Having more time to travel, sightsee, and visit family are just a few of the perks that come with retirement. According to a USA Today article, retirees spend about 21-40 percent of their budget on travel. Of course, vacations can’t last forever, and then it’s time to snap back to reality. With proper budgeting, you can have multiple trips throughout your retirement.
Forbes advises people who are retiring to target about 70-80 percent of their gross income for their retirement savings. Before you start budgeting, make sure that you go through your finances to see how much you can actually afford to put away. When doing so, factor in how much you are going to spend on groceries, rent/mortgage, and car payments to see how much you are going to set aside. Ensuring that you still have enough money for your other daily expenses can help determine how much you can put away, according to US News.
If you are planning to start budgeting before you retire, keep in mind that the money you earn while having a full-time job will not be the same amount you earn during retirement through your pension. Start with an estimate of how much money you expect to have during retirement and compare it to your predicted costs during retirement to see if it aligns with your plans.
Your budget plan isn’t going to be the same as your friends’ or colleagues’ plans. Each family has different incomes and expenses to consider when creating their plan. If you’re having trouble creating a budget that’s reasonable, consider using online programs as a template for your budget. Programs that help budgeting include Mint, Quicken, and Personal Capital.
When planning for retirement, budgeting should be a priority, but it shouldn’t be the only priority in your life. Make sure you leave some extra money aside to play with – whether it is bi-weekly dinners out on the town or well-deserved weekend getaways. To achieve a balanced budget, include every expected expense, even the fun ones, in your budget plan. Set aside an amount of money to put away every week or two (or monthly if that fits your budget better) for your own enjoyment.
Be aware that your budget plan can change as you go through retirement for a number of reasons, including family emergencies or spontaneous trips. As your income naturally decreases when leaving a full-time job, you may have to revise your budget plan to fit new income and other new expenses, such as upgrading your healthcare plan in case of emergencies and planning for trips to visit other family members more often.
If you are seriously considering downsizing your living area, you should start looking before you actually retire. According to US News, a smaller home can help reduce your heating, cooling, and maintenance bills in the long run, and you will free up some home equity due to the smaller size. If you don’t want to move into a smaller home, paying off your mortgage is another way to help cut down on monthly costs and simpilize your budget as well.
Creating a solid budget plan prior to retirement will help you organize your lifestyle and spending. Having a solid plan that balances savings, expenses, and “fun” money is key. Although budgeting can be strict sometimes, there is always room to adjust the plan along the way if something doesn’t work for you or your lifestyle. Just think – the better you budget, the more money you’ll have for family and vacations – now that is motivation!
Having trouble getting started with your budget plan? Need some extra tips? Ask A Pup! We’re happy to help!
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