Part of this adventure in defining what retirement's gonna look like, part of it you're gonna get right, part of it you might not, you might blow through some money before you figure things out.

Welcome to how to retire on time, a show that answers your retirement questions. Say goodbye to the oversimplified advice you've heard hundreds of times. This show's all about the nitty gritty. That said, remember this is just a show, not financial advice. Do your research.

Now, with me in the studio is David Frandsen, and today we're gonna read your questions. As always, you text your questions to (913) 363-1234, and we'll answer them on the show. David, what do we got today?

Hey, Mike. How do I calculate what my actual monthly expenses will be in retirement?

I would recommend starting with what I call your purpose portfolio.

Okay.

This is part of the book, How to Prepare to Retire on Time, getting released soon, soon based on the recording of this episode. But Yeah.

So not out yet, but Yeah. On the way.

So something to consider is a lot of people will spend money to create artificial purpose in life to try to, like, fill a void.

Okay.

That's the last thing you want, is just to increase your spending every single year because you feel empty inside. And you could have a wonderful marriage and still feel empty inside. You could have wonderful friends and still feel empty inside. You might have a charity that you You need to understand purpose. And then, what is your lifestyle gonna look like to get that purpose, and then you back in the cash flow of that.

So let me give you a couple of examples. So the purpose portfolio really looks at your romantic relationship, which I believe everyone should have a romantic relationship in retirement.

Mhmm.

Then you have your family. Hopefully, you have family. Mhmm. And then you've also got your social, your friends. Okay?

Your friends are kind of who you're going to associate with to enjoy topics or activities that maybe your bride or or husband or I guess bride or groom. Mhmm. Mhmm. Right? Or your your family or, you know, they they might not want to participate with them.

Okay? Then you need different groups of hobbies or activities. Now, it's not you're going to golf to waste time. Yeah. It's not you're gonna work on your yard to waste time.

You're not trying to busy yourself. What you're trying to do is you're trying to create an activity that's gonna give you these three endorphins. You've got oxytocin, serotonin, and dopamine. Mhmm. And the way you get those is through connection with people.

Okay? You wanna connect with people, we're all hardwired to connect, but also that you give yourself challenges, and then when you exceed or accomplish the challenge, you get that hit of dopamine and so on. Yeah. So if if you wanna golf as, let's say, one of your physical activities, and walking a golf course is a physical activity, then you're not just going out there to swing a club and to drink a bunch. What you're doing is you're going out there and you're anxiously engaged in the pursuit of a better golf game.

Mhmm. So you're practicing how to how to, I don't know, put a backspin on it or how to do a draw, or you're practicing your putting, so that you can get one or two strokes off your game. You're practicing how to drive without the slice. So that when you do it, you get the hit. I mean, these are basically drugs that your body produces, and if it's produced in a healthy manner, they're very good for you, and they create that feeling of purpose.

You want to go to the charity. You're going to get serotonin and oxytocin by donating your time to lift the charity. But you don't go you don't just get a good experience. You could go to a charity and sit there and be miserable and complain the whole time. I'm doing it because I'm supposed to.

Or you could be involved, and you're seeing the lives that are being touched because of your charitable work, and you're giving to the charity, you're boosting the charity up, that's how you feel purpose. When people require you to get out of bed to fulfill an activity or responsibility. So the reason why I bring that up is some people will have a purpose portfolio, and they're saying, well, I wanna get involved with the mission trips for my church. So I've got an uncle up in Washington, for example, who's always traveling, and a lot of it, he's like going to Mongolia and obscure places to build churches or schools or just random stuff with his kind of local it's it's like a local city church, if you will. Cool thing up there, right?

Yeah. And there's all these very wealthy members of their congregation, and they just all came together and said, hey, what do you guys wanna do? So the church brings its ties together and it helps and then it supports and it goes out and does these really cool adventures. Mhmm. But he's paying his way to do all this.

Mhmm. Church isn't paying him to do it. He's paying his way to do it. So that's built into his cash flow. I know in the LDS faith, so the Church of Jesus Christ of Latter day Saints, they've got these these other mission church leaders who are going for two, three years Yeah.

To places. I know I know other church congregations, they might not travel, but they're they're working at the soup kitchens, they're working at I mean, all these other places, and they're doing it every single day. Yeah. So these different experiences, whether it's a one month trip, a two week mission trip, a two or three year trip, but your cash flow is very different. Yeah.

I mean, if you're if you're going to England or you're going to the Middle Of Africa too, those things would matter Yeah. Yeah. Yeah. On the trips and the duration. So Sure.

How do you wanna spend your time? How is it going to give you purpose? And then you need to start to understand what's your cash flow look like. Now, when you understand kind of what you want your life to look like, then go to your your your bank account, your wherever your credit cards are, and it's okay if you have credit cards in retirement. Just pay them off.

Uh-huh. Okay. And you download all of your transactions and then sort them by the type. So you get all of your Amazon transactions for the year in one group. And you start breaking it down and saying, well, where do you spend your money?

How much will be in discretionary spending? How much is gonna be in food? And then you can kind of start to get an idea of what this would look like.

If you

want some cheat codes on this, get one Excel sheet of all of your expenses, Make sure it's simply categorized

Mhmm.

So, like, you don't double count, oh, this paid off the credit card, and, you know, all the inflows now. Make sure it's really easy to understand, then upload it to your AI, and then say, how much do I spend, and categorize it, and then have a conversation about

this. That's interesting.

Might take you five minutes. Yeah. But it's very sobering. Yeah. You figure out how much does it cost to be you, and then you can figure out, okay, well, how much of that is because you're at work, and do you go out to eat often because you're at work?

Are you gonna continue to eat out often? Are you not? So then you start to build your lifestyle around this. Mhmm. But unless you download your your statements and you upload it to AI, and you could do a whole year very easy and do like a CV not CVS, CSV.

Oh, yes.

Not the not the drugstore. Alternative to Excel or Google Sheets.

Whole different thing there.

Yeah. But you can but then you understand how much does it cost to be, what your cash flow really looks like.

Mhmm.

Everyone, you know, puts in these numbers, oh, well, I spend this much on that or the other, and they exclude those one off expenses that really could take a toll.

Right.

So then you understand that, then you understand that how you want your how you're gonna get purpose in life, whether it's it's intellectual hobby, it's a physical hobby, It's a legacy hobby, know, passing on your legacy or mentorship or things like that. When you kind of figure out your your religious or spiritual part of your don't I don't it's not a hobby. Right. It's an important part of people's lives. But how much does it cost to make those adjustments?

And then put in a slight buffer in there because you might try gardening and hate it. So

you gotta be able to bail out of that.

Well, have you ever tried a hobby and you just despised it after a while?

I don't think I have, actually. I I've I've only done some things that I know that I like.

I don't know. Batting a thousand on that?

I I I guess so.

So I'll confess to one of mine.

Okay.

My wife and I on our honeymoon made some soap. We we took our honeymoon to Sundance. Such an incredible experience. Uh-huh. It was in the late fall.

It was gorgeous. Sounds lovely. You know, hikes and stuff, then a soap making class.

Okay.

And it was so fun. You know, we made soaps, they smelled great, we knew all the ingredients, so there wasn't like weird chemicals to it. It was very it was lye and all all the basic stuff. Yeah. So like a year later, I'm like, hey, we should do this.

This was really fun. We bought all the ingredients and never did a thing.

Yeah. Yes. Okay.

That's gonna happen. You might get really into your lawn and then decide you hate it. You might pick up a guitar Yeah. And then play it for a month, and then decide it's not really for you, and then you sell it on Facebook Marketplace or whatever.

Right.

So just understand that part of this adventure in defining what retirement's gonna look like, part of it you're gonna get right, part of it you might not, you might blow through some money before you figure things out.

I mean, I did buy some exercise equipment that I haven't used very much. Yeah. I can admit to that. Yes.

You're right. You're you use the gym here at the office.

I have. Yeah. I I needed to use it more consistently, but yeah.

Yeah. That's okay.

I'm glad it's there.

It's okay.

Yeah.

So but that's that's really don't don't look some people will have these ideas of, well, how much do I need for the cash flow? And it's like, oh, well, it's 20% of your work more or less or these are arbitrary things. I've had many people retire and they had a significant reduction in how much they needed.

Mhmm.

I've had people retired and said they had more time, they actually wanted to increase their spending because they were gonna do certain things that would require it.

Mhmm. Mhmm.

It's common to say, I'm retiring, so I wanna buy a boat. Oh, yeah. So the first year, there was more expenses on just the boat costs, and then it went back. I had a client years ago up in Seattle that we had priced into his plan for ten years the cost of maintaining his sailboat. So he bought it, enjoyed it, and then we planned to sell it, and then adjusted the cash flow at that point.

Oh, okay.

Yeah. It's just

So for me, like, I

Everyone's different.

I love riding mountain bikes. And right now, like, I just I do it when I can. Maybe it's once a week. But if I was to retire, like, next month, I would want to build into my plan. I I wanna spend a week in Bentonville every single month.

And so I'd have to, like, figure out how much that costs, I guess.

Yeah. For those who don't know, Bentonville, it's the funniest thing. Mhmm. It's what the the world the the mountain biking capital of the world

is Self proclaimed. There's no mountains there. There are no mountains. Yeah. There I mean, they

Some of the best trails you can find. Yeah. Great trail

Great trail riding and and they they've machine built a lot of trails and they've tried to use whatever elevation they can to their the greatest

Are gonna ride in your seventies and eighties?

Oh, yeah. I'll get an ebike. That's true.

That's what you do now. It's not cheating. It's just fun.

Yep. It's just that'll help you get up the hill then when you go downhill, you're just you're just hanging on. Yeah. So I would have to, like, build in, okay, how much is it would it cost for an Airbnb for the week? How much is an ebike?

I I price all that in, I guess, if I was gonna do this. Yeah. And just build it into the plan.

Well, you might maybe you buy a house there and you rent it out three weeks, so it helps helps offset some of the cash flow.

Even better.

There's a tax planning opportunity there with all of that. You couldn't be a rental because you're you're there too much. Oh. So you can't you can't do the schedule e stuff, but you could do other things.

Okay.

Yeah. Anyway, but that's you wanna construct that. What you don't wanna do is you don't wanna retire and then have a huge void that sucks up your cash because you're depressed.

Mhmm.

Be proactive about this.