A monthly budget is crucial to properly allocate your income to your various expenses and savings goals. Having a useful budget now is important to continue through retirement. In retirement, you may be on a fixed income. Living on a specific fixed income means you need to make sure all your expenses are covered and that you do not overspend. Using budgeting techniques now might make it easier for when you transition to your retirement income. You may not think about all of the living expenses you will have in retirement because many things might be overlooked. Keep reading to learn 6 things you should consider budgeting for in retirement.
Housing
Housing is typically the largest part of your expenses, whether it is rent or a mortgage payment. You also need to think about utility bills that come along with your housing. Any form of housing insurance is also included. You could also have tax expenses and any services you may need, such as lawn care and pest control.
Groceries
While you may only think of food when you hear the word “groceries” but it includes your personal care items and other household items. You will want to set aside money for all of these items, from food to toilet paper to shampoo. Many of these items are sometimes overlooked but are essentials.
Clothing
While you may not need work clothes anymore, you still need clothes to wear. Whether it's a new outfit for a special event or new shoes because your other pair is worn down, clothing needs to be accounted for in your monthly budget. Be sure to consider seasonal items, such as coats.
Health Care
You will have your monthly health care insurance premium, copay costs, and out of pocket costs, including medications. As you get older, the chances are greater that you will need medical attention. It is extremely important to be prepared to pay these expenses and budgeting can help you allocate funds for this expense.
Transportation
You may still have your car which could require car payments, insurance payments, gas, and repairs. If you rely on public transportation or ride sharing options, you will have to account for fares and expenses. Be aware of what level of traveling and commuting that you will be doing so you can accurately gauge how much needs to be put aside in your budget.
Miscellaneous expenses
Items such as your cell phone bill and your streaming services need to be accounted for as well. While budgeting, take the opportunity to cancel subscriptions that you may not use or need anymore. This will free up more money to cover important expenses. Any debt you are working to pay off, such as credit card debt, falls into this category as well. In your golden years, you want to enjoy yourself so if you plan on traveling or spending money on entertainment, it needs to be accounted for.
Budgeting does not need to be a stressful time. Consider how you are planning out a budget to make your retired life easier. Talking with a financial advisor can help you look at all the expenses you need to cover versus your income. To learn more about how we can help, give us a call at (402) 454-7204 or email me at jason@fp-wealth.com
Sources:
https://www.thebalance.com/how-to-make-a-retirement-budget-2388345