The end of 2024 is almost here. For some people, the end of the year also marks the conclusion of their working life. Unfortunately, this double milestone is the first time many folks begin considering how they will make ends meet in retirement. Planning for retirement can be challenging. After all, it can feel like there are too many variables. How do you know how much money you’ll need? How do you know how much income you’ll even have each month? Start getting a handle on these numbers by completing a retirement budget, which is a big step toward creating a better non-working life. While it’s best to do a retirement budget at least five years before retiring, there is never a bad time to examine the figures. Here are some things to remember when completing your projected retirement budget.
1. Consider what your retirement will look like.
One of the most important exercises of this entire process is to take the time to think about what your retirement will involve. Will there be a lot of lazy days in a hammock? Or do you see yourself on the go, traveling to new destinations, or seeing family and friends? Part-time work may be in your future. Start this process by writing down some of your retirement goals. Visualizing your future lifestyle will help you create a realistic forecast for which categories of expenses will go up and which will go down in your retirement years. Part of this is to think about what you’re retiring to, not only what you’re retiring from.
2. Examine your current expenses.
Before you estimate your retirement spending, you need to have a realistic assessment of your current costs. Track your expenses for a month to give yourself a baseline figure. To help you get started, visit the budgeting tool in our Financial Education Center.
Pro tip: Putting all your monthly charges on a debit card or credit card gives you an automatic record of where your money is going. Now’s also time to look at your credit cards and usage. While you can still get credit cards after you’ve stopped working, generally, it’s easier to do so while employed with a regular income. We offer a range of Credit Cards with low interest rates and rewards. You can get 0% intro APR* for the first six months after you open any of our Credit Cards. And when you spend $5,000 in the first three months, you’ll receive a $100 statement credit.
3. Determine your future expenses.
This is where that list of current expenses comes in handy. It gives you a jumping-off point for determining your future expenses and helps you identify ones you can cut in retirement. While you may be living independently today, consider the cost of care down the road. Will you need someone to clean your home or do yard work? Have you considered the price of personal care? The median hourly rate for a home health aide is around $30 per hour.** The average cost of being a resident in an assisted living home is $4,500 monthly.† Nursing home care can easily be double that amount per month.
Pro tip: Insurance needs, and costs can change dramatically in retirement, so make a note to contact your agent or provider to discuss your potential for future savings. Medicare health insurance generally begins when you are 65 or older. If you plan on retiring prior to 65, start shopping for health insurance now. The costs could significantly alter your budget and retirement plans. If you’re considering long-term care insurance, getting a policy in your 50s and early 60s will cost you less than buying one when you’re older. Yes, there is the risk that you may never use it, but these policies can help pay for care expenses as you age.
4. Remember to include all income sources.
People earn retirement income in many ways, including Social Security benefits, employer retirement plans (401(k)), individual retirement plans, pensions, annuities, investments, and part-time jobs. Be sure to include all of these in your budget figures.
Pro tip: Call former employers who may have put money in a retirement account or pension on your behalf. If you’ve changed jobs a lot over your career, there may be accounts in your name you may have forgotten about.
5. Give your retirement budget a test run.
Now that you’ve tracked all your expenses and created your retirement budget, try living on it for a month or two. Track all your expenses and see if you can stick to what you’ve projected.
6. Do multiple budgets if necessary
There may be events happening during retirement that change your financial situation. For example, you may pay off your house. You may face unexpected medical expenses. You may need part- or full-time care. You might want to work part-time for five years and then fully retire afterward. Or maybe you’ll receive a sizeable inheritance. Feel free to do two versions of your budget or even more if you think multiple life-changing events could happen.
7. Take advantage of free calculators.
With factors like inflation and compound interest impacting your future numbers, it can feel nearly impossible to calculate what your money will be worth or what things will cost at retirement. Use internet calculators or worksheets to help you create a retirement budget. Start punching in the numbers and running different scenarios now so you can make adjustments before you retire.
8. Decide when you’ll retire.
One simplified way to determine when you have enough to retire is when the amount you have in monthly income meets what you project for monthly expenses. If you aren’t there yet, consider ways to amass more money for your retirement.
Pro tip: If you’re trying to max out your Social Security benefits, a calculator on the Social Security site shows how much you’ll receive based on what year you retire. You can adjust the numbers to see the best timeframe for you. Consider adding more money to your 401(k) or IRA in the years leading up to retirement. Visit IRS.gov for the latest contribution limits.
9. Get help.
Retirement planning is a big task to take on by yourself. Contacting a financial counselor, certified financial planner, and tax professional can help you check your work and get fresh ideas for making the most of your money during retirement.
10 Money-Saving Tips for Retirees
We’ve covered imagining your ideal retirement, expenses, and creating a budget; if the numbers aren’t working to make your dream a reality, here are ten ways to keep more money in your wallet before and after retirement.
- Patronize businesses offering senior discounts: Many companies proudly offer discounts for seniors. If you don’t see it, ask.
- Take advantage of your schedule’s flexibility to travel on off days or get last-minute deals: Time is on your side when it comes to travel. Being flexible can save you money on everything from airfare to hotel stays. And if you can travel in a destination’s off-season, you can save even more.
- See if a local senior center offers free meals or entertainment options: A few minutes of research can lead to big savings.
- Sell a spare vehicle and reduce your insurance, maintenance, and registration costs: If you and your partner are retired, you may no longer need two vehicles. Try using only one vehicle for a few months to discover if one vehicle is all you need. If a second vehicle is required occasionally, using a ride service can save significantly over owing two vehicles. Check your local government for free or discounted transportation services. Most public transportation services offer senior discounts.
- Clip coupons: If you’re not clipping coupons, start. However, don’t start buying items because you have a coupon. Spending money to save with a coupon isn’t saving.
- Eliminate debt: Not everyone can enter retirement debt-free. Eliminating debt or getting it as low as possible while you’re still working can relieve stress in retirement. We shared information about our affordable credit cards above; another way to consolidate debt at a lower interest rate is with a Signature Loan. You can get an APR as low as 8.99%‡ – compare that to your current credit cards.
- Go for a walk: Depending on where you live and your physical condition, consider doing errands by walking or riding a bicycle. You will get a nice workout and save money on taking a vehicle.
- Make the library your friend: Visit the library instead of buying books, renting movies, or subscribing to a magazine or newspaper. Cutting unwanted subscriptions can help you save big and is easy to do with our Subscription Manager Tool in Tulee. As in suggestion 7, if you can walk to the library, it’s a double win.
- Ask about discounted city services: Call your water, sewer, garbage, power, and phone providers for senior rates. While many programs have financial eligibility requirements, you can’t save if you don’t ask.
- Enjoy meals at home instead of dining out: Retirement is the ideal time to become a better chef. Local farmers markets are great sources for fresh, in-season, locally grown produce, often at prices lower than your local supermarket.
Bonus tip: Downsize.
In many instances, downsizing (moving from a large to a smaller home) can save you considerably in maintenance and upkeep. Downsizing is also a great excuse to donate goods and purge your household of things you no longer need or want. By selling your home, you may be able to pocket a significant amount of money to help fund your retirement years. In addition to downsizing your home, consider downsizing your city. Life in a smaller city or rural area can be more affordable than living in a large metro and offer a less stressful quality of life. Moving and selling a home have tax implications. Please consult with your financial and tax advisor regarding tax consequences for your specific situation.
Final thoughts.
It would be great if we could predict the future to know exactly how much money to budget for retirement. Until we can, take a moment to start budgeting for the day you stop working by choice or circumstances (We understand not everyone gets to retire when they want). Planning, practicing living on a budget, and making financial adjustments while you’re still working can make retirement financially easier and less stressful.
*$100 Bonus for New Credit Cards for: Crystal Visa, Select Visa & Visa Platinum: A $100 (one hundred dollars) bonus will be paid in the form of “Visa Statement Credit” when at least $5,000.00 (five thousand dollars) is spent in purchases within the first 3 months (qualifying period) of the “New” Visa card opening. Bonuses will be paid out within 90 days after the qualification period. Example: If a card is activated on January 1, 2021 and the total of qualifying purchases for the months of January, February and March is at least $5,000, the primary borrower will receive a Bonus of $100 (one hundred dollars) no later than July 1, 2021. Limit of one reward/bonus per member number. Qualifying transactions must “post” to the designated account during the qualified period. All qualifying purchases will count towards the $5,000 in spent purchases unless return for credit of any of the qualifying transactions takes place within 90 days of the end of the qualifying period. Transactions may take two business days from the date of purchase to post. Member must be in good standing to be eligible for bonus. New accounts are subject to FIGFCU approval and all other terms and conditions apply. This offer is valid only for individual account /card holders, is non-transferable and cannot be combined with any other offer. The $100 Bonus is a product promotion sponsored by FIGFCU and may be discontinued at any time. Visa is a registered trademark.
Zero Percent (0%) Introductory Rate Promotion for purchases, is offered for new FIGFCU Visa Platinum ® Credit Card account holders. This incentive offer, is not available to those members who are opening a new Platinum Visa® and had an outstanding balance or a closed FIGFCU Zero Percent Loan account and/or had any FIGFCU Visa® Credit Card within the last year. If you are in an introductory rate promotion period, you are not eligible to transfer other loan balances, line of credit balances, credit card account balances or CASH Advance to take advantage of the introductory rate promotion.
Select Visa® Zero Percent (0%) Introductory Rate Promotion for purchases, is offered for new FIGFCU Visa® Select Credit Card account holders. This incentive offer, is not available to those members who are opening a new Select Visa and had an outstanding balance or a closed FIGFCU Zero Percent Loan account and/or had any FIGFCU Select Visa® Credit Card within the last year. If you are in an introductory rate promotion period, you are not eligible to transfer other loan balances, line of credit balances, credit card account balances or CASH Advance to take advantage of the introductory rate promotion. For full disclosures visit, figfcu.org/select-visa.
Blue Visa is a Share Secured Credit Card requiring deposited funds to be placed on hold with the Credit Union. Your Account is secured by the designated shares you have in a share account, be it an individual or joint account.
These pledged shares will secure your account. You may not withdraw amounts that have been specifically pledged to secure your Credit Card Account until the Credit Union agrees to release all or part of the pledged amount.
APR = annual percentage rate. Rates include discounts for Direct Deposit into a Farmers Insurance Federal Credit Union Checking Account and Automatic Payment/Folio Deduction. Rates are subject to change at anytime.
The balance transfer amount from other Farmers Insurance Federal Credit Union credit cards will retain its current rate (i.e., Visa Select at 8.99%, Visa Platinum at 10.99%, until the transferred balance is paid off. APR=Annual Percentage
Rate. Rate quoted is the lowest rate possible for qualified borrowers and is subject to change. Qualification is based on credit history, debt, and the ability to repay. Your rate may vary. All loans subject to credit approval. The newly opened Credit Union credit card’s rate will only apply to new transactions. Any balances on the previous Credit Union credit card must be paid off at the prior credit card’s rate.
Crystal Visa® Zero Percent (0%) Introductory Rate Promotion is offered for new FIGFCU Crystal Visa® account holders. If you are in an introductory rate promotion period, you are not eligible to transfer other loan balances, line of credit balances and credit card account balances to take advantage of the introductory rate promotion. For full disclosures, visit figfcu.org/crystal-visa.
**Samuels, Claire, “How much does in-home care cost in 2024? A state-by-state guide,” Aplaceformom.com. 2 May 2024. Accessed 2 December 2024.
†Van Dis, Kate, “How much does assisted living cost?” NCOA.org. 14 June 2024. Accessed 2 December 2024.
‡APR = Annual Percentage Rate. APR is the annual rate of interest that is paid on an investment, without taking into account the compounding interest within that year. Rates are subject to change at anytime.
2.00% rate discount is for a minimum of $1,000 monthly ACH Direct Deposit into a Farmers Insurance Federal Credit Union Checking Account and Automatic Payment/Folio Deduction as a repayment method to qualify. Rates are subject to change at anytime.
DIRECT DEPOSIT / 2% LOAN DISCOUNT PROMOTION: Up to 2.00% APR (Annual Percentage Rate) discount on qualifying loan is for a current or newly established minimum of $1,000 monthly Direct Deposit or Agent Net Check into a Farmers Insurance Federal Credit Union Checking Account and Automatic Payment/Folio Deduction as a repayment method to qualify. Offer subject to change or cancellation at any time. Direct Deposit loan rate discount available if at a time prior to loan funding (a) Member has a current or newly established recurring monthly Direct Deposit of at least $1,000 from net pay, pension, or government benefits, and (b) Member is obtaining a FIGFCU loan. Maximum available loan rate discount of 2.00% if Member is eligible to combine Direct Deposit discount with other available discount a maximum of 2.00% shall be applied. If Direct Deposit stops before loan is paid off, loan interest rate will increase by 2.00%. Other restrictions may apply. All loans are subject to credit approval. Rate and terms are subject to change without notice.
Promotion Offering applies only to Consumer accounts, which must be in good standing. Guardian, rep payee or executor, collections charge-off, business, and/or organizational accounts are ineligible. Must be 18 years of age or older. FIGFCU reserves the right to end or modify this promotion without notice. Member cannot take advantage of this promotion more than once. Promotion cannot be combined with any other account promotion for a discount over 2.00%. Visit figfcu.org for account details, minimums, and fees. Federally insured by NCUA. Subject to employer and/or payer terms and conditions. FIGFCU will generally post payroll Direct Deposits on the day they are received, other exceptions may apply. Promo Period: September 3, 2024, until December 31, 2024. (Terms updated 11/14/24). Signature Loans, Business Signature Loans and Agency Acquisition Loans not eligible for refinancing.
Available to new and existing Members who apply for eligible loans during the promotional period. Direct Deposit in the amount of $1,000.00 or more monthly or Agent Net Check into a FIGFCU Checking account (either High Yield or CashBack) and Automatic Payment/Folio Deduction to the loan is required. Signature Loans, Business Signature Loans and Agency Acquisition Loans not eligible for refinancing. Refinance Fees are as follows: Vehicle Loans – $200 refinance fee unless $4,000 in new money is added to the loan. Agency/Business Secured Loans – $400 refinance fee unless $10,000 in new money is added to the loan. Home Equity Loans/HELOC’s – $500 refinance fee for loans booked within the last 12 months unless $20,000 new money is added to the loan. Interest rate shown on final loan disclosures will be the higher rate prior to the discount. Loan will be booked with the lower discounted rate. Direct Deposit Addendum will be signed with closing loan disclosures.
