4 Tips to Retirement Budget Planning – the Essentials

4 Tips for Creating Your Retirement Budget


About 3-5 years before retirement, you should get a good handle on your available assets and create a monthly/yearly estimate of expenses for your retirement years. You’ve probably heard from financial advisors before that you’ll need 80% of your current gross income to retire, but the more accurate approach is to develop a retirement budget. Here are a few tips to do so:


List out all personal expenses. The first part of your budget should include everything you pay for on a monthly basis. This will be the largest section of your budget and should include costs like:


  • Bank charges
  • Care for a parent
  • Cash for frivolous expenses
  • Cell phone
  • Charitable donations
  • Club dues
  • Debt payments
  • Dining out
  • Education
  • Entertainment
  • Gifts
  • Groceries
  • Healthcare: dental, medical, vision, prescriptions
  • Hobbies
  • Household items
  • Laundry/dry cleaning
  • Personal care
  • Pet care
  • Recreation
  • Student loan payment
  • Vacation


Budget for insurance. List out your personal insurance expenses for you and your spouse, including disability, life, long-term care, medical, and umbrella insurance.


Budget for home expenses. Don’t just jot down your mortgage payment and utility bills. There are lots of costs to owning a home. Here’s a list of possible expenses to include in your monthly budget:


  • Mortgage(s)
  • Home equity line
  • Real estate tax
  • Rent
  • Homeowners insurance
  • Homeowners association fees
  • Utility bills: electricity, gas, trash, water/sewer, cable/TV, internet, phone, cell phone
  • Lawn maintenance and care
  • Major repairs
  • Minor repairs
  • Furniture
  • Cleaning service or other household help


Don’t forget about the cars. Be sure to include the following expenses (for all vehicles you own) in your monthly budget:


  • Loan or lease payments
  • Insurance
  • Gas
  • Repairs and maintenance
  • Parking and tolls

Remember, technology is quickly changing your transportation choices. Consider whether driving and its related maintenance and gasoline costs are necessary at all. Smart cars, non-taxi operators, and short term rentals may provide the transportation you need.


When creating your budget, it’s helpful to put two columns next to each expense line item for your today budget and your initial retirement budget. Some items will carry over, but it’s important to factor in decreases in others. For example, you might want to increase your vacation budget in retirement and lower your budget for work clothing, dry cleaning, and mortgage when your home is paid off. Your insurance budget will also change once you are eligible for Medicare.


Armed with this detailed budget, you’ll be able to better understand the type of income you need in retirement and whether you’ve accumulated a large enough nest egg to retire when you want to. If you need help with this process, call the Moran & Long team at 720.635.3180.