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Budget Planning - Can You Maintain Your Lifestyle in Retirement?
Budget planning and your retirement lifestyle If you are planning to take early retirement soon, it would be sensible to do a budget planning exercise to satisfy yourself that your retirement income is sufficient to cover the expenses when you retire. Millions of people are seeing their pension funds being depleted by more than 20%, and are worried that their retirement income won't be enough to meet their outgoings. They are concerned that the shortfall in their pension funds would mean that they may have to carry on working beyond the age of 65.
It is useful to carry out a budget planning exercise to work out estimates of your retirement incomes from various sources and the likely expenditures you will incur when you retire. You will then have an idea of what you need to do to boost your retirement income (like taking a part-time job) or what expenditures you'll need to cut when the time comes. Bear in mind that when you retire certain expenses will also cease. These include:
You may also stop enjoying certain work related perks like:
When doing your budget planning exercise, it is useful to do it on a spreadsheet if you have access to one, otherwise an analysis sheet of paper will do. Retirement Income Sources Pensions 1. State pension (including State second pension, if any 2. Occupational pensions from various employers 3. Stakeholder or Personal pensions Pension total (gross) Less tax Pensions after tax Other Income 1. dividends 2. building society interest 3. bank account 4. rental income 5. income from bonds, etc Other Income Total (gross) Less tax Net income after tax Add tax free income from ISA,PEPs, TESSA Total Net Income
Expenditure Household expenses rent council tax food utility bills household insurance repairs and maintenance telephone bill television license cable subscription Motor Expenses petrol & oil car insurance road fund license MOT test servicing and repairs Personal expenses clothes life cover medical insurance loan repayment savings plan charitable donations gifts for special occasions personal grooming Holidays, leisure and entertainment theatre and cinema tickets tickets to support your sports club, etc subscription to health club/golf club night outs with friends luxury cruises and holidays Don't forget to allow for inflation in your budget planning. It may be a good idea to try out the plan six months before you retire to see how you manage on your budgeted retirement income and expenses. If you find yourself struggling to manage on the budgeted income and expenditure, perhaps you might consider taking a part-time job when you retire to supplement your retirement income.
Retirement planning helps you get more out of life in retirement Retirement planning - how to adjust to your new lifestyle when you retire. |
