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START PLANNING FOR / My Retirement
The power of retirement budgeting 

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Most people look forward to retirement. But once it arrives, financial realities can present multiple challenges. Not all of the dilemmas are limited to the amount of money you have managed to save, per se. Many stem equally from having more time on your hands.

By no longer having to go to work, you’re now likely to find yourself in retail environments more often (e.g. shops, malls, superstores). You’ll have ample time to shop online, pursue recreational activities, and visit your friends. Travel is a common retirement dream, but it gets expensive when the costs are coming out of your own wallet. And since the average American retires at 62 and lives a couple of decades longer, making sure your resources stretch for a long time can present a struggle.1

There are solutions. Instead of waiting to see whether or not you can readily adapt to new spending patterns – and finding out that it’s hard – put in some planning. Analyze costs and begin to figure out where you can cut to create a realistic budget. If you stick to it, your money can go the distance.

Here are some ways to start your retirement budgeting.

  • 1

    Assess your housing. Housing costs – including rent, mortgage, insurance, maintenance, and property taxes – should use up no more than 15% of your total monthly budget. If you’re close to or over that mark, consider downsizing to save money. 

  • 2

    Examine current bills carefully. Check your statements to see if you’re paying for services you no longer need. These could include streaming TV channels, cable, subscriptions, gyms, shopping clubs, and credit card fees. 

  • 3

    Remember taxes. Social security and many other pensions are classed as income, therefore taxable. These taxes should be added to your budget to avoid surprise expenditures in the future. 

  • 4

    Expect unexpected costs. Set money aside for car repairs and replacements, maintenance assessments in a co-op, new appliances and technology, and emergencies.

  • 5

    Healthcare and dental will need extra funds. While Medicare kicks in at age 65, it won’t pay for everything. Look into supplemental insurance plans that may provide coverage, and factor in those fees or set aside more money. Medical costs will almost certainly increase as you age.2

  • 6

    See whether new technology and trends can work for you. Participate more in the new “sharing economy.” Try sharing taxis, shopping secondhand, and exploring the web for new ways to economize or bring in money. For instance, you may be able to easily turn a room in your house into guest income, or sell collectibles online.

  • 7

    Let the kids know you’re on a budget. In today’s economy, 1 in 5 adults from age 20-30 live with their parents, and 60% of them receive financial help.Subsidizing grown-up children, while it may feel right, can become a serious drain on a fixed income. If your retirement budget can’t support your child, explain your new status and prepare them to be 100% financially independent.

  • 8

    Use your new leisure time to save money. Try doing more for yourself and seeking out bargains, for instance, you no longer have to travel at peak times, and you can wait until your favorite stores have sale events.

While it would be preferable to plan your senior years well in advance, retirement budgeting is a great way to help you live within your means. Arrive at a budget you can live with. You’ve earned a great retirement. Enjoy it.

Rebecca Riffkin, “Average U.S. Retirement Age Rises to 62,” Gallup.com, Apr 29, 2014   

2 Ann C. Foster, “A closer Look at spending patterns of older Americans,” US. Department of Labor Statistics, March 2016

3 Adam Davidson, “It’s Official: The Boomerang Kids Won’t Leave,” New York Times, Jun 20, 2014