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Budget Flexibility in Retirement

During our working years we don’t experience a whole lot of income fluctuations and so don’t have to flex our budget all too much. When retired, most of our income is derived from investments and a little budget flexibility can smooth out the ups and downs of our investment performance.

I wrote a similar post on being financially flexible. I’d like to delve into my actionable steps in budget flexibility for physicians in retirement.


Retirement Income

The savvy early retirement enthusiast will aim to achieve most of their retirement income from investments. Cash just doesn’t have the same income-generating power, requiring way too much of it to replace spending in retirement.

An investment, on the other hand, can produce income in forms of dividends as well as appreciation of the underlying asset.

For some investors dividends are bond yields, for others it’s rent from an income property. And some investors earn dividends through lending note investing.

A stock portfolio, for example, can generate a 2% dividend income annually and we can sell some funds every year to produce the rest of the income that we need.

Nothing wrong with CD’s and annuities, but investing in the securities market historically has had better returns than these. It’s just a more efficient way to generate retirement income.


Retirement Spending

Spending creep and budget blindspots are normal even for the most frugal of individuals.

Imagine you are retired and you go to buy your coffee every morning. After a while you also order a croissant and soon that black morning coffee becomes a cappuccino.

You went from spending $3 every morning to $10. It’s not a lot in isolation but it may not be your only creeping category.

Maybe you never cancelled your life insurance, nor your comprehensive auto policy after you retired. Maybe you kept your credit card which has $200 annual fees. All these are budget blindspots which are easily overlooked and ignored.

In retirement we tend to spend more on things we want and less on things we need. This can add to the spending creep. Fortunately, the peaceful state of being retired remedies a lot of that wasteful spending urges.


Investment Performance

If you’ve followed the real estate trends the past couple of years, you will have undoubtedly picked up on the high valuations investors are placing on real estate. Crowdfunding real estate websites are recruiting a ton of physicians who are entering en masse, as though this investment can never go bust.

Unfortunately, investments are cyclical for reasons that economist or financial analyst can’t pinpoint. It has so many moving parts that it’s hard to predict where the yarn will unravel.

A diversified portfolio has better returns and adjusting one’s portfolio based on risk is critical in order to prevent bailing out early on a good investment.


Even if you are invested in CD’s or bonds, inflation can wreak havoc on your portfolio’s spending power. Fortunately, such devastating inflation is short-lived but it can still manage to lower your spending ability.

Bear Market

What about a bear market? Imagine that stocks and bonds hold their current level for the next 7 years. They are said to ‘stagnate’ or have a flat performance.

Sure, you’ll continue to earn some dividends and there will usually be some inflation-adjusted fund appreciation. But a 2% investment income will hardly give you morning wood.

Enter, budgeting flexibility. Your investment will do what they will on their eventual path to appreciation. Budgeting flexibility lets you smooth out those dips because you can spend less when there is less passive income from your investments.


7 Budget Flexibility Tactics

Is your spending tied to you happiness? If so, it’s critical that you amass a ton of wealth and do everything possible to prevent a financial disaster.

From everything I’ve learned so far, relying on your spending to bring you happiness is a recipe for disaster. There are many ways to be happy without having to rely on spending.

Here is my list of 7 things that you can cut from your spending in order to maximize your budget flexibility when you’re retired.

If you have a financial advisor then they should be able to point all these out to you. If they don’t then maybe you’re not asking the right questions or you need a new financial advisor.

Your FA can’t force you to do any of these. Maybe practice these moves now before you’re retired to see what it takes.

1. Driving

Driving out to the beach or mountains a few times a week will wear out your engine, tires, and increase your gas spending.

During lean economic times you could avoid upgrading your car every couple of years. While you’re at it, wash it less, drop the excess insurance coverage for a while, and rent it out on Turo when you don’t need it.

2. Traveling

Hold off on vacations during times when you need to stretch your budget. Travel is expensive even if it’s just to visit your snaggletoothed cousin. Taxi, airport food, plane ticket, hotel, lost luggage, and souvenirs.

Desperate to travel? You can do a local staycation by renting a hotel for a week near you where you can enjoy the pool and still drive to your house to prep some meals.

Or consider doing house-sitting if you must leave your state or country. There are professionals websites dedicated to this for people who need their plants watered and their pets looked after.

3. Food

Cooking at home can save a lot of money. Many physicians have kitchens that would make professional chefs jealous. They have kitchen equipment for every kind of cuisine.

Fancy ingredients are pricey and a little too Emeril Lagasse in your kitchen.

Rice, beans, onions, yams, spinach, and a few avocados. BAM! You got the most amazing fucking dishes you can make with these cheap ass ingredients.

4. Gifts

What’s with parents and gift buying? I’m not saying that you shouldn’t give a gift but you don’t have to get a 10-yo a $50 Amazon gift card, regardless of what other parents do.

Make the kid a bracelet. Take them out and teach them how to throw a frisbee. There are many ways to display the affection that a gift is meant to represent – it’s hardly a gift card at Amazon. 

5. Gym

Exercise, gym, personal trainers, and your masseuse. These can be skipped without risking imminent obesity, I assure you.

Budgeting flexibility doesn’t mean suffering but there are many ways to enjoy some exercise. Go to the driving range or buy used golf balls and go swing at a junk yard.

I love the shit out of rock climbing and at $100/month it’s not a cheap sport. But I can go buy a $30 hang-board and practice my moves at home for a few months/years if needed.

6. Entertainment

Entertainment includes the movies, arts, drinks with friends, museums, and plays. There are ways to enjoy these things for free.

Alternatively, consider volunteering for various venues and in exchange they will give you free entrance to the performance and sometimes give you free tickets to share with friends.

7. Housing

Rent out one of your spare bedrooms if your budget needs to slim down majorly. Otherwise, hold off on lawn-care, major renovations, and big repairs.

A roof can be temporarily patched if necessary to avoid a whole roof job. You can push off the kitchen renovation and not heat the pool for a few seasons.



7 replies on “Budget Flexibility in Retirement”

Hi Dr. Mo! Somehow stumbled along your blog. Thanks for sharing your thoughts and some numbers. My wife and I, both physicians (FM and pain) both recently finished and decided to take a year off after residency to travel. We share many of your same thoughts and have similar goals. Glad to see it’s possible to be a non location dependent physician as we want to Take mini-retirements in the future. I’ll be following along to see how thing a go!

Any exciting travel plans?
I’m off to Spain for the next few months and I’ll be doing a few telemedicine gigs there to earn me a little income so that I don’t have to dip into my investments quite yet. I like the idea of mini-retirements, whether through sabbaticals or taking full leave of absences or when you are between jobs. Should be exciting.

We’ve built out the back of a Honda Element and have been traveling through Mexico and Central America for the past 7 months. We will be returning soon and finding work in Southern California to start hitting those loans hard. For my specialty it’s a bit harder to find the flexibility that FM provides but our goals are to be financially independent from our jobs and to be location non-dependent, at least part of the year or every other year. Have you done locum tenens jobs elsewhere? One thing I wish I did was try some telemedicine on this trip but then again at times I don’t because half the time the internet doesn’t work. Which text based platform are you using? Also I added my website below which I stopped updating because blogging is hard work! Especially when your internet doesn’t work! Cheers!

Also what are your thoughts on disability insurance? My wife and I chose to forgoe it in residency as it seemed like a lot for us to pay at the time and the insurance agents were selling us hard on it and selling us on our fears. I don’t know of any other industry that buys disability insurance. Nonetheless of my lawyers, engineers, finance friends have it. Our parents didn’t buy it. Why do doctors alway feel like we need to buy it? Just a thought but I’m thinking about revisiting the disability insurance once I start working.

Awesome travels Kevin, thanks for sharing that. Are you guys rock climbers? I’m a boulder junky myself. Your website,, is great and hope you get a chance to write more. It’s so nice to be able to see how others do it.
I’ve done per diem work all over but never took a locums gig because I hate that someone else will profit from me working my ass off. But, it’s the nature of things when a particular medical group can’t use craigslist to advertise a job.
Telemedicine is really easy to do on the road as long as your whole life isn’t consumed by it. A couple of hours a day is all you need. is my favorite because it’s really easy and asynchronous. Roman is another great telemedicine company to work for if they are hiring – it’s for men with ED.

As for disability. As long as you have student loans and aren’t financially independent it’s necessary to protect your biggest asset which is your income. If you have a 2-income household it might be different but what if that relationship falls apart. I had disability insurance right up until I became financially independent. After that I gave it up. For $500/month a physician can get a very solid plan from a reputable insurance company. Unfortunately, it’s necessary because the risk of being young without a way to earn an income is high. Most disability statistically is only short-term but it’s still nice to have.

Yikes! $500/mo is like a car payment! If anything, I may choose to get it. Disability insurance tends to be more expensive for women anyway. It also doesn’t cover injuries from activities such as rock climbing and scuba diving…all things we love to do and if I remember correctly requires you not to be able to work for 6 months or so before it takes effect.

We both rock climb and got into more multi-pitch climbing this past year. It’s been more of a side activity for our trip as there are so many things to do! I may pick up more writing in the future but it requires so much work as I edit endlessly that it takes me out of being present while I’m traveling. I really like how “real” your blog feels and it feels more like following a journey rather than reading from someone who already has all the answers.

Are you working part time urgent care in Spain?

Thanks for the kind words.

I’d love to follow you guys on your journey though I know writing can be a little tedious at times.
I’m visiting some friends in Oakland and went to Ironworks Berkley Climbing gym – great spot.

With my telemedicine stuff I can do some telemedicine work while overseas. Some medical groups like Doctor on Demand and Teladoc don’t allow physicians to do telemedicine work while they are out of the country. Oscar and JustAnswer allow you to do some work as long as you let them know which should provide me with like $2,000-$3,000/month of income for an hour of work a day – if that.

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