“Budget.” It doesn’t exactly conjure up images of the carefree retirement you’re planning for, does it? So let’s discuss your “spending plan” instead, and focus on managing expenses and finding a balance between the money you have and the lifestyle you’re dreaming of when you retire. Rather than confine you, a spending plan can allow you to spend money on the things you really want.

Look at the variables

When you’re creating a spending plan, you’ll want to consider what your fixed and variable expenses are now and what you estimate they’ll be in retirement. Your fixed expenses will include your mortgage or rental payment, weekly groceries and any other consistent payments you make. These will be easier to plan for than the variable ones. Here, you’ll have to be creative. Will you be traveling, taking your grandchildren to baseball games or picking up new hobbies when you retire? Think about the activities you do now, how much they cost and whether that cost will increase when you have more time to do them. We like to call this: understanding your Needs, Wants and Wishes for Retirement.

Make your pre-retirement budget a retirement spending plan

Pull out your existing budget. Take a look at your expenses and estimate which ones will go up and which ones may go down. Some may go away completely, like employment-related expenses. Others may need to be added, like health insurance if you’ll no longer be covered through your employer. Detail all of your expenses, but don’t forget to detail income sources such as Social Security, retirement accounts and pensions too. It is also important to note whether your income sources are pre-tax (you will still need to pay income taxes) or after-tax (you do not owe income taxes and will be able to spend the entire amount).  Our budgeting (we mean spending plan) worksheet is a helpful tool.

Plan on having a good time

Taking the time to create a realistic spending plan can give you a sense of certainty. It can help provide you more freedom to spend money on what you want, without breaking the bank. And isn’t that what retirement’s about? 

This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice.  All investments are subject to risk.  We recommend that you consult an independent legal advisor or financial professional for specific advice about your individual situation.

The tax information herein is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor. 

Securities offered through Voya Financial Advisors, Inc. member SIPC.  

Neither Voya nor its affiliated companies provide tax or legal advice. Please consult with your tax and legal advisors regarding your individual situation.  

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