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Building a Budget That Lasts: How to Build a Budget that Changes As You Do, From Pre-Retirement to Late Retirement

Happy senior couple using a computer at home

By the time you’re approaching retirement, you’ve had decades of income to help build a nest egg. Even so, if you’re like many people, you may not have given a lot of thought to your retirement budget beyond building up your balance.

 As your retirement draws near, you may find it helpful to begin thinking of your retirement budget in stages so you can do some more precise financial planning. Each stage brings different needs and expectations, so continually monitoring and adjusting your retirement budget will ensure you’re financially prepared to navigate each stage as it comes.


Stage 1: Pre-Retirement (ages 50 to 62)

With retirement taking a more distinct shape on the horizon, this is the time when you may begin retirement planning in more concrete terms. At this stage, retirement is less a far-off dream and you likely have some ideas about your vision for an ideal retirement lifestyle, including where you may want to live, how you plan to spend your free time, and what kind of expenses may be associated with those plans.

 This is an opportune time to take a close look at your retirement savings and compare your balances against your goals. What you learn may determine whether you retire sooner than later, and you may find it appropriate to get more aggressive or back off on your previous saving strategy.


Stage 2: Early Retirement (ages 62 to 70)

For many retirees, this stage is the most challenging because it’s when you’re most likely to leave the workforce full time. That means income changes and adjusting to a new lifestyle all at once. You may be paying for health insurance out of pocket for the first time if you aren’t old enough to qualify for Medicare, and the income you receive—whether from a pension, Social Security, savings, or other sources—may be quite different from your previous employment paycheck.

 For some retirees, this stage signals great freedom and opportunity to access the money you’ve been saving for decades to reward yourself with a vacation, second home, or other costly ventures. Most financial experts agree it’s wise to strike a balance between this exuberant spending and your long-term plans. For example, you might consider a move to a dream destination where the cost of living is more affordable than your previous home.


Stage 3: Mid Retirement (ages 70 to 80)

During this stage, you’re likely well settled into retirement, and liquidating assets like real estate can be an effective way to boost your budget. If you haven’t already, you may consider moving to an independent living community to gain freedom from the responsibility of homeownership and access to enriching amenities and activities that help you make your wellness a priority.

 This is also a good time to revisit your will and estate plans, as your needs and your family’s may have changed. For example, you may now wish to include grandchildren who weren’t yet living when you drew up the original plans.


Stage 4: Late Retirement (ages 80 and up)

Your need for supportive care is likely greatest at this point, so it’s wise to anticipate additional expenses for assisted living or long-term care needs. Fortunately, planning ahead may help you curb those costs to some degree, and your lifestyle spending is likely less than it was in your earlier retirement years.

 If you haven’t already, revisiting your life insurance policies, liquidating remaining assets, and initiating any planned giving or charitable bequests are all appropriate during this stage of retirement. You’ll also want to assess your remaining retirement budget to ensure the balances align with the care you expect to need from this point forward.


Use Your Retirement Budget Wisely

While your retirement is sure to hold many wonderful surprises, it’s impossible to predict exactly how the future will unfold. Many seniors find moving to a Life Plan Community like The Moorings at Lewes is a smart way to safeguard their finances while enjoying an enriching and rewarding lifestyle. Contact us to learn more about the financial advantages of living in a Life Plan Community and how you can gain valuable peace of mind throughout your retirement years.

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