How to Painlessly Downsize Your Lifestyle in Retirement

Debbie Loper |

The decision to retire brings with it several choices that individuals must make. You not only have to decide how much to save for retirement and when to finally pull the trigger and retire, but you also should consider how your retirement savings are going to hold up during retirement and what kind of expenses might lay in front of you on the road through retirement. If you have a retirement budget checklist at hand though, you may find that you are better prepared to make some of those tough decisions both ahead of and during retirement. Before you get started, The Balance points out that it would be helpful to collect items such as recent bank statements and credit card statements to ensure accuracy.

 

What are Fixed Monthly Expenses?

The best place to start when building a retirement budget is with those items you are most familiar with. In most cases, this means looking at your fixed monthly expenses. These are the items which are least likely to vary from month to month or even year to year. This includes laying out your mortgage costs, car payments, and any fixed utilities such as cable, garbage collection, phone bills, and internet service.

 

What Expenses are Variable Monthly?

This is one of the two most important areas to focus on. Variable expenses are those items that you have greater control over each month, but are also costs that many of us lose sight of easily. Variable expenses include costs such as groceries, gas, entertainment, and dining out. US News notes that food, for example, can be one of the easiest places to save money during retirement or turn into one of the biggest money pits. It points out that retirees often find themselves saving a lot of money when they skip convenience meals and opt for home-cooked meals, which also deliver health benefits over high-calorie convenience meals.

 

Do You Anticipate Non-Recurring Expense?

Here are the second of the two important areas. Non-recurring expenses are tricky because many of them are unforeseen by retirees and serve a double-whammy as often being very expensive. Non-recurring expenses can be as simple as predicting if you want to vacation frequently during retirement, or whether you foresee the likelihood of higher medical costs during retirement. On this latter point, you should specifically focus on your overall health and whether chronic illnesses could lead to expensive prescriptions and numerous doctor visits annually. Medical bills have a way of blowing up the budget. This makes it even more important to focus on non-recurring expenses when putting together your retirement budget checklist.

 

Compare Your Income and Expenses

From here, things get a little simpler. You have laid out your expenses in a variety of categories and now it is time to compare those costs to your available income. How much money will you be bringing in from retirement account resources and any part-time jobs you take on? How far does that money go in covering your expected expenses? More importantly, where is there wiggle room in your variable and non-recurring expenses to cut costs?

 

Check-in Regularly on Your Budget

One of the most important things you can do with a retirement budget checklist is use it. Don't simply put one together to give yourself a shocking picture of income and spending. Use that information to make changes. Check back on your budget regularly to see what's changed and see if you can make further adjustments. In the end, doing so will help you live a more comfortable retirement.

Planning for retirement is paving the road to your future life and a financial advisor can help you get where you want to go. Visit us at Hughes Warren to get started today.