How to Build a Retirement Budget
Retirement is one of the biggest financial changes of your lifetime. To be comfortable during retirement, saving and planning is essential. It can be helpful to sit down with someone from your credit union to examine your options for IRAs —individual retirement accounts—and for advice on achieving your savings goals. Another strategy that can help you prepare for retirement is creating a retirement budget. Your retirement budget will help you get a clear idea of how much money you will need to maintain the lifestyle you want during retirement. Follow these steps to create a budget for your retirement needs.
Calculate Your Fixed Expenses
Your fixed expenses are the things you need to live, such as your mortgage payment, food costs, and utility bills. If you aren’t sure how much you spend on some of your living costs, take six months of checking account statements to get an average of how much you spent in each category. When in doubt, overestimate your spending, so you’re sure to have enough.
Price Some of the Things You Want To Do
How do you envision enjoying your retirement? Do you hope to spend your time traveling, or are there hobbies you want to indulge? Calculate the costs of pursuing the things you want to do during your retirement, so you know how much discretionary money you would need to follow through. In some cases, if there is a gap between what’s leftover from your fixed expenses and what you’d like to be able to spend, you may find areas of your fixed spending you can adjust. For instance, you may choose to move to a smaller home or switch cell phone plans.
Don’t Overlook Health Costs
Healthcare costs can become a significant issue in retirement. If you already have a chronic health condition, budget for the expenses of managing it in your fixed expenses. If you’re healthy, earmark a portion of your funds for future healthcare costs. A financial planning expert can help you decide the right amount.
GCS Credit Union is committed to the financial success of our members through every stage of life, including retirement. When you need information about IRAs and retirement savings strategies, make an appointment with a representative at our credit union in O’Fallon by calling (618) 797-7993.