Planning is Forever
Once you’ve retired, don’t assume that the planning is over. Just as your personal and financial situations
changed while you were working, they will continue to change in retirement. There will be surprises as to how much money
you really need to fit your new lifestyle. Keep in mind that you’ll be mostly on a fixed income, and some budgeted
items will increase dramatically in cost over time (e.g. food, gas, utilities, etc.).
Also, you’ll need to periodically adjust your budget to accommodate the following unplanned events:
or loss in investment value,
- Income not keeping pace with inflation,
- Development of health issues,
in housing situation (dwelling, location, etc.),
- Encountering unplanned expenses (e.g. housing or auto repairs),
part-time employment, or
- Commencement of minimum pre-tax account withdrawals.
However, before you begin to make major adjustments, you need to give your initial budget a chance. Also, be aware
that it usually takes a year or two to determine how well your retirement financial plan is working. This is why it’s
important to continue tracking and categorizing expenditures after retirement so that you can do an accurate comparison and
make appropriate adjustments.
Update Your Budget
Updating your budget can be an easy or very complicated exercise depending upon how well you classify your expenses.
Expenditure tracking is greatly facilitated through the use of credit card purchasing. Each month when the statement
arrives, you can accumulate expenses into the various categories and post these into your financial software (Quicken, Money,
etc.). It’s easiest to just post the credit card totals and use the “split” function to split the
total into the various categories.
This process is automated by downloading transactions from your financial institution to your computer. Credit card
expenditures can be either directly imported into your financial software (e.g., using a Quicken QFX file) or into spreadsheet
software using a CSV (comma separated values) file. Once imported into Quicken the transactions can be individually
categorized. However, I prefer working with an MS Excel spreadsheet to categorize expenses and to load just the category
summaries into Quicken. This simplifies the amount of detail in the credit card register.
Although most banks offer file-download functionality, there are still some smaller banks that do not provide it.
Check with your software’s financial institution list to be sure.