Three ways to budget for fun in retirement

The way retirement is supposed to go is that you scrimp and save for decades while you are working, and then you get to enjoy years of luxurious, worry-free leisure.

But here is a little tip: Fun does not just happen. You have to budget for it.

According to new data from Merrill Lynch and Age Wave, 77 percent of retirees have hardly planned at all for their first five years of leisure activities. This is not just a minor bookkeeping oversight. If you don't factor in the fun, it could blow a meteor-sized crater in any financial plan.

Here are a few pointers from financial planners about how to budget for fun — and also avoid any nasty accounting surprises before it is too late.

1. Forget the 80 percent rule. Many retirees abide by the rule of thumb that they'll need to live on 80 percent of their pre-retirement income. Scrap that, suggests Douglas Kobak, a Pennsylvania financial planner.

You're likely to be ticking items off your "bucket list" within the first few years of retirement. Tour Peru's Machu Picchu? Volunteer?

"Most retirees need an income of at least what they were earning just before retirement to maintain their lifestyle and do leisure activities as well," says Kobak.

2. Get creative. Just because you want to maximize your leisure time, it does not mean you have to maximize the amount you spend on it. Since you no longer have money coming in, get inspired to make the most of the money that is going out.

"One client and his wife loved golf, so they would volunteer for the PGA tour," said Marguerita Cheng, a financial planner in Maryland. "They got to play on some of the world's best courses for free. Another client always wanted to visit Africa, so he went on several medical missions."

3. Find out your partner's idea of fun. It is astonishing that this even needs to be said. But apparently it does, because two-thirds of those with a partner have not discussed how much leisure time to spend together in retirement, or how much money to devote to it, according to the Merrill Lynch data.

In other words, spouses are living under the same roof, and yet have completely different notions of what retirement is going to look like. One might have dreams of a farmhouse in Tuscany, while another might want nothing more than to stay stateside to look after the grandkids.