Use this sample retirement budget as a template for your retirement budget.
Retirement is a time for that those who have worked diligently to relax, travel and spend time with family. Those who make the appropriate accommodations for the golden years always fare better than those who leave things to time and chance.
When it comes close to time to retire, it is best to do a budget and to see what income is coming into the home verses the outgoing expenses. The biggest mistake most people make when budgeting is to prepare their budget, and then place it in a drawer forgetting about it. Money doesn’t go as far as it used to, so here are some tips for creating a retirement budget. Groceries and Other Necessities
Most people are not realistic about their spending habits. Creating a budget is a good time to reflect on what expenses are necessary and what can be avoided. If a family likes to go out to eat, this should be included in the budget as food or under entertainment. Groceries is much more than just what is bought at the store, some people actually can eat out cheaper during retirement than cooking a big meal. Gathering some numbers from previous months can help gauge how much is needed for this necessity.
The budget should also allow for fluctuations and for increases in certain times of the year, like Christmas, when someone is likely to cook more. Other necessities, like toiletries can also fall into this category. It is one of the most important because everyone has to eat.
Hopefully, by the time a person reaches retirement, they have their home paid off. Unfortunately, with today’s economy, many people have to take out loans on their homes or even go to rental units. Even if the home is paid off, there will still be upkeep on the property. Things like lawn mowing services, yearly HVAC checks and other items that are routine should be included.
Smaller things like furnace filters, light bulbs and things of this nature can go under maintenance. Even if the home a person lives in is paid for now, it may become necessary to set aside money for nursing home care in the future, depending on the level of income.
A lot of times, by the time a person hits retirement age, they have their car paid off. However, it is unrealistic to expect that car to last the rest of one’s life, especially if they retire at 65. Putting a car payment in the budget will allow a person to see what their budget will look like with a car.
The money that is allotted for a car payment can be put in savings to help use toward a down payment when the time comes for a new set of wheels. A lot of people are in a financial pinch when they have to shell out $30K for a car they were not expecting; this can be a big budget buster.
Other forgotten expenses are oil changes and allotted money for car repairs. Cars will not run forever without maintenance and budgeting necessary repairs are essential. Car repairs can be needed at any time, so having a reserve to be able to cover these expenses is crucial. If a person doesn’t drive, they may need to change this area of their budget to transportation costs rather than a car and gas for the vehicle.
This is the most under budgeted items by seniors. The common misconception is that Medicare will pay for everything. In fact, there are many expenses that Medicare will not cover and a supplemental policy might be needed.
The cost of a supplemental policy can be anywhere from $200-$300 additional monthly. Also, any co-pays on doctor visits and medications should be considered in the monthly budget. Medical care is usually what gets most seniors who are on a budget. While having government and even other coverages are nice, they just don’t take care of everything. Not preparing for health necessities can put a person in financial destruction.
All The Little Extras
Before writing a budget, sit down and think about all the expenses on a daily, weekly and monthly basis. Look at things like birthdays, wedding gifts, charity donations, tithes and other non-recurring expenses. If a person has children, do they loan them money often?
Most people give something for birthdays, even if it is just $10. All of these things need to be accounted for or it could be real trouble for the budget. Clothing and entertainment are items that are also quickly forgotten. Budgeting for clothes can be important. While it’s nice to think that there will never have to be any money spends on clothes, it is necessary.
If a person isn’t a big shopper, then they can adjust their clothing budget to the minimum. However, it should not be forgotten at all because clothing is an essential part of the budget. Another item that people do not like to include is entertainment.
This can include going out to eat with friends and also movies, shopping trips and other items that are classified as extras. Again, this is another item that people want to leave off the list, but it is unrealistic to say that there is no entertainment in a monthly period.
The best advice when compiling a family budget is to be realistic. Some people want to set limits for themselves that are not possible. If a person is setting limits that are unrealistic, then they set themselves up for failure. By setting a budget based on actual expenses and what is needed, it is easy to save and prepare for retirement.
Retirement Budget Sample Income:
SS Income- $2,396 Retirement Pay- $1,980 PERS Income- $250 Other Income- $450 Total Income- $5,076
Rent/Mortgage- $1,250 Car- $450 Health Insurance-$150 Car Insurance-$100 Cell Phone-$135 Cable-$75 Electric-$125 Gas-$45 Car Gas-$200 Credit Card Payments-$100 Prescriptions-$65 Car Repairs-$75 Clothing-$50 Entertainment-$200 Groceries-$400 Maintenance-$200 Birthdays/Gifts-$100 Charity/Tithes-$50 Savings-$500 Total Expenses- $4,070