When approaching retirement, most people gather information by reading articles about retirement, consulting with a financial advisor, joining the AARP, and talking with friends and family who have retired. Gathering all this information allows one to determine how their life will change after retiring. And it’s true, it does, but one side of retirement that many people do not talk about is how to transition from a person who earns money to a person that spends money. That’s not to say you did not spend money before retirement, but what it does mean is that you will no longer have a job to go to every day. You can sit on the couch all day, kick on Disney+, and see how long it takes you to watch thirty years worth of The Simpsons.

Budgeting for Retirement Made Simple

The Tapestry retirementEven if you do not spend a month or two watching television, you will be spending money. What will you be spending it on? The usual – food, clothes, the car, the house, all sorts of sundry items.

Whether you depend on your 401(k) or Social Security to get you through your retirement, you need to learn how to budget. While “budget” tends to sound like a dirty word to a lot of people, it’s just a system for dividing your money into spending categories.

One of my favorite budgeting systems is called the “Zero-Sum Budget.” what this means is that at the end of the month, you end up with $0. Of course, you could always end with more than that, and that’s good. If at the end of the month, you end up with a balance above a penny, put it into savings. Retiring with this kind of budget set up is hard, as you will need to know your expenses.  Take the time to calculate it before you retire.

Leave Nothing to Chance

The Tapestry retirementFigure out what you owe – that is phone bill, cable, streaming, electricity, water, anything you pay for monthly, including food and other miscellaneous items. You add everything together and see what can be tweaked here and there. When the month starts, you get your distribution or your deposit from Social Security, and you stick to your budget.

It also helps to keep track of your spending. Many people utilize a form of the cash envelope system for this. This system is where you have cash in envelopes for different purposes. Like, one envelope for food, one envelope for entertainment, another for miscellaneous, etc.  Once the envelope is empty – no more until next month.

At the end of the month, any money left (and not a negative amount), put it into savings. Also, one of the items on your list of things to pay should be savings. Yes, you have saved a lot of money in your 401(k) or get money each month from Social Security, but you still need savings. When an emergency happens, do you want to tap your 401(k) or wait until the next month for money? Of course not, that would leave you worse off.  have some savings to fall back on. With a bit of work, you can create a well-oiled budget for your retirement years.

If you are looking for a retirement community, check out The Tapestry, an age-targeted community in Garner, NC.  For more information call 919-772-4663.