If you are thinking about retirement, it is important to think about preparing a budget. Many of us understand or should understand how much income we will get when we make the decision to retire. If not, there are many tools to help you determine that amount. However, many of us do not consider as thoroughly how much we will spend. Here are some categories of expenses that should be considered when planning your retirement budget. Many of these may not be needed when your final budget is complete. I think it is important to consider them all and keep those you need and reject those you do not need.
Categories of Spending.
• Home-related expenses include
mortgage, property taxes, homeowner’s or renter’s insurance, rent, utilities,
home repairs, home furnishings, household cleaning supplies, housekeeping and
laundry services, gardening and yard supplies, and gardening and yard services.
• Food expenses include food and
drink, including alcoholic beverages that are bought in grocery and other
stores (dining out is not included).
• Health expenses include
out-of-pocket (uninsured) health insurance costs (including Medicare
supplemental insurance); out-of-pocket costs for prescription and
nonprescription drugs; out-of-pocket cost for hospital care, doctor services,
lab tests, eye, dental, and nursing home care; and out-of-pocket costs for
medical supplies.
• Transportation expenses include
car payments (principal and interest), vehicle insurance, vehicle maintenance
and gas.
• Clothing expenses include
clothing and apparel (including jewelry), and personal care products and
services.
• Entertainment expenses include
trips and vacations, tickets to movies, sporting, and performance events;
hobbies and leisure equipment (photography, reading, camping, etc.); dining out
in restaurants, cafes, and diners; and take-out food.
• Other expenses include
contributions to religious, educational, charitable, or political
organizations, and cash and gifts to family and friends outside the household
(including alimony and child-support payments).
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