Budgeting isn’t easy to do when you’re working. It’s even harder, in some ways, when you’re not! While some of your expenses may simplify as you grow older and pay off big debts, other expenses may grow, and you’ll be faced with the unique challenge of managing your savings without any new income. While every situation is different, here are some general tips for budgeting after retirement.
Understanding what changes in a retirement budget
There are some key differences between your senior budget and the one you’ve had all your life. First, and most obviously, you won’t have any income!
The point of your old budget was to keep your expenses smaller than your income so that you could save money. Now you’ll be working with that saved money, trying to use the right amount of it such that you can enjoy life to the fullest while making sure that you don’t outlive your savings.
There are other changes, too. There’s a good chance that you’ll be debt-free (or at least relatively debt-free) in your old age. Paying off the last of your mortgage will mean that one big bill disappears from your budget each month. You may have paid off your car, too, unless you bought a new one to celebrate your retirement.
But other expenses will grow. As your home ages, it will need more maintenance and repair. You may need to invest in health and safety improvements like ramps and other accessibility features. You want to be able to afford an American Standard walk-in tub when you need one! Your healthcare requirements might rise, too, sometimes beyond what is covered by Medicare or even your supplement plan.
Key tips in senior budgeting
So budgeting is still important as a senior. Here are a few things you’ll absolutely want to consider.
Government funding: You’ll be able to draw on social security when you turn 62, but you’ll get more each month if you wait until age 70 to withdraw the cash. You’ll also want to be careful about how to draw money out from your IRAs and 401ks. This is where a financial advisor can really come in handy!
Managing investments: You don’t want to give up the interest that comes with investing, but make sure that your portfolio is balanced in a way that limits risk. That means more “blue chip” stocks (stocks in large companies that are considered safe bets) and short-term bonds, and fewer risky investments.
The same old rules: Budgeting rules don’t go completely out the window when you’re older. Pay the bills first!
Protecting yourself: Speaking of bills, some of them should be for insurance policies. Now is the time to minimize risk. Go to a broker like Our Life Covered to get a good deal on insurance and to make sure that your coverage is what you’re looking for.