Retirement Budgeting Made Easy

You have reached retirement and thankfully you have enough money to live within your means, but that does not mean you should throw your budgeting habit off the window. More than ever, saving money after retirement is just as important as saving before retirement. Although the same rules apply, the outcome is different now.

While budgeting before retirement is done to help you reach your financial obligations and have enough money aside to meet your retirement goals, doing your budget after retirement helps you maintain those funds through your remaining years, this includes leaving enough money to leave an inheritance or bounce your last check. Here are what you should do in this budgeting process.

Prepare before planning your retirement budget

There are some preliminary steps before setting up your post-retirement budget. You need to know where you are, where you are going, and how you will get there. You also need to know how long you might live. There are life expectancy calculations available online that can give a fairly close prediction, but you can also conveniently use a life expectancy of 100 years then subtracting the years depending on your lifestyle. For instance, shed off 5 years if you smoke or regularly breathe second-hand smoke.

Calculate your net worth

Determining how much you really are is a good indication of your financial standing at this moment. It is recommended to prepare a Net Worth Statement at least once a year. To calculate your net worth, gather and list all of your assets (what you own) and liabilities (what you owe). The difference between your assets and liabilities is your net worth.

Plan your monthly budget

List down all your income for the month, including home wages, alimony, residuals, income from business, and others. Then, take some time to list all your expenses. These consists of fixed expenses such as mortgages, loans, and others that have a fixed amount that you pay each month; fixed variable expenses that you owe every month but the amount is variable such as utilities, groceries, and gasoline; and occasional expenses like dry cleaning, medical bills, clothing, recreation, and so on. Lastly, list your credit card expenses. Try to keep a log of every cent you spend for a month or so and monitor how much are you are actually tossing away on unneeded items.

Set your budgeting goals

Your retirement plan is dependent on your ability to budget and save for your remaining years. You should first get control of your purchases then start working on ways of decreasing your credit card debt.

 

Posted by Ardent Editor on Jul 10 2008 in Money 101

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