Ron and Joan Zahn have been budgeting since 1962, the year they got married.
The Zahns are now in their mid-70s living in De Pere, Wisconsin, and Ron has been retired for a decade from his work teaching and working in administration for parochial schools. Joan stopped working full-time as she raised their five children, but took on at-home babysitting jobs to bring in a little extra income.
Ron explains that they have been investing for retirement from “day one.”
“In 1962, we started investing $US25 a month into a mutual fund,” he remembers. “Those investments, over time, allowed us to have resources in retirement, and I committed to not extracting more money than the required minimum distribution each month.”
(He’s referring to the mandatory account withdrawals after age 70 1/2, the amounts of which depend on how much you have saved. Bankrate has a calculator to help figure out yours.)
Ron says 80% to 90% of their savings are in their IRAs, and the remainder is in mutual funds. “If I use only the required minimum distributions, it’s almost guaranteed — unless there’s a total national collapse — there will be money left for the rest of our lives,” he says. In their will, they will leave whatever is left to their children and to the church.
Now, the Zahns live on $US4,080 a month from both of their Social Security payments, his pension, and required minimum distributions from both of their IRAs. They also gain occasional income from substitute teaching and from a charitable gift annuity.
Ron’s income leaves them “safely below the threshold of paying income taxes,” and he estimates they have about $US300,000 saved in IRAs.
Here is how they budget:
The Zahns have always been frugal, and Ron explains that they generally don’t spend much money. The “housing” category includes their mortgage ($US889), property tax (~$US520), and any needed maintenance and repairs. The “medical” category includes $US210 per month for Medicare Part B, and the “utilities” category includes TV, phone, internet, and garbage removal.
Ron explains that their budgeting strategy is to give to the church and charity first, and then “the rest is application of reason. We don’t need as much for clothes as we do for groceries. To a degree, our spending is based on personal desire. We don’t desire to travel the world, so our vacation budget isn’t particularly large. However, on occasion, we’ll do a longer trip — mostly to see kids.”
There is no specific category for savings other than what they’re putting together for a new car because, after a lifetime of diligent budgeting, Ron says they don’t need to make a concerted effort to save. “I just didn’t feel like we needed a special category, because a special category implies I take the money and isolate it. In this household, the money just automatically ends up in a savings vehicle of some kind if we don’t spend it.”
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