Being able to retire is one of the most common financial goals in this country, and it is not all about sitting around doing nothing. Most people are looking forward to retirement so that they can actually enjoy their time and do the things they enjoy. For many, retiring is more about having the freedom to follow their hearts and their passions and spending time with those they love.

And retiring is no longer about age. Many young people are choosing to retire from the corporate workforce very early in life with the hope of following their dreams. The meaning of retirement has expanded and is now as unique as the individual working toward it.

How To Plan Out Your Retirement Budget

No matter your age or your retirement goals, planning and following through with that plan is the key to success. When should one start to seriously plan for retirement and how exactly should they go about doing it? We are going to answer those questions and more below.

This cannot be said enough: Start your retirement budget planning as early as you possibly can. Yes, you may need to make changes and adapt your plans - that is simply part of life. Waiting until you are close to retirement to start retirement budget planning is asking for trouble.

Many people question getting a financial advisor involved in their affairs, but there are actually many benefits to it. You can tell them your goals and dreams for retirement, and they can help you choose the right moves to make to get you there. They can provide clarity. Sure, you can do it yourself, but financial advisors know things that you and I would need to learn. They have the wisdom and knowledge that we do not. Why not put that knowledge and wisdom to work for you?

Also, consider this: It is always easier to do something for someone else than it is to do it for yourself. For instance, perhaps you have tried to help a friend declutter their home. As you do not live among their possessions and likely have no emotional connection to them, it is easy to point out several things that he or she should get rid of. When it is time to declutter your own home, though, deciding what to purge is more difficult.

Another example is giving advice. If someone asks you for advice, you can probably give them some words of wisdom. If you were in that same situation, though, you might not know what to do. This is simply because it is much easier to see things clearly from the outside than it is when you are wrapped up in it.

Similarly, a financial advisor can look at your dreams, goals and financial situation from the outside and find a clear and straightforward path for you to follow. When you try to do it yourself, it can get confusing. Consider at least having a consultation with an advisor to determine if you like their way of thinking.

You have probably heard from someone that social security probably will not be around forever. Well, that may or may not be true, but one thing is for sure: Social security is typically not enough for anyone to live on. So, whether it stays around forever or if it does not, you should not rely on it as retirement income.

If you happen to receive it when you retire, awesome. You have more than you expected. If you do not, at least you will not be relying on it. In truth, you should never rely on something that is that much out of your control.

You are probably not going to think of every single thing at this moment that you should be budgeting in. There might be a bill you are overlooking or a goal that slipped your mind. The best thing you can do is keep a running budget list with you in your purse or wallet. Whenever you think of something that you need to add to your retirement budget planning, write it down. Set aside a day every few months or so to take a look at that list and add in what is there.

Staying on track can be much easier when you have a tool to help you out. You might choose a spreadsheet, a pen and a piece of paper, or a budget finance app. Any of these tools can help you stay on top of what you need to do.

Rainy days will come in retirement as often or more than they did when you were working. You do not want those rainy days to wreak havoc on your finances. Be sure that you have an emergency fund that is easily accessible.

Now, let’s talk about when you should start planning your budget and how the planning process differs in various stages of life.

Early Retirement Budget Planning

Long before retirement approaches, you should start your retirement budget planning. The earlier you can do this in life and in your career, the better as it gives you more time to prepare. Start by asking yourself the following questions:

What Are Your Goals for Retirement?

What do you actually want to do when you retire? Can you see yourself kicking back and sitting still or will you want to travel? Will you make more money through a hobby, such as woodworking or writing a novel? Do you want to just spend your time spoiling the grandkids? Write down your current vision for retirement. Don’t worry - you can make changes later if you need to.

Where Will You Live?

Are you planning to stay in your family home or do you hope to move to a retirement village? Maybe you want to spend retirement in the Virgin Islands or close to a ski resort. While you can change your mind and your plans later, it is best to start your retirement budget planning with some specifics. Where you choose to live can greatly impact the amount you need for retirement.

What Are Your Current Fixed Expenses?

These may change, especially as you get closer to retirement, but you need a foundation for your retirement budget planning. What are your current fixed expenses? These include expenses that are the same every month and are usually due on the same date, such as:

• Rent or mortgage payments

• Property taxes

• Insurance premiums

• Car payments

• Any other payment you make that does not change due to your use

Even though these expenses may increase or decrease by the time you retire, especially if you are a couple of decades from retirement, your current expenses can help you. If you account for these while you determine the amount you need to save, you will be much closer to the actual amount you need than if you completely left them out. You can adapt your budget as needed when expenses do change.

What Are Your Current Variable Expenses?

Variable expenses are the same as fixed in that they will likely change over time because your needs will change. Still, you can start retirement budget planning now with your current variable expenses. These include expenses that change due to your use and needs, such as:

• Groceries

• Gas

• Medical expenses

• Household goods

• Discretionary spending (such as entertainment, clothing, and so on)

• Any other spending you do each month that can vary according to your decisions

What Is Your Current Estimated Retirement Income?

As of now, how much do you expect your retirement income to be? You should include income from:

• Stocks and other investments

• Survivor benefits

• Pension plans

• 401ks, IRAs, annuities

• Secondary income, such as royalties, rental income, and other passive income

• Anything else that you believe you can count on after retirement

Is your projected income enough to cover your monthly and yearly expenses? This is a bit of a tough question to answer, so do not expect any certainty. Instead, just use your estimates to see if you are on the right track at this time or if you need to make changes.

Make or Adapt Your Current Budget

When you have an idea of whether you will have enough to retire or not and have a list of the expenses you expect to be paying, it is time to add retirement savings to your budget- if you have not already. If you are already saving for retirement, take the time to determine if you need to make any changes.

Before you put away your retirement budget, take a look at any debts you feel will still be around. Is it possible to add some extra payments so you can pay them off quicker? Sometimes even adding small amounts can decrease interest and have you paying off balances faster.

Also, take pictures of your retirement budget planning pages. This way you will always have a copy to refer back to. Paper copies can easily get ruined. Having digital copies too can be a plus.

Closer To Retirement

The closer you get to retirement, the more deeply you will want to dive into your retirement budget planning. Within a few years of retirement- at least three to five years- take another look at your retirement budget and answer the following questions:

• Has anything changed?

• Are there any debts or expenses that have been eradicated?

• Have any debts or expenses increased or decreased?

• Are there any that you can decrease?

• Will you need to be purchasing a new vehicle any time soon?

• Do you have more grandbabies to spoil than you originally expected?

• Do you still plan on living where you originally intended?

• Are your savings, investments, and projected retirement income on track?

• Do you need to make, save, or invest more?

• Are there additional medical expenses than you originally budgeted for?

If you need to make changes, do so as quickly as possible. The earlier you adapt your strategy, the better shape you should be in when you reach retirement.

Ongoing Retirement Budget Planning

Once you have officially retired, it is important that you check in with your budget often. You have worked hard to set yourself up for retirement. You definitely do not want to have to come out of retirement due to a lack of cash.

Up to this point, you have been planning for certain expected expenses. Hopefully, you have been able to set aside more than enough. Unfortunately, sometimes no matter how much you plan and prepare, things do not work out as you thought. To prevent unexpected events from raining on your retirement parade, it is important to stay on top of your budget and use your money wisely.

Set Your Goals

Having a yearly and monthly budget is a wise idea - one you should follow throughout your income -earning years and throughout your retirement. At the end of each year, determine your financial goals for the next year. Is there a trip you want to take? An investment you want to make? A large purchase you are looking forward to? Whatever your goals, write them down.

Write Down All the Expenses You Expect to Have

Next, add in the “one and dones”, such as Christmas, birthdays, and other irregular spending. Be sure you add on expenses like oil changes, air conditioner servicing, tune-ups, lawn care, and so on- things that you pay for on an inconsistent basis. Many people are caught off guard by these expenses because they are not recurring costs so they are easy to overlook. However, Christmas still comes on December 25th every year. Starting your year off by adding these things to your budget gives you a head start.

You also want to add in your savings and investing goals. Just because you retired does not mean your money has to. In fact, retirement is an excellent time to have that money working for you. Decide before the year starts where you want to put your money to work.

Count Your Regular Expenses

Now, add in your regular expenses. You can estimate your variable expenses and use averages where necessary. Once you have added all of these expenses together, divide the total by 12. This is the amount you need every month. Is this a doable amount for you?

If not, you will need to make some adjustments to either your expenses or your available cash flow. Take a look at your variable expenses first and determine areas where you can cut back. This is generally the easiest category in which to cut costs for retirement budget planning and any other budget planning for that matter.

Cut Back Where Possible

For instance, if you budgeted $150 per week for food, challenge yourself to cut that cost down by a third or even a half. You can do this by using coupons, eating out less, and making meals from scratch instead of eating so much processed food. You can also cut costs by cutting out subscriptions and memberships you do not use, making gifts for Christmas instead of buying them all, shopping for cheaper car insurance, and other similar steps.

Consider Finding a New Source of Income

After you have cut back where you can, consider ways you could make a little extra. This does not mean you have to reenter the workforce. Instead, turn your passion or hobby into cash.

What do you enjoy doing? If you like gardening, you could sell your produce or plants. If you love kids or pets, you might offer to be a sitter on occasion. For those who enjoy knitting and sewing, make some goods and sell them online or at your local market. Writers can easily make some extra cash online by writing for others or could start their own websites on a topic they enjoy. There are plenty of ways to bring in some extra.

When you have made your necessary changes, make an appointment with yourself each month to make sure you are on track. This also gives you an excellent chance to make changes to any plans or goals that you currently have. Your budget appointment with yourself does not have to take all day. An hour or less with your financial paperwork should tell you all that you need to know.

Conclusion

We all look forward to the day when we can experience freedom. Even those who hope to keep working enjoy the idea of working because they want to- not because they have to. It does not matter how old you are or when you plan to retire, start your retirement budget planning now to give yourself the best chance at success.