Building a Budget for Retirement

We all have dreams of retirement that include plans of what we will do with our free time and ideas for how we will live out our bucket list. But, as we get closer and closer to retirement the reality of the price tag on those dreams begins to feel daunting.

Don’t worry though.  In retirement, just like everyday life, there is nothing a good budget can’t fix. However, your budget for retirement might look slightly different than your budget right now. Here’s how you can figure it out.

Everyday Expenses

In retirement, your everyday expenses may look slightly different than your everyday expenses right now.  For example, you won’t be commuting to and from work every day using gas or eating out every day for lunch. So, when you are thinking about the money you need to pay your bills and just “live,” be sure to take these factors into consideration.

Lifestyle Expenses

Lifestyle expenses are where things get “real” in retirement.  There are many more opportunities for entertainment and adventures since you have free time. It is important to create an idea of the lifestyle you want to live upfront, so you can ensure you have enough funds to make it happen.  The crucial point is to be honest with yourself. If you know you will want to go to the movies once per week, or take an annual trip to the beach you must budget for that. Otherwise, it likely will not happen.

Medical Expenses

Medical expenses are very different in retirement than they are while you are working. For one, health insurance coverage changes, meaning you might be paying more than you are used to. When creating your retirement budget, be sure to go over your health insurance coverages to get a good idea of how much money you will need for your medications and care.

Long-term Goals

Long-term goals are where things get exciting.  If you have always dreamed of taking a European vacation, African safari, or going on a 3-month cruise during retirement now is the time to make it happen! Set aside enough money in your budget to live out your bucket list without having to cut into the money you have for your other necessary expenses.

Creating a retirement budget is a balancing act that requires a lot of work, but the results are well worth it. If you are looking for a solution to your cash needs in retirement, you should really consider a Reverse Mortgage as an important part of your retirement budget. A Reverse Mortgage is a straightforward, easy solution to help you through retirement. Talk to you financial advisor today!