Restructuring Your Budget for Retirement

If you are like many people, you have been planning and building a nest egg for decades for the moment when you finally reach retirement age. However, have you also considered how you would restructure your budget, to accommodate your needs at retirement?

Understanding Spending Limitations

Your spending reality will change once you retire. Not only will your income be different, so will your expenses, and the way you fill your time. With much more free time on your hands to fill during the day, it is easy to overspend. You need to do two things before you retire so you can establish better expectations of your spending power and limitations after you retire.

1. Gather your expenses.




2. Know your income.

The better you understand your budget and spending habits now, the more prepared you will be to make the appropriate changes when you retire. Now is also an ideal time to assess your monthly expenses and seek out ways to trim the fat. This attitude of slimming down spending will carry over into your retirement to help you budget wisely when the time comes.

Adjusting Your Expenses

Retirement changes much more than just the number of hours you spend at home each week. At first, it can be a blessing to have nothing to do every day. It does not take long, though, for boredom to set in. You will want to be careful that you do not compensate by increasing your spending in response. You must adjust your expenses to accommodate your new financial reality. That includes things like:

• Switching to lower-cost mobile phone plans.




• Eliminating unnecessary expenses (subscriptions, services, coffee habits, etc.).




• Ditch the costly cable plans. With devices like Roku, Fire TV Sticks, and Apple TV, there is no need to pay expensive cable network fees.




• Consider level pay services for utilities. Leveling out your electric or gas bill can help create a more consistent budget across changing seasons.




• Reconsider the benefit of multiple vehicles. Not to mention the fees associated with keeping multiple cars on the road when you are not dealing with a daily commute. You may find that services like Uber and Lyft can more economically fill in for that second car.




• Try to have your house paid off before retirement. Then you only have to worry about maintenance, insurance, and taxes on your home rather than paying a hefty house note each month.

The key is to minimize expenses without limiting your quality of life. Other things you might do is take advantage of senior discounts to reduce costs related to dining out and entertainment.

Things to Consider

Not only are you spending more time at home once you retire. The types of things you are responsible paying for will also change. As you work to create a functional and effective retirement budget, make sure to include a few unexpected twists, such as:

• Insurance costs




• Supplemental insurance




• Copayments and other medical expenses




• Costs of caring for elderly parents or boomerang children




• Potential costs of divorce after retirement – and the division of assets divorce creates

In other words, you need to have room in your retirement planning and budget to accommodate a few unexpected expenses along the way. Natural disasters, marital strife, medical emergencies, and more can create chaos within your budget.

Putting it All Together for Your Retirement Budget

In order to get the most out of your retirement budget it needs to be the following:

• Realistic




• Researched




• Reasonable




• Responsible

While there are no guarantees, following a successful budget throughout retirement dramatically increases your odds of financial independence along the way.