The Free Retirement Budget Calculator Every Retiree Needs

Your retirement plan is only as strong as your budget, and that is why a Retirement Budget Calculator is essential. If you retire without a clear, data driven way to estimate your monthly spending needs, your plan can quickly go off track. I believe this single step of creating a retirement budget is the foundation of every successful income plan. That is why I built a brand new, completely free Retirement Budget Calculator to help you pinpoint exactly what you will need in retirement.

At some point in early retirement, you will make a major shift from saving money to spending the money you have saved. If you have already gone through this transition, you know how uncomfortable it can feel. For those who are still approaching it, let me warn you, it can create a lot of anxiety. This is not something that should happen without a clearly defined retirement income plan.

At the very center of that plan is your retirement budget. Without knowing what you need on a monthly basis after taxes, there is no reliable way to build an income strategy that works. Before making decisions about Social Security, pensions, withdrawal order, or Roth conversions, you first have to determine your monthly net income goal.

That is why I created the Retirement Budget Calculator. I believe this step is so important that I invested several thousand dollars with my software developer to make this tool available to everyone for free. I will link it below, but before you dive in, let me walk you through exactly how the newest version works and how it can help you plan with confidence.

Getting Started With the Retirement Budget Calculator

You will want to enter your date of birth and your planned retirement date. That may feel a little personal, so if you prefer not to use your exact date of birth, you can enter one that is close, such as a different day of the same month. It will have the same effect.

These dates are important because one of the biggest new features of the Retirement Budget Calculator is the ability to set beginning and ending dates for specific expenses, and that feature will not work without them.

Adding and Organizing Your Expenses

As you scroll down you can see there are multiple categories of expenses like Home Related, Utilities and Communication Services, but within each of these there are multiple subcategories for those that want to get really specific.

When you click the add expense button, for example in the Home Related category, you will see the Subcategory box. If you want to just lump everything into one big number, you can select Total Home Related Expenses, or you can choose one of the more detailed expenses below that. For show and tell purposes, we will just use the subcategory of Lawn and Garden.

Under that is a label if you need it. For example, if you have multiple expenses in Lawn and Garden you could label each one to keep up with what is what.

Next, you will want to enter the frequency of the expense. It will auto default to monthly, but we also know that lots of expenses happen on a quarterly or annual basis.

Must Spend vs Like to Spend

Under the frequency is one of the big new features of this calculator that allows you to choose between Must Spend and Like to Spend.

Must Spend includes mandatory costs. Like to Spend includes lifestyle extras, and typically Like to Spend should be equal or higher than Must Spend.

For example, if you know that for lawn care your Must Spend is $400 per month, but they have told you for an extra $300 per month they will change out your annuals, put pumpkins out in the fall, and Christmas lights in late November, you may want to see if there is room in your budget.

You would enter:

• $400 in Must Spend
• $700 in Like to Spend

If you do not put anything in the Like to Spend category, it will automatically default to be the same as Must Spend.

Setting Start and End Dates for Expenses

Below that is another new feature of this Retirement Budget Calculator, which is the ability to set start and end dates for expenses.

There are many expenses in retirement that are time bound. Whether that is a mortgage payment, travel expenses, or a host of other potential expenses that will only last for a certain period, you can now specify the length of the expense.

By default, this will be set to age 95, but it can easily be changed.

For example, in our lawn care section, let us say you know that you plan to move to a patio home when you are 75 and the lawn maintenance is part of the package. You would not want this expense to continue all the way out to age 95. Instead, you would simply select the age when that expense should stop.

Once you have everything entered, you just hit save and it will be added as an expense.

Tracking Your Monthly Retirement Budget

One of the things you will notice is that at the bottom in the hovering bar, it starts calculating your average monthly budget in the Must Spend and Like to Spend categories.

The number shown there does not average your expenses across your entire retirement. It reflects only the expenses you have entered on a monthly basis so far.

There is also a way to see how your expenses will change over time.

Factoring in Inflation

At the bottom of the calculator, you can input your chosen rate of inflation. For example, if you change this to 3 percent and scroll down to the table, you will see four columns of expenses:

• Must Spend in today’s dollars
• Like to Spend in today’s dollars
• Must Spend in future dollars
• Like to Spend in future dollars

These future dollar amounts are based on the inflation rate you selected.

As you review the table, you can see how inflation changes your retirement budget over time. You will also notice that all expenses are solved as monthly amounts. While annual figures could have been used, most people are more comfortable planning on a monthly basis.

If you would like to download this table for your records or to use in another spreadsheet, that is easy to do using the available download options.

Start Building Your Retirement Budget Today

Creating a clear retirement budget is one of the most important steps you can take before leaving the workforce. When you understand your Must Spend and Like to Spend needs, you can make smarter decisions about Social Security, withdrawals, taxes, and long term income planning.

If you have not built your retirement budget yet, now is the time.

Use my free Retirement Budget Calculator to get started today.