Everyone pictures retirement differently. For some, it’s the opportunity to travel the world and experience new things. For others, it’s helping with the grandkids and staying close to home. No matter how you picture your own retirement, however, one notion will always ring true – every day is a Saturday.
In fact, many people don’t realize that expenses can easily rise in the first few years of retirement. For that reason, it’s important to adequately prepare for your retirement and develop a budget that will allow you to experience the things you were forced to put off during your working years while still spending in a responsible way.
No one wants to outlive their money so – whether you intend to spend your last penny on your last breath or leave as much as possible to your heirs – budgeting for retirement is critical for stability and contentment. Therefore, abiding by a few simple tips can greatly enhance how well your budget will serve you throughout your retirement years.
A reliable retirement budget is one that’s built on solid and useful information. The first step in creating your retirement budget should be to gather all pertinent information, including your account statements, bills and anything else that might be of use. Go back at least six months, if not a year, to get a good idea of what the average figures are so your budget isn’t skewed.
From there, create a budget spreadsheet that will organize all of the information into a concise and insightful document, preferably on a computer or digital device for ease-of-use but paper will suffice.
Have a Heart-to-Heart Conversation With Yourself
As the old adage goes, there’s a big difference between needs and wants. During retirement, when income is constrained, it’s important to differentiate between what you absolutely need versus what you would prefer. In other words, water, electricity and healthcare are fixed, indispensable expenses but you don’t necessarily need the sports package from your cable provider.
Of course, after a lifetime of work, retirement should be a time for you to enjoy life and not constantly pinch pennies. Therefore, sit down and prioritize any extravagances you don’t necessarily need but would enjoy. Those are the types of items that should be included within your retirement budget for entertainment and general enjoyment.
Prepare Your Budget
Once you’re properly organized and have both identified as well as prioritized extraneous but important expenses, start preparing a simple budget with your income and fixed expenses. Consider the resulting amount the flexible portion of your budget that can now be devoted to savings or spent on traveling, hobbies, entertainment or however you deem fit. Once you have a working template in place, remember that your budget should be continually revisited to make sure it’s accurate, informative and based on the most current data possible.
This content is designed to provide general information on the subjects covered. It is not intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney.
Gary Marriage Jr. is the founder and CEO of Nature Coast Financial Advisors, which educates retirees on how to protect their assets, increase their income and reduce their taxes. Marriage is a national speaker, delivering solutions for pre-retirees, business owners and seniors on the areas affecting their retirement and estates. He is an approved member of the National Ethics Bureau, and has been featured in “America’s Top Hometown Financial Advisors 2011” and was selected to contribute to a book with Steve Forbes titled “Successonomics”
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