Budgeting Before and After Retirement

As important as budgeting is while you are accumulating money for retirement, it is even more important when you retire. A good pre-retirement budget puts retirement savings first. IRA’s and 401k plans allow you to save money first, even before the government takes their cut by allowing workers to save on a pre-tax basis. A budget provides a framework to pay for current expenses and save for future expenses, allowing for income and expense variations over months through the year.

About.com: Money Over 55, features a great article by Dana Anspach. In the article, “How to Make a Retirement Budget: A Retirement Budget Leads to More Fun in Retirement “, Dana outlines the steps to preparing a retirement budget. Here is a brief summary of her guidance, follow the link above to read the entire article. It even includes a budget worksheet.

 

Here are Dana’s 5 Steps:

 

After you gather your bank statements and credit cards statements along with any income information follow these five steps.

 

STEP 1 - Research your costs for health care before and after retirement.

STEP 2 – Research your costs for health care before and after retirement.

STEP 3 – List all your flexible or optional expenses.

STEP 4 – Write down some thoughts on how you want to spend your time in retirement.

STEP 5 - Calculate Fixed verses Flexible expenses.

It is pretty easy to prepare a budget when you have all of the steps laid out like this. So get started on the path to a financially stable retirement.