So many people underestimate the amount of money they will need to maintain the lifestyle they want when they retire. Most of the practices we employ for retirement savings are based in the hypothetical: budgets, spreadsheets, and goals. Why not make the intangible tangible by testing out your retirement budget to see how it works.

Understand Your Goals

There are many steps to ensuring you have saved enough to retire, but one of the primary tactics is understanding your retirement goals.

• What is your monthly savings plan?
• How much do you want to have saved?
• What do you want your lifestyle to look like?
• What are your priorities in retirement?
• Do you understand your spending habits?

These questions should help inform your retirement saving, spending, and budgeting. Take your time with these questions and talk with your financial advisor so that you can collaboratively build a retirement lifestyle that will work for you. The first step in the process is making a budget.

Making a budget is the easy part, sticking with it is a whole different story. The questions above are designed to not only help you create your budget, but how to stick with it.

Spending is a habit. By peeling apart the layers of that habit, you will find the intention behind it. Your intention is crucial to maintaining any budget, especially retirement. Intention gives you purpose, drive, and meaning. It works to illuminate the why of your habits and will help you make your budget work because you will be able to build a budget around the values that drive you.

What values are most important to you? By answering this question you allow yourself the ability to structure your retirement spending, saving, and investing on the things that are most important to you and your family. When money is paired with intention and grounded in values, it has the best chance for success.

After you have built your retirement budget, it is time to see how well that will work for you.

Thought Into Action

When you near retirement age, your retirement budget becomes even more crucial. It stops being numbers on a page or words from an advisor, it is your life. You will feel it when actually paying rent, buying groceries, and purchasing that plane ticket. Your money will need to be used. So why not figure out if what you have planned will work for you?

You should try out your retirement budget for a short period of time, about 1 or 2 years, in order to get the full effect of your cash flow options and how it will affect your lifestyle long-term. Here is a step-by-step guide for making this experiment work.

• Don’t forget to start.
• Be intentional with your start and end dates and provide built-in check ins every 6 months. This will help you stay on track and show you the progress you have made.
• Keep a notebook.
• Like any good experiment, detail what is happening each day. Note any changes, behavior, mood, etc. Be candid about what is working and what presents the most challenges.
• Assess the results.

It is important to take a critical look at how the experiment went. Below are some questions to ask yourself.

• Was the budget too restrictive?
• Did you overestimate your costs?
• What was the most challenging part?
• Was there a part that seemed easier than you thought?
• Where is the biggest area for improvement?
• Have you accounted for the “one-time items” that happen every year?

By taking your retirement budget for a test drive, you are able to become immersed in the budget you set for yourself. With this reality, some things may become quite clear like overestimated your living costs and underestimated your travel wants.

Throughout the whole process of building and living your retirement budget, it is important to maintain a certain level of flexibility. If something is not working, then change it. By testing out the way your life will change based on the budget you have created for yourself, you will be better able to assess your wants and desires and how to make your retirement as sweet as it can be.