If you’re getting close to retirement, there are many decisions you’ll have to make soon. Everything from where you’ll live to how you’ll fill the hours of your day. One of the most important retirement decisions you’ll make involves your finances. After retirement, you’ll be responsible for maintaining your lifestyle without a steady paycheck. As you know, budgeting while you were working was important, but having a budget in place during your retirement is even more important. Here are some tips to help create and follow a retirement budget.

Research your income sources

Guaranteed income is going to play and important role in your retirement budget. Now is a good time to map out your Social Security payments, pensions, and other steady sources of cash.

Estimate your investment income

Now’s the time to take a deeper look at your investment income, from capital gains on your mutual funds to dividends on your stock holdings and interest on savings accounts and certificates of deposit. You can use tax returns to estimate this income or look at your brokerage statements.

Track your current spending

Knowing how much you’re currently spending will give you a place to start when creating your budget for retirement. Go through your past statements and bills to gather this information.

Adjust your budget for your retirement lifestyle

Now that you’ve estimated your income and spending, make any necessary adjustments so your retirement budget will fit your retirement lifestyle. For example, those expenses for work clothes and commuting will go away or become much less, but the expenses for things like hobbies and travel are more likely to go up.

Do a trial run

It’s a good idea to do a trial run on your estimated retirement budget before making the decision to retire. Set aside your estimated monthly income, including what you expect to get from Social Security and future pensions, then live on those amounts for a couple of months and see how it goes.

Make adjustments as needed

If your trial run goes smoothly, you don’t need to do anything else. However, if it didn’t, you know it’s time to make some adjustments.

Pay attention to spending

Spending too much, especially in the early years of retirement, could reduce your options later. Be sure to watch your budget carefully and try not to overspend.

Conduct a new analysis every year

It’s important to track all your sources of income, and all your investments, on a regular basis. That means calculating your net worth on a yearly basis and reviewing your retirement budget accordingly.

Make adjustments based on your analysis results

If you want to enjoy a financially secure retirement, you need to build flexibility into your plan. That means making adjustments based on your current circumstances and changing the structures of your budget as you go along. Your retirement should include fun, relaxation, and adventure, not financial stress. If you want to enjoy your post-work years, you need to create a budget that works for you, flexible enough to change with your needs, but strong enough to see you through all the years of your retirement. These tips can help you walk into your retirement with more confidence.

If you’re wondering how much you should be saving for retirement, join us for our free Retirement 101 webinar and we’ll help you discover the answer that’s right for you. Find more details and register for this webinar online.