It is important in retirement that we develop a discipline with respect to finances that is consistent with our new reality. The first thing we need to do is honestly review our retirement situation. We are no longer earning a salary but we also are drawing on our various retirement benefits. If one is married, then it is important that both spouses be part of this financial review. Even if you have never done it before, it would be very helpful to put together a budget of anticipated expenses and income. The basic source of your income is your retirement benefits and Social Security. In addition, you need to look at potential income from any investments that you have. Of course it is best if your major expenses can be covered by your pension income and the Social Security for you and your spouse. If you need to draw on your investments, you need to do it in a manner that allows your drawdown from investments not to drain your resources unnecessarily.
Once you have a reasonable understanding of your potential income, then you turn to expenses. Most retirement articles suggest that your expenses will be less in retirement. Reasons for that range from a reduction in need for clothes for business, to less frequent income normally incurred during your working hours — meals, gas mileage, etc. You can find a sample budget on line and simply look at your spending patterns. If you find that difficult, a simple exercise may be helpful. Buy an inexpensive paper calendar. Tear out a month of pages and carry them with you. Honestly record every penny that you spend. At the end of one or two months, sit down and apply them to your sample budget.
If your income exceeds your expenses, consider how you might intentionally build a small savings account for special occasions or purchases in your future. If you expenses exceed your income, look at our spending patterns and see where you can make adjustments. If you and your spouse do this together, you can make a team response to your present condition and also begin to make plans for your future.
