5 Budgeting Tips for Retirement

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Budgeting is a fundamental life skill that sticks around right to the very end. After all, you don’t want to run out of money during your retirement. To make sure you’re in a good financial position as you enter retirement and beyond, follow these five tips. 

Know Your Monthly Outgoings

The very first step in the retirement budgeting plan is to determine your monthly outgoings. You should break these down into two categories: essential and discretionary. Your essential expenses are those like utility bills and food. Whereas, discretionary expenses are those you can live without. 

With all of your expenses listed this way, you’ll have a better understanding of where your money goes. This is the part when many people realize they overspend in certain areas like dining out and other entertainment; cut excess spending to make retirement more comfortable. 

Write a Spending Plan

During your working life, you most likely spend more money on a Saturday because you have time to go shopping, head out for the day, and spend time with friends. However, when retirement rolls around, every day will feel like a Saturday because you won’t have the demands of work pulling your strings anymore. 

To avoid splashing out every single day, it’s a good idea to write a strict spending plan. This plan will take into account your monthly outgoings and will help you decide which ones to take forward. To ensure your plan matches your retirement lifestyle, review it every few months. 

Move into a Smaller Property

When you’re bringing in a steady income, you may be able to afford your dream home in the suburbs. However, having access to less revenue during retirement may mean that you can’t afford the bills anymore. 

To avoid digging yourself into a pit of debt during retirement, we recommend downsizing and moving into an independent senior living community. These dedicated homes are designed to help retirees get the most out of life, by bringing them closer to peers and essential amenities. 

Have an Emergency Fund

Life can throw curveballs at any time, and they often come with a hefty price tag. Instead of getting stung heavily by an unforeseen circumstance, we recommend building an emergency fund. There are many places to start saving for emergencies but our top pick is the Roth IRA, which is a tax-free account allowing you to get the most out of your money. 

Start Diversifying Savings

Even though 401(k)s and IRAs are great for saving for retirement, it doesn’t mean all of your money has to sit in them. You can often get more out of your money by exploring investment options with a higher yield. For example, you can store money in a brokerage or retail account, which may bring in more profit. Alternatively, you can diversify further by depositing money into a health savings account (HSA) or Roth IRA/401(k). 

Retirement will feel smoother if you’re well-prepared financially and have a budget in place. By following the tips outlined above, you’ll find that your money takes you much further.