I’m 68 years old and living on a strict retirement budget. My friends think I’m cheap, but I’m just trying to preserve my nest egg — can I do that without saying ‘no’ to everything?

A spending plan could be the key to enjoying retirement without ending up broke

When you must make your money last — but still want to use some of it to enjoy life — a detailed budget is key to your success. If you make a financial plan, you can decide how much you're comfortably able to spend without putting your future at risk.

To make your plan, start by determining how much income you have available. This includes Social Security, and withdrawals from your retirement nest egg. A standard rule-of-thumb says you have a good chance of making your savings last 30 years if you take 4% out in year one of retirement and adjust up for inflation annually. So, if you had $600,000 saved, you could spend $24,000 from your savings.

Once you know your income, subtract your fixed expenses — including saving for emergencies if you don't already have money set aside for a rainy day. See how much you have left over after covering essentials like medical care, food, transportation, utilities, taxes, insurance, clothing, and savings. Allocate that money to the things you value most, whether that's dining out with friends or taking a big trip. The average household spending for Americans aged 65 to 74 is $56,374, according to Bureau of Labor data.

Let's say for example that you have $24,000 you can safely withdraw from savings and $22,884 from Social Security (the average annual benefit amount as of January 2024), you'd have $46,884 to spend. If your fixed costs for essentials add up to around 50% of this amount, you'd have $23,442 for discretionary expenses. You might decide to use, say, $9,000 of that money for activities with friends throughout the year.

The key is to work through this plan, find out exactly how much you have to splurge, then make sure you're using that money to bring you joy. If you find you have nothing left after necessary costs, you may also think about whether a lifestyle change — such as downsizing to a cheaper house — could make you happier by freeing up some cash to enjoy your time.

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Maintaining relationships with friends on a fixed budget

If your budget for fun is limited and you can't or don't want to make changes to expand it, you can also find ways to maintain relationships without spending more than you should.

To do this, take the initiative to invite your friends to things that don't cost a pretty penny. You could arrange a book club at your home, suggest weekly picnics in the park, or research free concerts and events in your area. Many businesses also offer senior discounts, so never hesitate to look for opportunities to save.

While it's stressful to feel like you don't have the money for your dream retirement, taking control of your finances by making a budget and finding low-cost activities can help you significantly improve your quality of life. You only get one retirement, so it's worth doing these things to make the most of it.