Retirement Planning

Budgeting Before You Retire

To help ensure you are putting enough away for retirement, it's a good idea to create a budget to use before you retire. Tracking your spending can be one step that may help you enjoy a financially secure retirement.

Creating a Budget Before You Retire

Retirement planning and budgeting

Many financial advisors advise maxing out your retirement accounts - especially during your last five working years. While you may be in agreement with this strategy, you may also be wondering how you're going to go about accomplishing this goal. We suggest making a budget as you are planning for retirement.

Pre-retirement budgeting

If the thought of creating a budget at this stage in your life is about as welcome as a migraine headache, just remember that staying on track and learning to budget is a vital component of retirement planning. The knowledge of how you spend your money can allow you to make informed financial decisions in retirement. This could be the difference between a properly funded retirement and wondering how you're going to pay for everyday living expenses.

Creating a basic budget

A budget can be a simple a way to track where your money comes from and where it goes. Once you know your total annual income and expenses, you can incorporate an action plan to spend less than you earn.

Creating a budget all starts with the basics of tracking your income. Since you're still working, tracking your income can be as simple as looking at your paystub and how much money you bring in each month. Be sure to include any additional sources of income such as alimony, income from commercial property, and investments, as well as any annual bonuses that you typically receive.

Once you have your annual income total, it's time to figure out how you're spending your money. Fortunately, with the modern conveniences of online banking, debit and credit cards, tracking expenses isn't as labor intensive as it used to be. Simply gather your statements and then pencil out a simple monthly budgeting worksheet in which to plug in your monthly expenses. You can do this manually on a legal pad, or find an easy-to-use online budgeting worksheet.

Once you have a solid number for your annual income, multiply your monthly expenditures by 12, and then subtract this number from your annual income. Hopefully, you'll find that you spend less than you make. If that's the case, go one step further and see if there are ways to further reduce your expenses and set aside even more to feed your retirement accounts. If you've found that you're spending more money than you make, then it's time to get serious about reducing your monthly expenditures. Take a hard look at things you have control over and where you may be able cut back. Have you taken the time to review your home and auto insurance to see if your current rates are competitive? What about brown bagging your lunch versus eating out?

The great thing about learning to budget before you reach retirement's doorstep, is that you create a type of roadmap that could help you stay on track and meet your retirement goals. Sometimes, creating a simple budget can make you stop and take a hard look at where you are now compared to where you need to be and prioritizing where your money goes. By focusing on what you need most, you can better figure out where you can cut expenses and plan for the retirement that you've always dreamed of.

For more helpful articles on learning to budget and save for retirement, visit the Protective Learning Center.

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Preparing For Retirement

While most of us are setting aside what we can for retirement, it isn't until we are five or ten years away that the realization sets in that we may not have saved enough. Learning to budget ahead of retirement can be a good way to get back on track to maximize your current savings and retirement accounts. For more information, visit the Protective Life Learning Center.


All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit www.protective.com.

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.

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