The Covid pandemic has taken a toll on everyone – possibly even you and your retirement. A recent poll indicated that 59% of Americans will work longer than desired, and 41% said it would take a miracle for them to be financially secure in retirement.
You might be wondering how it’s even possible to be secure in retirement – but there is a way.
If you’re already retired or plan on retiring soon, you need to learn how to make a retirement budget and make it work.
Make a Retirement Budget
First, you need to learn retirement budgeting. If you don’t have one already, make one right away. Don’t try to stick to a budget that’s only in your head.
Your budget should include fixed expenses like essential spending, non-essential spending, period expenses, discretionary spending, and income.
Essential spending includes food, housing, transportation, utilities, and health care costs. If you retire before the age of 65, you will want to look at health care coverage to keep you covered prior to Medicare kicking in. You can sign up for Medicare 3 months prior to turning 65.
Non-essential spending includes gym membership, cable television, and streaming services.
Periodic expenses include non-monthly expenses such as vehicle registration, property taxes, and premiums for insurance policies.
Discretionary spending is your fun money. This includes travel, hobby, and entertainment costs. Make sure to leave room in your budget for this one. For many retirees, the extra time they have in retirement leads to them taking on new hobbies. Factor in the cost of these new hobbies.
Include your retirement income in your budget too. This includes all sources of income, so make sure that social security is included, as well as any pensions.
Test Your Budget
Now that you have a budget, it’s time to test it out prior to retirement. Set it as your new monthly budget, and continue to contribute any excess towards your 401k or other retirement plans.
If after a few months you’re comfortable with your budget, you may be ready for retirement. If not, then it’s time to tweak your budget.
Adjust Expectations
After creating and testing your budget, you may find that you don’t have as much retirement money as you would have hoped. Take a second look at your expenses. What can you cut down on?
Some retirees go as far as downsizing their homes and moving into smaller homes in an area with a lower cost of living.
Increase Your Income
If all else fails, you can try to increase your income prior to retirement. You may also need to look for a part-time job to supplement your retirement.
You can also look for unclaimed money. Many people are missing money, and are unaware that they have unclaimed funds waiting for them. Even if you don’t think that’s you, it never hurts to check. You can read more info here about how to find and claim funds.
Prepare for Your Retirement Today
Hopefully, this article convinced you that you need a retirement budget. Once you have that, it’s possible to stick to it – if you have the discipline. Even if your retirement budget is tighter than you would have hoped, you can still enjoy your senior years.
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