Budgeting in Retirement: 4 Effective Strategies

Last Updated on October 2, 2023 by Candi Randolph

So, let’s chat. You know that moment at a party when you’re caught between the guacamole and the mini quiches, and someone asks, “So, what’s your retirement plan?” Cue the awkward silence, right? Well, we’re here to banish those cringe-worthy moments for good. No more dodging the topic or brushing it off with a casual, “Oh, I’ll figure it out.” It’s time to get comfortable with the ‘R’ word – Retirement!

A budget, friends, is not just a piece of paper where numbers go to die. It’s a roadmap to our dreams, our ‘bucket-list’ getaways, and yes, even that little cottage by the sea you’ve been eyeing since your 40s. According to Savvy Ladies, financial literacy in midlife includes understanding expenses, planning savings, and managing assets. Sounds like a lot? Don’t sweat it. Keep reading.

budgeting in retirement

Retirement planning doesn’t have to be as daunting as climbing Everest in stilettos. As the experts at Investopedia put it, it’s all about identifying income sources, sizing up expenses, implementing a savings program, and managing assets and risk.

We probably all have asked ourselves these questions:

  • Will I outlive my savings?
  • Can I keep up with healthcare costs?
  • Will my retirement income keep up with inflation?
  • Can I earn enough interest in my investments when interest rates are low and the market always fluctuates?

These are real concerns that many of us share. So, let’s tackle them together. In this blog post, Jack Wallace, a guest writer who knows his stuff is going to help us make a plan for our retirement years that is practical and sustainable.

Will budgeting in retirement make everything perfect or immune from change? No. But, the best approach is to be proactive, and that is what this article will delve into.

Written by Jack Wallace, Director of Governmental & Lender Relations at Yrefy

While retirement might be something we all look forward to, during economically challenging times such as now, it can be difficult to continue living on a fixed income without missing payments, sacrificing needs and wants, or having to begin working again. According to credit karma, baby boomers have an average of $52,401 in debt (not including mortgages). Here are a few tips on how to shift your budget after retirement, so you can live the life you dreamed of and worked so hard to enjoy.

Budgeting in Retirement

practical tips for people who are budgeting in retirement

Make a Plan, Adjust it Occasionally if Needed

The first step of any budget is to make a plan. You’ll need to figure out exactly what your new monthly income will be, and what your monthly expenses will be. Chances are, you’ll need to make some lifestyle adjustments which you would much rather figure out sooner rather than later.

The economy changes quickly, so giving yourself some leeway in your monthly expenses and calculating how much you’re spending each month is important so an economic crisis such as a rising interest rates, inflation, and ultimately a recession, doesn’t cause you panic when it comes to your finances.

Essential vs Non-essential

An important part of making a plan for a monthly budget is laying out your essential and discretionary expenses in an easy to see way where and how you are spending your money.

How much of your monthly food expenses is going to ordering fast food or dining out at restaurants? How much could you save making more meals at home? Could you cut back on your entertainment expenses and look for more free or senior discount things to do around town?

Budgeting for your housing repairs, health care, transportation and food are the top expenses not to mention essential, so be sure you’re accounting for essentials before looking at discretionary expenses. 

Take Advantage of Discounts

Whether you’re an AARP member, a member of the Association of Mature American Citizens, or simply want to enjoy a discounted meal at your favorite restaurant from the 55+ menu, taking advantage of senior discounts whenever and wherever you can, is a great way to save money and still do the things you love.

Don’t forget to enjoy the retirement stage of life – you’ve earned it! Check out free activities at your local community center, save money on traveling, and some pharmacies even offer discounts on certain medications.

Pay off or Consolidate Your Debts

Bankrate recently found that around 47% of credit card holders don’t pay off their credit card monthly and carry debt from month to month. and some people are barely able to make the minimum monthly payment.

If you have a lot of credit card debt and other loans that you’re struggling to make payments on, consolidate the debt into one loan with a fixed rate, so you can factor in paying down this debt each month and don’t have any unexpected surprises when your bill comes in. This can give you peace of mind, and help you set a goal.

If you have time before retirement, try setting aside extra money each month to pay a little more than the minimum that’s due so you can get the mountain of debt down sooner.

If you still have Federal student loan debt that you are repaying for your education or for one of your children or grandchildren, remember that you will start repaying that debt back again this October after almost four years of the Administrative Forbearance period that started in March 2020.

Go to www.studentaid.gov to see what Income-Driven Repayment Plan works best for you to lower your monthly payment. Remember to check out the new S.A.V.E. plan that was announced on June 30th by the Secretary of the U.S. Department of Education.

Thanks for reading! Remember that you and I are responsible for how we track, spend, and (hopefully) save our money. We are our own keepers, so let’s all be diligent and wise with what we have when budgeting in retirement.

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