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How to Make a Retirement Budget

how to flex a budget

By Dana Anspach. Money Over 55 Expert

Dana Anspach has been's MoneyOver55 Expert since 2008. She is also a contributor to MarketWatch as one of their RetireMentors .

Dana is the founder of Sensible Money, LLC, a fee-only (meaning they sell no financial products for a commission) professional services firm which offers retirement income planning and investment management services.

You can follow Dana at Sensible Money on Facebook or Twitter where you'll find more free content and conversations.

You can also watch one of her recorded classes on YouTube called The Key to Retirement Success .

Believe it or not, a retirement budget leads to more fun in retirement! In addition, making a retirement budget helps you avoid one of the biggest retirement mistakes people make – which is spending too much too soon.

Why is a retirement budget so important?

Of all the many factors that affect your retirement income (inflation, your rate of return on savings and investments, your retirement date. taxes, spending, part-time earnings, Social Security ) there is ONE that you have the most control over.

It’s your spending.

Getting a handle on your upcoming retirement budget puts in you a place where you’ll be able to make smart choices about the retirement lifestyle you want. You may find there are trade-offs you are willing to make that might enable you to do things like retire earlier, travel more in retirement, or have more money for fun and hobbies.

Here’s how to create your retirement budget:

What You’ll Need

  • Your last 6 to 12 months worth of bank account statements
  • Your last 6 to 12 months worth of credit card statements
  • Last two paystubs for you (and your spouse if you are married)
  • 10-12 colored highlighters
  • Last year’s tax return

Use the information on the items above to see where your money has been going and use the highlighters to group expenses into categories.

How Much Time Will It Take?

  • 1 hour to gather the info you need
  • 2 hours to create your retirement budget

Level of Difficulty

Category: Bank

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