Making a Budget
Planning Your Retirement Budget involves analyzing current expenses, anticipating future outlays and making sure you will have enough income to cover them all. But beware of certain expenses that may derail your retirement plans. To start the process, first make a budget using current income and expenses for the last 2 month and see where the differences are. Start using a Monthly Budget to find all recurring expenses and then work to an Annual Budget to make sure nothing is missed. Once you have a Budget before retirement, making the retirement budget can be a lot easier - to see where your retirement income needs to plug into your Retirement Income Plan.
Consumer.org, Making a Budget website, is very helpful and makes this simplistic! Consumer.org - Making a Budget Website
It is all about the details and you should be as detailed as possible when making a budget. It's especially easy for spending on hobbies, travel, grandchildren and recreation to get out of hand during the early retirement years. Some retirees actually spend more money when they retire due to more free time to spend money. Make sure you have a spending plan that will fit your lifestyle and allow your retirement income to last for the long haul - it could be a while!
Just because you're retired doesn't mean you're all of a sudden going to stop wanting things! Plan for home improvements and major repairs in retirement. Don't set yourself up for failure and plan on taking more debt to make this happen. Debt can be one of the worst things to have during retirement since it creates more expenses in retirement. Start saving for retirement costs like this now and plan for where they will come from.
Another thing to budget for in retirement is family you may be helping. Figure this out before retirement! If you have parents, children, grandchildren, or other family you may need to take care of or help financially, make sure the money is in your plan. Helping adult children financially is probably the biggest budget squeeze we have ever seen when someone enters retirement. Some who are still saving for retirement have put their future income at risk by helping their child purchase a home or pay for their expenses. A serious illness might have a parent moving in with you or needing help to pay medical bills or for nursing home care. Plan ahead for this!
Below are Budget Spreadsheets to make this a little easier (click on each to download):Annual Budget Planner with Graph
Apple Numbers Version
Microsoft Office Excel Version