Budgeting, Retirement, Retirement Journey

What does a retirement budget look like?

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Photo by Alexander Mils

A big part of our journey to retirement is figuring out what our future costs will be.  Some of this is guess work, but we generally have a good idea because there is a short amount of time before we retire.  One of the best things I’ve done, in my opinion, was plan our retirement budget and live on it NOW.  I initially wrote about it here, but have changed a few things.

Here is our monthly retirement budget with our real numbers. (Instead of HealthCare, we pay a mortgage, HSA, and LTC insurance).

Health Care/HSA  $                     3,000.00*
Utilities  $                         250.00
Homeowner’s Association  $                           80.00
Cell Phone/Cable  $                         265.00
Taxes (Personal & Property)  $                         600.00
Insurance (Car, Home, Umbrella)  $                         200.00
Home/Car Maintenance  $                          500.00
Charitable Giving  $        To be determined
Groceries  $                         550.00
Eating Out  $                         100.00
Household  $                         100.00
Gasoline  $                         200.00
Personal Care  $                         150.00
Clothes  $                         150.00
Gifts/Christmas  $                         300.00
Personal Spending  $                         200.00
Travel $                          750.00
TOTAL: $                       7,395.00

*In retirement, $3,000 will come out of a separate investment until Medicare kicks in at 65.  We will be taking social security at 62, 67, which will give us another $4,500 a month.  This should *hopefully* more than handle the medical portion of our retirement. That leaves a monthly budget of $4,400/mos. or $52,800 a year.

As you can see, I’ve kept in a sizeable monthly amount for travel.  It is something that is important to us, and I wanted to budget for it.  Of course at any time we may fall short, this will be the first to go.

Retirement advisors will tell you that you need 100% of your present day salary in retirement.  I disagree.  In retirement, we will no longer be saving for retirement, taking care of children, paying for college, etc.  By living off of my ‘proposed’ retirement budget now and not spending more, it’ll be easier for us to make the transition.

This amount may seem high to some, and low to others.  I know my parents, who are in their 80’s, live on MUCH less and they are very comfortable.  When they were in their early 60’s they traveled a lot, and used up their retirement accounts.  But my father worked for AT&T and has a great pension and social security to get them through these years.   I believe our spending will go down once we reach our 80’s as well *God willing*.

I will keep evaluating the budget (and our investments) as we get closer to our target retirement date.  Based on the numbers today, we are on track.

How does your budget compare?