Preparing for retirement isn’t just about saving. There are a number of things people tell us they wish they had known before retirement that, in hindsight, would have made the process easier. The one we hear again and again is that they wish they had evaluated their spending earlier. Your experience leading up to and into retirement will be unique, but this simple task is for everyone.

Let’s face it – we all hate to budget and we all hate to track our spending. But if there was ever a time to get a better handle on what it costs to be you, it’s the time leading up to retirement. If your income in the form of wages, salary or self-employment will be drastically reduced or completely evaporate once you retire then you will be drawing from alternative sources — savings, Social Security, pensions – to make ends meet. Without a budget or some idea of your household spending, you may find yourself drawing too much from savings and putting your long-term financial security at risk. Or – as we’ve heard from more than one person – not having a budget may lead you to restrict spending for fear of running short when you actually do have enough to achieve your goals and enjoy your retirement.

If you don’t already keep a detailed budget, take the time to track your spending. It’s pretty simple. First, identify the big categories of your basic spending needs, like housing, food, transportation, health care, insurance, clothing and taxes. Then note your lifestyle-oriented categories like hobbies, vacations, and other types of fun. Next, go through your bank account statements, credit card statements and tax returns to identify spending in these categories. Your credit card company may already give you a head start on this. Go back at least six months – a year is even better. Things that don’t fit in one of your natural categories can wind up in miscellaneous – you don’t have to overthink it. The point of this exercise is to quantify and categorize what you actually spend. If you already do this via spreadsheets, Quicken or Mint.com you are one step ahead.

After you’ve completed the categorization – and maybe recovered from shock – take a moment and think about how spending may shift once you are retired. Your dry cleaning and daily commuting costs will likely decline, but you may want to increase your fun budget with more travel or the pursuit of a new hobby.

Once you have a handle on your basic and lifestyle spending, think about special expenditures that may be on the horizon in the next few years. Will you purchase a different vehicle? Will you remodel your home? Will you move to a different location ? Will you pay off a debt or a mortgage? Make notes and estimate these special expenditures as well.

Finally, share this information with your Fiduciary Investment Advisor so they can help you build a long-term plan for a secure retirement, and keep you on track as time goes on. Cross this task off your retirement checklist early and the rest is much easier.

Questions about retirement? Contact Patrick, patrick.meyer@unifiedtrust.com or 859-514-3350.

About Patrick Meyer view all posts

Patrick Meyer is the Director of Wealth Management Client Services for Unified Trust Company. He joined Unified Trust Company in 2009. He has over 20 years of experience and manages the teams that support the Wealth Management division’s sales, service and trust administration functions. He serves on the Wealth Management Trust Investment Committee and is leading projects to advance Unified Trust’s retirement income solutions.