Budgeting in Retirement

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Knowing what you spend

The first step for consideration when creating a retirement budget, is knowing what you are spending right now. Knowledge is power, and tracking your income and expenditures is critical if you are going to retire early. This can be a sobering, even tedious exercise, but necessary to take the next step. The first step is determining what you will use to track your expenses. You can do this with apps, or spreadsheets or by keeping a paper and pencil ledger. Whichever you choose, it is a good idea to think about the categories that you spend in. Sometimes, it is easier to track all of your expenses for a month and then decide what your categories are going to be. Once you've tracked your expenses, and categorized them, it is time to do a careful review and consider if your spending matches what you value. From this point you can consider areas you are spending too much, or too little and adjust. Now you are ready to move on to considering a retired budget.

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Creating a budget

Creating a budget for your future retirement is an important step to ensure that you can live comfortably in your retirement years. Here are some steps you can take to create a retirement budget:


Things to consider

There are many unexpected expenses that you might face in retirement, which is why it's important to have a contingency plan in place. Here are some common examples:

It's important to plan for these unexpected expenses by building a buffer into your retirement budget and considering options like long-term care insurance or home warranty plans.