Are you in the process of setting a budget for retirement? This is not as simple as it sounds. Despite the fact that you have been working with a budget for many years, things change when you retire.
In the past, your budget was based largely on your monthly income from your job. While you will continue to receive money every month, it will no longer come from your employer.
Common Categories in a Budget for Retirement
Above all else, you need to keep your retirement budget as organized as possible. A couple of years before you plan on retiring you should begin to create a preliminary budget. This checklist below will give you a good idea of what to expect during retirement.
Categories you must include in your retirement budget are:
- Housing (taxes, insurance, home repairs and maintenance)
- Transportation (car payment and gas)
- Personal expenses
- Miscellaneous loans
As you can see, these are many of the same categories that you have been dealing with for most of your adult life.
Some of these categories will stay “fixed” from month to month. For example, your mortgage is not likely to change – unless you have an adjustable rate loan. On the other hand, there are categories that can and will change such as home repairs and entertainment. You may spend $1k on a home repair this month but $0 next month. Make sure you are prepared for these fluctuations.
Just because you are retired does not mean you should stop saving money. Be sure to include this in your budget for retirement. How much you save depends on many factors including your income and how much you spend on regular expenses during the month.
When planning your budget for retirement, consider these categories as well as any others that are personalized to your situation.