Retirees: Here's Why You Shouldn't Use Someone Else's Budget To Decide What 'Comfortable' Looks Like
When you’re preparing to retire, you might be looking for tips that will make financial decisions easier. Perhaps there’s a formula for how much money you should save or a specific amount you should always have on hand.
Unfortunately, there really isn’t a magic number that will work for every retiree. In fact, it can be damaging to base your finances on other retirees’ situations.
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Here’s what you need to examine to shape your budget so it fits your lifestyle, not simply match what worked for someone else.
Housing Costs
You might have paid off your home or you might move into a rental because you don’t need as much space any more. Figure out exactly what your monthly housing expenses will be.
If you own your home, make sure to include property tax, insurance, utilities, HOA fees and a little wiggle room for upgrades or repairs in your calculations. No two retirees will have the exact same figures when it comes to home costs per month.
Car Expenses
Similar to a home, your vehicle costs are going to vary depending on if you have a car payment or not. Plus, you’ll want to break down the monthly costs of gas, insurance and maintenance. There are also DMV registration fees and parking costs to consider. All of these will be different depending on your specific situation.
Healthcare
The price of care depends on your health and your Medicare plan. If possible, find out what your Medicare costs will be before you retire so you can have a solid idea of what to put aside each month. Find out if your plan will cover all of your current medications and procedures.
You might also need to look into supplemental health insurance, which will incur extra cost.
Leisure
Of course, the allure of retirement is the free time you’ll have. How much extra income you have depends on your specific savings and income.
Don’t immediately think that making less money means you can’t make room for fun. Try to determine a percentage of your monthly income that can go toward discretionary spending. You deserve to enjoy life after years of hard work.
Starting From Scratch
Retirement is a new stage and sometimes, that means a new budget. In the subreddit r/retirement, user LyteJazzGuitar wrote: “The biggest lifestyle change in retirement was to toss everything we knew about life and did a complete do-over!! We went from spenders to savers and fashioned a totally new lifestyle.”
Retirees on the subreddit recommended tools like YNAB, Planner Plus, Quicken and Boldin to input your expenses, savings, income and retirement portfolio to help manage your monthly expenses in this new era of life.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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