We spend our lives working around the clock to manage the bills and pay the mortgage, and while we’re at it, we’re supposed to start thinking about our future beyond the workplace. Retirement is a big part of your life, even if you’re currently in your twenties and busy partying the night away!
If you are living to a shoestring budget, the idea of planning for beyond tomorrow may feel like a difficult feat. Living day to day can be hard enough without looking for funerals on a budget, too. The thing is, we don’t get to know how many tomorrows we get, so we have to be vigilant and plan for the unexpected so that our families don’t get left with the fallout. Planning a budget for retirement is going to be an essential part of your life and if it isn’t yet, you need to make it so. Getting a handle on your budget is going to be the only way to get you there, so we’ve put together some tips to help you to create your budget.
Before you get started, you need to have bank statements printed from the last year. You also need some funky stationery so get the highlighters out and grab a copy of your tax return from last year. You can use the information from these items to help you understand what your outgoings and incomings have been for the past year. This can give you an accurate understanding of what cash you need to put aside to live on in your twilight years.
First, you need to list all your fixed expenses. Your retirement budget needs to be as accurate as possible so that you don’t leave anything out in your savings plan. You need your essentials list; healthcare insurance, food, utilities and mortgage payments all come under essentials. This should also include transportation if you require a car to get around. Then, you need to list your non-essential items and while the latest cable TV package is a tempting essential, it really isn’t essential to your monthly budget. If you can drop extras you don’t need – for example, the gym can be swapped for outdoor walks and home workouts – then you can free up some of your monthly cash and add it to your budget.
Once you’ve done that, you need to look at your healthcare costs. With age, these will change so you should be looking at affordable ways to manage healthcare later on. Don’t forget, this will include dental care, eye care and checks on hearing so you need to make a provision for those things in your budget. You hobbies and the way you spend your time will change as you move into retirement, so make sure you make a provision for new hobbies, or just make a point of noting what you currently spend and how this can transfer to new things to do.
Your future doesn’t have to be scrimped on when you get there, as long as you can make the savings you need to make today.