One Worksheet to Easier Retirement Budgeting

Retirees are often faced with the challenge of adapting to life on a fixed income. Without a proper budget in place, you can end up living outside of your means or outliving your savings. And financial hardship can bring unwanted stress to a time of your life that is meant to be carefree.  

Lower your stress and make your retirement more enjoyable by creating a budget you can rely on by using this simple worksheet.

Organize Your Monthly and Annual Expenses

Begin by writing down all of your essential expenses. These can include:

• Rent or mortgage payments
• Property taxes, home warranties or homeowners insurance
• Food
• Health insurance/Medicare out-of-pocket costs
• Prescription medications
• Car insurance
• Gas and/or public transportation costs
• Utility bills (excluding cable TV and internet)
• Credit card payments or other debt payments

Next, write down all of your non-essential expenses. These can include things like:

• Gym or club memberships
• Cable TV and internet subscriptions
• Magazine subscriptions
• Money used for entertainment or eating out
• Clothing that you feel could be above or beyond what you truly need
• Money and gifts for spouses, friends, children or grandchildren
• Christmas and birthday gifts
• Vacations and travel

Create a Budget Planning Spreadsheet

Now, make a spreadsheet with all 12 months organized horizontally in a row and your essential expenses stretching vertically in a column. For each space, write in the approximate amount of the expense. For example, if your rent is $800 per month, fill in $800 for each month in the row representing your rent. For expenses that are paid annually or semi-annually (such as car insurance), average them out monthly and fill in accordingly.  

Next, you’ll want to determine how much spendable money you have available each month. The first step in calculating this number is to add up all of your savings, 401(k), IRA, pension or other money that has been stashed away for retirement.

If you spend four percent of your savings every year, it will be enough to last you 25 years. While that percentage may differ based on each person’s own circumstances, four percent is regarded as a good industry standard.

Divide that four percent total by 12 to determine how much can be allocated for spending each month. In other words, you’ll allocate 0.33 percent of your total retirement savings to spend each month.

Next, tally up all of your monthly income from Social Security, part-time work or any other income you may have. Add this to the amount of your allotted retirement savings to reach the number that is available for you to spend each month.

Your budget worksheet should now look something like this:

Now, add another row at the bottom with the amount of money you have available to spend each month (retirement savings + income).

Then add another row to illustrate how much money you have leftover (amount spent - amount available).

Using this rough example, you would have $280 leftover each month after taking care of all your essential expenses. Now it’s time to work in your non-essential expenses. After all, retirement is meant to be enjoyed, and paying for vacations and birthday gifts for grandchildren are important. Other things like gym memberships and magazine subscriptions can be valuable for your health and well-being.

 Begin by adding non-essential expenses that you pay every month to the column on the left, and then add up their total in another row. Your worksheet will then look like this:

Next, subtract the total of your non-essentials ($170) from the total leftover after your essentials ($280). Now enter that amount ($110) to another row, which is your grand total.

You now have $110 leftover every month after making all of your essential expenses and monthly non-essential expenses. The final step is to work in your non-essential expenses that are not paid every month and move money around accordingly.

For example, let’s say you have two grandchildren and their birthdays are in May and September. You wish to take a summer vacation to the beach with your family in July.

The $110 of leftover money you’ll have available in May and September is more than enough to cover the cost of birthday presents for your grandchildren. But it won’t be enough to cover the beach vacation or holiday gifts for the entire family. Let’s estimate you’ll need $300 for the vacation and $250 for holiday gifts. That means you’ll have to move money around from the other months to accommodate those costs.

The final row of your worksheet will show the amount of money you’ll have leftover after shifting money around to accommodate these irregular non-essentials.

With the adjusted total, you now have $77 leftover each month (still enough to cover those birthday gifts) and will have $300 leftover for the vacation in July and $250 available for Christmas gifts in December. These adjusted totals still average out to the same $110 per month that you had available previously.

Your final budget worksheet will then look something like this:

Any amount of that $77 that goes unspent each month can be filtered back into your savings and used for unexpected health care costs, car repairs or anything else that may pop up without warning.

Using this budget worksheet to manage your finances can help you enjoy a more stable, predictable and stress-free retirement.

Learn more about enjoying a happy and healthy retirement with these helpful resources:

• Senior Healthy and Safety Travel Checklist
• Traveling on a Budget
• How to Keep Your Mind Alert, Active and Young
• Medicare and Retirement