senior woman creating a budget

For many, retirement planning involves determining how much money to save and invest during your working years, sticking with the plan, and then retiring to live happily ever after. But how do you budget for happily ever after — especially when it might last for decades? There are steps you can take to eliminate some of the guesswork and craft a solid retirement budget. Here’s what you need to know:

The Stages of Retirement

Of course, retirement can mean different things to different people. For some it means travel and lots of time with grandkids. Others become avid hobbyists or enthusiastic volunteers. Regardless of how you spend your time, retirement tends to follow a distinct 4-stage pattern. Knowing these stages, and the unique shifts in income and expenses during each phase, can help you shape an effective retirement budget.

Phase #1: Pre-Retirement

This isn’t exactly a phase of retirement; rather, it’s the decade or so before retirement when you’re still working, but beginning to get a more definite picture of how much money you’ll have once you retire. This phase begins at about age 50 and ends when you leave the workforce. During this phase, important steps include:

  • Assessing your retirement income. A review of your savings, retirement plans, and your expected income from Social Security or a pension can help you determine what your monthly income will be in retirement.
  • Estimating expenses. Look at your current expenses. If any are fixed, will they continue into retirement? Think about your goals for retirement — do you want to travel or maintain a second home? — and include them in your estimated expenses.
  • Considering genetic counseling. Genetic testing can provide important information about your predisposition to certain diseases. When testing is done in conjunction with genetic counseling, you have access to an invaluable resource — a trained clinician who can help you understand the results of your test so you can create a retirement budget that takes into account your future healthcare needs.
  • Look into long-term care insurance. According to the U.S. Department of Health and Human Services, approximately 70% of people will require long-term care in their lifetime, with the average length of care needed being around 3 years. If you’re considering buying long-term care insurance, look into Fellowship Freedom Plans, which combine the financial protection of long-term care insurance with comprehensive care coordination that helps you remain in your home as you get older.

Phase #2: Early Retirement

This phase marks a major shift in your life as you quit working and begin to enjoy the newfound freedom of retirement. As you embark on this phase, which begins officially with your retirement and lasts until about age 70, you’ll want to take time to evaluate your retirement budget and make adjustments since you’re no longer earning a regular paycheck. In addition to putting fresh thought into your ideal retirement lifestyle and how it fits with your retirement income, consider the following questions:

  • Is it time to start claiming Social Security benefits? You can begin collecting Social Security at age 62, but your benefits will be permanently reduced. You can begin claiming full benefits at age 66. After age 70, there’s no financial incentive to delay claiming your benefits.
  • What about health insurance? You’ll be eligible for Medicare at age 65 (unless you qualify earlier because of a disability). If you or your spouse is younger than 65 when you retire, consider how you’ll cover healthcare costs. You can find information regarding healthcare options at Other possibilities include joining your spouse’s health insurance plan, or continuing your employer benefits through COBRA.

Phase #3: Middle Retirement

This stage, from approximately age 70 to 80, often sees a slowing in your activity as you cross things off your bucket list and begin to stay closer to home and to spend less money. At this stage, you’re likely receiving Social Security and taking at least minimum distributions from your retirement accounts. As your focus in life shifts, it’s again a good idea to evaluate your retirement budget and to take the following steps:

  • Revisit your estate plan. Look over your will to make sure it still accurately reflects your wishes. Consider designating a financial and healthcare power of attorney in case you become unable to manage your money or make medical decisions.
  • Reevaluate your living arrangements. This can be a time of disenchantment with lawn care and home upkeep. You may realize your current home is too big for you or doesn’t suit your changing needs. If so, consider a more comfortable lifestyle in a senior living community, where upkeep is taken care of for you and homes are designed to help you age in place.
  • Consider your future care needs. Approximately 65% of people need paid or unpaid in-home care for an average of 2 years. While it’s sobering to think that you might be among that 65%, facing that possibility can spur you to secure the care you might need. Again, a senior living community, in particular a Life Plan Community that offers a continuum of care, can be an ideal solution. You might also investigate in-home care options in your community.

Phase #4: Late Retirement

From age 80 onward, you can expect another shift in your retirement budget, as healthcare expenses will likely increase. This is the stage in which you’re most likely to benefit from any forethought you’ve put into your care needs, such as opting for a Fellowship Freedom Plan or moving to a Life Plan Community, both of which can help keep healthcare costs manageable.

Resources at Fellowship Senior Living

A successful retirement budget depends on regular reevaluation and savvy use of available resources. For people in the Basking Ridge, New Jersey area, Fellowship Senior Living offers a plethora of resources that can allow you to enjoy life to the utmost while securing peace of mind about future care needs.

  • Work with genetic counselors at Fellowship Medical Group to decide if genetic testing is appropriate and to respond to the results with a sound plan for care.
  • Take advantage of our Fellowship Freedom Plan, a long-term care plan that provides a safety net of services so you can stay in your home as long as possible.
  • Or, if you prefer to live in a vibrant community with amenities and health services just a short distance away, consider a move to Fellowship Village, a  premier  Life Plan Community, offering independent living and a continuum of care at predictable costs.

Contact us to learn more about the many in-home services we provide, or the engaging lifestyle at Fellowship Village.