Build Your Retirement Budget

Katie DuncanMarch 4, 2022


Cartoon digital calculator spelling "BUILD" on screen.

When you reach retirement, your financial goals will shift from saving for the future to making your money last. The key to doing this successfully is to create a budget that will guide your spending and help you prepare for unexpected expenses.

How to Budget for Retirement

Budgeting in retirement is not that much different than budgeting while you’re working. The process remains largely the same. What changes, however, is your income and expenses.

To create a retirement budget, you will need to:

  1. Get an estimate of your monthly retirement income.
  2. List your expected expenses and consider the expenses that will change over time.
  3. Adjust your spending as necessary to not exceed your income.
  4. Revisit your retirement budget regularly to keep your spending on track.

Let’s take a closer look at how to figure your retirement income and expenses.

Talk to a CFS* Financial Advisor

Want to take your retirement plans to the next level? Schedule a Amplify Wealth Management appointment with our colleagues at CUSO Financial Services (CFS).

Your Income in Retirement

Your retirement income will depend on how much money you were able to save before retiring. You’ll want to consider income from Social Security benefits, retirement investment plans such as a 401(k) or IRA, and any other income streams that will continue throughout your retirement, such as rental income from a real estate investment.

Handy online retirement calculators can help you determine what your monthly or annual income will look like based on your nest egg, how many more years you expect to live, rate of return on your investments, and inflation.

Costs to Consider in Retirement

After you determine what your income will look like, consider your expenses. Here are the main categories to think about.


Will you still be paying off your mortgage once you enter retirement? Will you be paying monthly rent? These are two big questions to answer, as housing will be one of the biggest expenses.

Even if your mortgage has been paid off, your home becomes more expensive to maintain as it ages, and property taxes regularly increase. You could save on your housing expenses by moving to a smaller home in a more affordable neighborhood—or even a new city or state.

However, it’s wise to also plan for the increased costs of assisted living. The likelihood of someone requiring daily assistance increases with age and can happen suddenly.

Essential Expenses

Think of the other bills you pay regularly, like utilities, your phone bill, and other monthly costs. Be sure to look at your current bank statements to see what you’re paying for and how much it costs.


There are two major concerns with healthcare after you retire:

  1. The cost of insurance premiums
  2. Unexpected healthcare expenses

Depending on your insurance before you retired and which coverage you elect to pay for after you retired, insurance premiums can go up significantly. Many older folks choose to add on supplemental insurance to cover beyond Medicare; have you decided whether you’ll add those plans?

Beyond premiums, hospitalization, surgery, and nursing home care are expensive. Even if you have Medicare, Medicaid, or health insurance, you’ll want to be sure you understand exactly what your insurance will cover. Making sure you can cover these kinds of unexpected expenses should be part of your overall budget.


Taxes don’t disappear when you enter retirement. You’ll have to pay income taxes on social security benefits, withdrawals from tax-deferred retirement plans, and other sources of income.

A financial advisor or tax advisor can help you determine a tax-advantaged withdrawal plan to optimize your tax burden.”

Depending on your current financial situation, types of retirement plans, and amount of money that you’ve saved, you may actually end up paying more in taxes during retirement if you move up a tax bracket.

A financial advisor or tax advisor can help you determine a tax-advantaged withdrawal plan to optimize your tax burden.


Food costs are highly susceptible to inflation—your food budget in five or ten years is likely to look very different from the money you spend today. You may have to rebalance how many times you cook meals versus eat out. When you do go out, take advantage of all the discounts you can find.


What will you do with all your free time? Take a cooking class to help reduce your food expenses? Ballroom dancing? Cake decorating? Gardening? No matter what your interests are, you’ll want to continue budgeting for entertainment. You’ll have more free hours to fill, so you might find that you increase your entertainment budget after you retire.

Family Members

Of course, you’ll want to spoil your grandchildren and other family members! Whether it’s a new bike or part of a college fund, be sure you’ve planned for these expenses. You may also find that a close relative needs some financial help for whatever reason. Be sure you’ve worked these expenses into your retirement planning—after all, no one can predict the future.


If you have a car, it probably won’t last forever. Will you be able to afford a new(er) one after you retire? Will your family downsize from two cars to one? Are you near public transportation, and, if so, how often will you need it? Transportation is another area in which you should consider inflation. You’ll be able to get less and less car for the same budget every year, and public transportation costs increase over time, as well.


It’s wise to consider both planned and unplanned travel expenses. For example, you might want to help your son and daughter-in-law with their new baby—and, if you didn’t budget for that kind of unexpected travel expense, you could be in a bind. Don’t just save for your trip to Paris or Caribbean cruise; save for weekend getaways, family reunions, and other events.

Creating Your Retirement Budget

Once you list out your income and expenses, compare them. Do your expenses far exceed the money that you can reasonably expect to receive every month? If this is the case, you will likely need to cut down on your spending.

Keep your budget on track by using a spreadsheet, pen and paper, or a budgeting app. You can find numerous retirement budget examples online and find a method that works best for you.

The important thing is that you check in with your budget regularly to make sure that you’re on track. You may even need to reevaluate your spending if you find yourself having to withdraw more money than expected for something like unplanned health care costs.

Look Long-Term

This is a crucial part of your budget—does it work long-term? Do you have enough saved up to make regular withdrawals over the next few decades? This is where a financial advisor can really be helpful; they can help you identify any potential shortcomings in your expectations for income.

Plan Your Retirement Budget Today

It’s never too early to start planning and thinking about retirement. When you’re young, your focus will be on saving. But as you near retirement age, you’ll want to start thinking about how you plan on using your money. A budget will help keep you on track.

Not sure where to start? A CFS* financial advisor can help you devise a budget that will help ensure that your financial needs are met for the coming years.

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer Member FINRA/SIPC and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018.

Talk to a CFS* Financial Advisor

Want to take your retirement plans to the next level? Schedule a Amplify Wealth Management appointment with our colleagues at CUSO Financial Services (CFS).

Katie Duncan

Katie Duncan is a financial writer based in Austin, Texas. Her articles include financial advice for freelancers, homebuyers, and more. When she’s not writing, Katie loves traveling and exploring the outdoors with her friends and her dog, Poe.