Budgeting in Retirement

None of us know what's around the corner but your retirement could last 20 or even 30 years so it's important to plan your finances carefully.
You should consider how your outgoings might alter when you retire. You may end up spending less on some items like travelling to work but more on others such as heating so you should try to establish an idea of how much you might need and what you're most likely to spend money on for, what might turn out to be, a considerable number of years.
Consider Your Present Situation
Before you can make any decisions about how you are going to budget, you should look at your current circumstances and prepare a personal budget. When you have completed this, you can use it to plan things like savings or investments or, if you have debt problems, you can use the budget to negotiate a suitable repayment strategy.How do I Prepare a Budget?
Household Income
Firstly, make a list of all sources of household income and how much you get from each. Possible sources of income can include wages, state retirement pension, occupational or personal pension, council tax benefit, attendance allowance or disability living allowance, housing benefit and income from any savings and investments.Decide whether your personal budget is going to be drawn up on a weekly or monthly basis and convert each item accordingly. If your income and/or expenditure should rise, then you need to update your budget figures. You should do that at least once a year anyway and April is usually a good time as this is when pension and benefit rates are increased.
Household Expenditure
Draw up a list of everything you spend money on. Include as many things as you can think of with a weekly or monthly figure (depending on how you've drawn up your plan) and make as close an estimate as possible for variable or irregular payments, e.g. holidays, home repairs and entertainment. If you own a car, include things like road tax, petrol and essential maintenance.Your Assets
This should include details of any savings accounts, stocks and shares, your car, premium bonds, house, valuable jewellery and the value of any life insurance policies. If any of the items are not fully paid for, make a note of what you still owe against that item and also include deductions from any loans, credit cards, debts or any other arrears you might have.Balancing the Budget
Now that you have the 2 lists, you need to balance your budget and ensure that your expenditure does not exceed your income. If your income exceeds your expenditure (taking into account any unexpected bills and any other unforeseen expenses that might occur), then your budget balances and you can safely spend any excess money you've set aside for things like holidays, entertainment etc. However, if your expenditure is higher than your income, you need to reduce the amount of your spending or look for ways of increasing your income.There Are Numerous Ways You Can Try to do This
Are you entitled to tax allowances? Many people over 65 are entitled to higher tax allowances so make sure that you're not paying too much tax.Are you entitled to any welfare benefits? If your weekly income is low, you may be entitled to Pension Credit. You also might be entitled to claim Council Tax Benefit or Disability Allowance. If in doubt, contact your local Department for Work and Pensions who can tell you exactly what you can claim for.
If you have grown up children living with you, try to ensure that they make a fair financial contribution to your living costs. It can be useful to show them your expenses list just so they can see for themselves the amounts of the bills you have to pay.
Don't forget the winter fuel payments you are entitled to. These payments can greatly reduce the cost of your fuel bills and grants are also available to help you with things like home insulation and draught-proofing and for central heating, in some cases which could help you further reduce your utility spend.
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