Ready for retirement planning? Here are nine categories to help you start budgeting for retirement.
Planning ahead for your retirement years can provide additional confidence and financial security. And with increased life expectancy, a retirement budget can take into account your future income and spending over a longer period of time.
There are no clear rules about how much you might spend in retirement, because everyone is different. But one of the first things you might want to consider doing is getting a handle on the line items in your retirement planning budget and determining your retirement “needs, wants, and wishes.”
TD Ameritrade suggests starting on your retirement budget by separating your spending into two buckets: mandatory (your “needs”) and discretionary (your “wants and wishes”). Then, compare them to your expected income in retirement.
Building out a realistic budget can help you increase the likelihood that you’ll fulfill your future goals and enjoy the life you envision.
Many people never take a good look at all the things they spend on. That might be OK if you have a paycheck coming in every week or two, but once those paychecks stop coming and you’re relying on your savings, it could be worth it to consider taking a look at your receipts.
One key is to try understand exactly what you’re spending your money on now. You can start by following these steps:
Take the time to give your retirement situation and its changes from your working life a thorough and serious review. Sure, once you retire, you won’t need a professional wardrobe, and you might not go out for lunch as often—but then, you might. In fact, the more time you have on your hands, the more likely you are to fill that time with activities that increase spending.
For example, you may find you want to travel more in retirement, perhaps to see your grandchildren or to explore new cities. By scrutinizing the line items in your budget, analyzing your expenses, and allocating funds correctly, you can be better prepared to finance any trips you envision and any costs for your overall lifestyle in retirement years.