A Retirement-Ready Budget

A Retirement-Ready Budget

January 24, 2023


ARCHIVED BLOG, PLEASE NOTE:  The information below was posted prior to any affiliation with LPL Financial and is posted here for historical purposes only

“When can I be done?” This is the most common question we have heard from clients over the past 6 months. We have all faced unique challenges over the past three years, and for many people, that is making retirement sound a little more enticing.

Outside of shaking a Magic 8 Ball or looking into a Crystal Ball, there is a lot of information to sort through before answering the big question: “When can I be done?” In this post, I want to focus on one of the most important factors: your monthly budget. Although most people do not track a set budget month to month, we are all accustomed to spending a certain amount each month. It is critical to pinpoint what this number is for you individually before crossing that retirement finish line.

I know this can feel like a daunting task for those of you who are not financial nerds like me. Here are a few tips on how to get started:

  1. Write down your total monthly net income.
    1. How much income is deposited to your checking account each month?
  2. List out your monthly expenses paid through your checking/savings.
    1. Mortgage, car loan, utilities, etc.
  3. Determine a monthly amount paid for all other items through a credit card or debit card.
    1. Groceries, online purchases, travel, restaurants, etc.
  4. Take some time to consider any expenses that might differ in retirement.
    1. Do you have any expenses associated with kids living at home or being in college?
    2. Will your mortgage be paid off?
    3. Are you looking to travel more frequently?
  5. Don’t forget about healthcare! Many people overlook the cost of healthcare in retirement.
    1. For University of Michigan employees, take some time to review your eligibility for coverage online: https://hr.umich.edu/benefits-wellness/retiring-u-m/your-benefits-retirement

The steps listed above are a great starting point. If you are not regularly reviewing monthly expenses, you may be surprised to find out how much you are spending. It is normal for people to remember how much they spend on their mortgages, cars, groceries, etc. However, when you start including non-monthly items such as property taxes, travel, and home projects, you realize how quickly some other items add up.

Part of our process at Evangelista & Associates is to assist all new and existing clients with honing in on these numbers before retirement. We utilize this tool to help answer that burning question: “When can I be done?” If you are interested in getting this question answered for yourself, please email me at emily@university-wealth.com to schedule a complimentary consultation.

We are not affiliated, associated, authorized, endorsed by, or in any way officially connected with the University of Michigan, or any of its subsidiaries or its affiliates.