Skip to main content
Created: June 27, 2019
Modified: July 3, 2023

Exposing The ‘B’ Word As You Near Retirement

Click to read this article on

Budget is the ‘B’ word. The word sometimes connotes a negative implication for some as they feel budget means ‘less spending.’ Although in reality, in the retirement and investment planning world, we view budgeting as knowing how much you spend so that you can have a plan in retirement.

How many Americans keep a budget?  According to the 2016 U.S. Bank Possibility Index, only 41% of Americans follow the most basic of financial planning tools which is creating a budget.  As you approach retirement age, there are things to think about regarding budgeting:

1. Write down all of your expenses – fixed and variable

Fixed expenses cost the same amount each month and are paid on a regular schedule such as monthly, quarterly or from year to year. Health insurance, car insurance, car payments, mortgage payments are typical household fixed expenses. Variable expenses refer to spending decisions like buying clothes, eating and drinking out, vacationing, playing golf with friends. These items are variable because the amount spent varies from month to month. Most variable costs are discretionary and that’s how most Americans view them, however, some costs like groceries or gas in your automobile represent necessities. The amount spent can vary significantly from month to month and therefore, these costs are also categorized as a variable expense.   Over a month’s time frame, review bank statements, credit card statements and other financial documents to determine all your expenses. Be thorough and review your list to make sure everything is accounted for.

2. Write down all your income and where it will come from

Another set of numbers to fully understand is income. What will your retirement income be and how much are you keeping after taxes?  The three main streams of income for most Americans include Social Security, pensions and or annuities that pay as long as we live and any personal investments and savings that have accrued.

3. Determine what is important to you in retirement

You have spent years working, saving and maybe raising a family. You have closed one chapter of your life, now is the time to live life, travel and begin to fulfill your bucket list with experiences and adventures you’ve dreamed of. Factor in trips and large expenses which may impact your revenue stream.  We have clients, who are in their mid 60’s, who come in and tell us that they purchased their last car. With Americans living way into their 80’s, it is highly probable that another car will need to be purchased. Another thing to contemplate is where you plan to live. Will you stay in your current location? Or, have you always dreamed of living closer to the mountains or the beach?

4. Pay off Big Items

For some, it may behoove them to pay off big items like mortgages. However, for some, peace of mind far outweighs the increase in revenue from investments – especially if you have an extremely low mortgage rate. Speaking with a financial advisor who is well versed in tax implications, may provide an understanding of both the risks and benefits involved.

5. Consider Unexpected Expenses

Unexpected expenses can run the gamut from medical emergencies, home repairs, major auto repairs and unplanned travel.  Sometimes routine check-ups can be a nuisance but often save money in the long run. As you begin aging, be cognizant of signs related to your health or signs within your home – sometimes addressing the issue or problem head on will prevent major expenses down the road.  However, even the most diligent individuals often incur an unexpected expense along the way. Be mindful and plan accordingly.

6. Senior Discounts

Who doesn’t like to save money?  If you are a senior, hundreds of businesses including restaurants, hotels, the travel industry, entertainment venues offer significant savings for individuals over a certain age. The discount percentage and the age may vary, but saving money is as easy as googling ‘senior discounts.’ Take advantage of the discounts, you’ve earned it!

Budgeting means different things to different people. We look at it from the perspective of knowing how much you spend so that you can have a plan in retirement. Spend the time upfront assessing your fixed and variable expenses and then evaluating your revenue stream. By doing a little work in the early stages, it may increase your ability to live life to the fullest – whatever that means to YOU!

Joel Johnson, CFP®
Managing Partner at Johnson Brunetti
Joel Johnson, CFP®
Joel Johnson, the Managing Partner of Johnson Brunetti, has been in the financial services industry since 1989. As a CERTIFIED FINANCIAL PLANNER™ professional, Joel and his team have helped thousands of families develop their own individualized retirement plans based on the unique needs of those approaching the second phase of their lives. Starting from humble beginnings but developing a strong work ethic early on, Joel’s grandfather taught him by serving others first and creating value for someone else, you will never have to worry about money. These important life lessons were the driving…
Our Locations
Johnson Brunetti
Welcome to Our New Website!
Everything was designed with you in mind, making our retirement planning resources more easily accessible to you.
Check out your new resource center, where everything can be organized by article type or topic
Are you ready to speak with a financial advisor?
Skip to content