Budgeting, Retirement, Retirement Journey

What does a retirement budget look like?

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?

6 thoughts on “What does a retirement budget look like?”

  1. You are doing great! Have you thought of looking up a health insurance broker? My sister, retired small business owner, uses one and found a Blue Cross Gold for closer to $1500 for the two of them (almost the same age).
    I am just not convinced about LTCare insurance. What have you found?

    1. We chose a LTC program that pays cash to a loved one who can take care of you. Our yearly premium is $1800, and it will cover 3 years of care for each of us, with a cash for loved ones at $2400/mos. OR if one of our loved ones is a medical professional, they will pay them $5000/mos.
      There are so many factors, but we have a maximum benefit of $292,000 each, and if we pay this insurance for 30 years, we will have paid $54000. This, to me, is similar to homeowner’s insurance. It won’t cover everything, but it will cover a big chunk.

      1. Sharon, this sounds like a very good LTC policy. If you don’t want to share publicly who this is, can you email me the info?

      2. Mutual of Omaha has a bunch of different scenario plans and ultimately that is the one we chose. I worked with an insurance agent (fee based) so he wasn’t tied to a specific company. He was not pushy, but listened to what I wanted. Together we found the plan that was right for us. If you want his name, I will be more than happy to send along.

      3. Sharon you chose an excellent plan. I just never knew it was possible. No name yet. I’m going to look in to this. Thanks again.

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