It's a little scary budgeting when your usual income is coming to a screeching halt, right? Retirement is something you have worked for your whole life, on income you were used to. Now you transition to a fixed income. (Most people). That's an adjustment! Now, if you have planned your retirement, you may have a few sources of income- whether it be a pension, social security, a retirement account, your savings, an inheritance, annuities, etc., which is great! This provides a bit more security for you.
If you haven't figured out an income stream yet you need to call us ASAP! That's our forte'. If fact, we say you need to create an income RIVER. That's when you have multiple sources of income.
Meanwhile, you need to also consider the BUDGET you will have when you approach retirement. We want to help you unravel this subject.
Let's start by diving into the average American budget. According to the Bureau of Labor statistics, the average American household spends over 77% of their yearly income on "basic needs." Studies have shown that regardless of income, budget percentages remain the same. Some stats to take into consideration:
- The average American spends roughly 33% of their income on shelter. This can include a rental, mortgage interest, property taxes, maintenance, repairs, and home insurance.
- The average American spends an average of 16% of their total income on transportation, this includes the purchase and upkeep of their vehicle.
- The average American spends an average of 13% of their income on food. (Cooking at home or eating out)
- After the basic needs are covered, Americans spend an average of 12% of their income on personal insurance and pensions.
- The average American household spends an average of 8% of their total income on health care and health insurance.
- & the fun stuff.. Americans spend an average of 4% of their income on entertainment.
- Americans give an average of 3% of their income to charitable contributions.
- & another 3% on apparel.
So how do you compare? Are these the habits you keep? Are they maintainable on a fixed income once you retire? Creating a retirement budget is incredibly important because as I mentioned above, it is a total shift from a regular budget you have while you are working. Retirement is YOUR time, so do yourself a favor, be prepared. Without a budget, there's stress that hangs over you when you do not have financial security, when you have a lack of savings, when you're wondering how you're going to actually enjoy yourself!
We've created a budget sheet for you. For those of you who are already retired- it may be a good refresher. Sit down and do an inventory again. This sheet is fillable online so you can do it right on your computer or tablet- or print it out and break out a pen!
It may be a little overwhelming- reach out to us for any help you may need. We want to make sure you're Rocking Your Retirement.