Leverage a retirement budget worksheet

Whether you’re a young upstart, midway through your career, or fast approaching your golden years, somewhere down the line, retirement is inevitable. And to enjoy the most secure, comfortable, and fulfilling retirement possible, early planning is essential. Leverage a retirement budget worksheet.

According to a recent survey, 20% of American adults over 50 have no retirement savings, while half worry they will not have enough to last in retirement.

We know retirement planning, and the mere thought of retirement strategies, can be stressful—but if you want to truly enjoy life after your working years, it’s important to take the necessary measures early on.

So, where do you start? Well, the best retirement spending strategies start with a solid budget. Creating a retirement budget will not only give you a deeper understanding of your expenses and how they may fluctuate over time, but it will also help you set achievable financial goals to work toward.

Here is some advice to help you better understand your spending in retirement and prepare for a bright and prosperous financial future.

Account for the “retirement smile”

Coined by retirement research expert David Blanchett, the “retirement smile” is a method of financial forecasting that allows you to plan based on the notion that your spending in retirement will change over time.

The “retirement smile” is a handy way to think about how your spending patterns might change throughout your retirement. Picture this: early in retirement, you might enjoy the freedom of no longer working, with less pressure to keep up with work-related costs like commuting or professional clothes. You’re probably spending a bit on travel or new hobbies, but overall, your expenses may start to dip compared to when you were working. This is the first part of the smile, where things curve down.

As time passes, though, healthcare costs tend to increase—that’s the middle of the smile where spending starts to rise. Doctor visits, medications, or even long-term care can start to take up a bigger chunk of your budget as you age, so it’s important to plan for that.

Finally, in the later years, many retirees find that their expenses drop again. Maybe you’re not traveling as much or spending on big adventures. Your lifestyle might slow down, and with it, so do your costs. That’s the second dip in the smile.

Understanding this “retirement smile” can help you plan better for the different phases of retirement — especially making sure you’re prepared for those middle years when healthcare costs might rise. It’s all about balancing your spending and knowing when to expect those ups and downs.

These three significant spending milestones, if displayed visually, dip before rising again, forming the appearance of a smile. By accounting for the cadence of your potential expenses, you will stand a greater chance of creating a successful retirement budget.

Build the right plan and portfolio

Creating a solid financial plan is key, but building the right portfolio to support that plan is just as important. While having a budget is crucial, it’s only one piece of the puzzle. A well-rounded financial plan should address your current needs and future goals, ensuring you’re prepared for whatever comes your way.

Once you’ve got a clear picture of your long-term budget and cash flow, the next step is to protect the money you’ll need from market ups and downs. That’s where building the right portfolio comes in. Your portfolio should be tailored to your specific situation and goals — it’s not just about picking investments but creating a strategy that matches both your short-term needs and long-term aspirations.

One of the best ways to determine how much of your portfolio should be in safer investments, like bonds, is through liability-driven investing or liability immunization. This approach matches your investments to your future financial needs. By analyzing what you’ll need for the next 10 to 15 years — like retirement spending or healthcare costs — we can calculate the present value of those future expenses.

With that analysis, we can help you determine how much to allocate to more stable investments, protecting the money you’ll need from market volatility. The rest of your portfolio can then be positioned for growth. This way, you can confidently balance keeping your money safe and allowing it to grow over time.

In the end, you’ll have a personalized portfolio designed to meet your needs, giving you peace of mind knowing your financial future is on solid ground.

Dig deeper with our retirement budget worksheet

If you’d like a more comprehensive view of your potential retirement expenditures, drilling down and categorizing your various expenses is the only way to understand them in detail. It’s truly the best way to construct a retirement budget that works.

There may be lump sums you will need to consider for big life events or family milestones such as first cars or weddings. There are also essential expenses and discretionary expenses—those that can be considered optional or a luxury.

Not only will our worksheet serve as a valuable retirement budget calculator, but you’ll be able to break down your various expenses with ease. You might even come across spending you’ve completely overlooked.

We hope these tips prove helpful as you look ahead to retirement. By preparing early on, you can reap the rewards years down the line.

To get your retirement budget off to the right start and create a plan that will yield you the best results, download our Retirement Budget Worksheet.

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