Post-Retirement Budgeting Explained

On the 50th episode of the Retirement Explained show, I’m discussing how you should be approaching your budget after you retire.

Budgeting is a super important part of building wealth, reaching your financial goals, and retiring when you want to, but the way you approach your budget will change after you stop working and move onto the next phase of your life.

Start with an estimate of the income you will need

The first step with creating a post-retirement budget is identifying the income you’ll need. We need to know what kind of target we’re shooting for. If you know exactly how much you need to spend, even better, but if you don’t a quick estimate will do when it comes to the first draft of your spending plan.

Start with an estimate of the income and your expected spending

The first step with creating a post-retirement budget is identifying the income and spending you’ll need. We need to know what kind of target we’re shooting for. If you know exactly how much you need to spend, even better, but if you don’t a quick estimate will do when it comes to the first draft of your spending plan.

The second step is to identify what you’re needing to spend and compare it to what you’re expected income is. We want these numbers to add up at a glance and make sure we have all of the puzzle pieces together.

Consider expenses that will change in retirement

Some of your expenses will change in retirement; for instance, you might travel more in retirement, but you might be driving less. I think it’s good to take your pre-retirement budget and build off of that. Life will be different than before you retired, but it will likely rhyme with it.

-Brian