Retirement is an exciting chapter in life—an opportunity to pursue passions, travel, or spend quality time with family and friends. However, it also brings financial changes that can be challenging if not managed well. A solid post-retirement budget is crucial to maintaining your lifestyle and achieving your goals. This guide will walk you through the steps to create an effective post-retirement budget tailored to Australian retirees.
1. Assess Your Income Streams
Your first step in creating a post-retirement budget is understanding your income sources. This may include superannuation, government benefits like the Age Pension, investment returns, and any part-time work or side hustle money. According to the Australian Department of Human Services, as of March 2023, more than 71% of Australians aged over 65 receive some form of pension.
Tip: Make a comprehensive list of every income source and calculate the total monthly income. This clarity will help you identify your financial capacity and set realistic goals.
2. Determine Your Essential Expenses
After retirement, some expenses will remain constant, while others may change or disappear altogether. Essential expenses typically include housing, utilities, groceries, health insurance, and transportation. Understand which costs are fixed and which can be adjusted.
Example: If you own your home, make sure to budget for ongoing maintenance costs and rates.
3. Set Aside a Leisure Fund
Retirement should be enjoyable. Include a budget for leisure activities like dining out, travel, hobbies, and social events. An Australian Seniors survey reveals that 58% of retirees plan to travel domestically, making it a priority in their budgets.
Tip: Allocate a specific amount for leisure each month. Consider joining local seniors’ clubs or community groups to enjoy discounted events and activities.
4. Create a Contingency Plan
Life is unpredictable, so it’s wise to set aside funds for emergencies. This could be unexpected medical expenses, home repairs, or family support. Financial experts recommend having at least three to six months’ worth of expenses saved in an emergency fund.
Tip: Regularly review and adjust your contingency fund to ensure it covers potential risks relevant to your lifestyle.
5. Review and Adjust Regularly
A budget isn’t static; it should evolve with your needs and circumstances. Schedule regular reviews every three to six months to reassess your income, expenses, and financial goals. This ensures your budget remains relevant and effective.
Example: If you’ve paid off a loan or reduced a cost, allocate those savings to leisure or your contingency fund.
6. Seek Professional Financial Advice
While this guide provides a foundation for your budgeting efforts, consulting a financial adviser can offer personalised strategies and ensure tax efficiency. The Financial Planning Association of Australia can connect you with accredited professionals who specialise in retirement planning.
Tip: Look for advisors with experience in pension management and investment strategy to maximise your financial health.
Retirement marks a new beginning, and with the right financial planning, it can be a rewarding and stress-free experience. Start refining your post-retirement budget today, and take control of your financial future.
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