meals....and got 3 of the same size free. That's 16 meals but we only paid for 4 (and yes, the price per pound was comparable to other stores).

      I have also started checking out the local dollar store (there are actually three close to us) for things like detergent, SOS pads, dish soap, and staples that work perfectly well.


Inappropriate comments will be deleted