January 22, 2022
  • January 22, 2022

Here’s how to set one up in 4 easy steps

By on January 1, 2022 0

You might not have carefully followed a budget in your working years. But if you’re retiring, it’s really important to take your budget seriously.

While some retirees have part-time jobs, if it’s not part of your plan then you will need to be extra careful about managing your money. This is especially true if Social Security will be your main source of income and you don’t expect to have access to a lot of money outside of these benefits.

Whether you’re completely new to budgeting or retiring soon, here’s how to budget in four steps that gets you the most out of your income.

Daily Money: Get our latest personal finance stories delivered to your inbox

1. See what your existing expenses look like

Chances are, many of the expenses you pay today are expenses you will continue to incur after you officially retire. Go over your credit card and Bank account statements for the past six months or so, and see what your spending looks like. Next, write down each expense category that applies to you and what it costs you on average. For example, if your electric bill is typically around $ 150 per month, this is an item you would include in your budget.

► To retire in 2022? Make sure you do these 5 things

2. Determine how your expenses are likely to change

Some of your living expenses may go down after you retire. For example, you could spend less on gas once you stop driving to get to work every day.

But some of your living expenses might increase in retirement. If you spend more time at home, your utility costs could increase. And you might end up spending more money on hobbies and entertainment because you’ll have to keep busy when you’re away from work. Go over each item in your budget and adjust that amount based on what you think it will change.

► Ready to retire? Think twice before retiring to any of these 13 states

3. Determine the income you have

You can have access to a number of different sources of income after retirement, such as social security benefits, pension plan withdrawals and pension money. Add up these income sources to find out how much you can afford to spend, and adjust your budget if necessary to account for a drop in income from what you are currently earning.

► Should I work in retirement? Consider these pros and cons

4. Set priorities to maximize your new free time

There may be little room in your retirement budget for things like travel and entertainment. But these are expenses you might want to prioritize once you stop working, because sitting at home bored all day is not a good way to live.

Take a look at your budget and see if there is room to narrow down some areas to free up more money for recreation. You may decide to make larger changes, such as downsizing, to give yourself that flexibility.

Sticking to a budget could help you avoid a world of financial stress once you retire. These tips could help you create a budget that is not only realistic, but allows you to spend your retirement years doing the things you’ve always dreamed of.

Alert: highest cash back card we’ve seen now has 0% introductory APR through 2023

Motley Fool offer: If you are using the wrong credit or debit card, it could cost you dearly. Our expert likes this first choice, which includes a 0% introductory APR until 2023, an insane cash back rate of up to 5%, and all with no annual fee.

In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We strongly believe in the Golden Rule, which is why the editorial opinions are our own and have not been previously reviewed, endorsed or endorsed by the included advertisers. The Ascent does not cover all the offers on the market. Editorial content for The Ascent is separate from editorial content for The Motley Fool and is created by a different team of analysts. The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content partner providing financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.


Source link