Creating a retirement budget is one of the biggest gifts you can give yourself and your family. As is obvious, your earning channels will diminish, and you would be in deep need of regular finances post-retirement. This is why you should know the basics of creating a successful yet practical retirement budget that finances your lifestyle and leave some wiggle room for contingencies too.
Healthcare should be your priority
Irrespective of your current medical condition, you should count health as the major concern in your retirement plan. As per latest stats from the US government, on an average, a 65-year-old woman and a 65-year-old man spend $214,565 and $189,687 on healthcare respectively.
To start with, acknowledge the medical issue you can experience in the next five years. Afterward, plan accordingly and save to counter any unwanted situation. Plus, you should estimate the costs you will be paying for prescription drugs, medical premiums, etc. Even though none can predict the future, yet, you must stay ready to face any uncertainty.
Save for your leisure
You have worked your whole life, and it is time that you take a break from mundane routine and try something new. Retirement is an opportunity to do things you enjoy and love. Nonetheless, these hobbies are generally quite expensive and keeping age in mind you will be spending a lot more money on things you adore.
Majority of people never budget for their leisure activities, which turns out to be a curse, especially when you are free to do anything. Thus, you must save a good chunk of your earnings to spend on activities that bring back adventure and fun in your life.
Property taxes are important
If you are still paying returns over your home, then you need to double up to save money for your retirement more quickly. People who are planning to go mortgage-free will also not be spared from spending money on their home. As you might know, homes tend to demand a lot of maintenance as they grow old. They require regular checkups, and you will have to go for outside help as you probably would not be able to match the physical standards required for such jobs.
Again, property taxes will also rise over time. Hence, you must save extra money for these hikes as you will experience them somewhere down the road.
Take note of fixed and flexible costs
To make the most of your savings calculate the amount of fixed and flexible expenses you will be bearing after your retirement. You will encounter a lot of new costs which can damage your savings and expending plans. Take a look at the history of your expenses and decide your future living costs accordingly. You will be able to determine your fixed and non-fixed expenses in the longer run.
You will encounter a lot of flexible expenses like entertainment, leisure activities, food, and urgent medications. Thus, you should not be furious over expenses that were not planned. Instead, you should save extra money in advance.
Finally, if you have been living according to a budget, then do not make unnecessary changes to your lifestyle after retirement. No splurge is worth the pain of not having enough money.