Retirees tend to live off a fixed income that’s a mix of Social Security benefits, pensions and various retirement savings accounts. As a result, budgeting is crucial for a fixed income, both to ensure a retiree doesn’t overspend beyond their means but also to provide a safe and enjoyable retirement after years of hard work.
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A helpful means of approaching and understanding a middle-class retirement budget is to break down expenditures and know what your income is going towards. Per the U.S. Bureau of Labor Statistics’ Consumer Expenditure Surveys (CE), an average retiree’s household spends approximately $5,400 monthly (that’s around $65,000 per year). Knowing just how and where to spend that monthly allowance goes a long way toward a successful retirement.
GOBankingRates has culled the 10 things every middle-class retiree should budget for after turning 70 so as get the most from their retirement without risking overspending.
Housing
- Monthly cost: $1,850
It’s unsurprising that a great deal of a retiree’s budget (approximately one-third) goes toward housing and housing-related costs. A roof over your head is priority No. 1 for your retirement. In addition to a monthly mortgage or rent, there are associated costs of maintenance, home insurance and property taxes to consider.
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Transportation
- Monthly cost: $900
Owning a car is an important part of retirement — it allows a retiree to travel for leisure, to attend medical appointments and to simply get around in general. Like a home, though, a vehicle comes with a number of auxiliary costs: car payments, gas, maintenance and insurance.
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Food
- Monthly cost: $700
Obviously food is a must for anyone, with allowances for both normal grocery shopping (which grows more costly with every year) and for the occasional dining out on the town.
Healthcare
- Monthly cost: $650
Maintaining your health in retirement should always be a priority, with monthly budgeting to cover such costs as medication prescriptions, insurance premiums and out-of-pocket expenditures.
Utilities and Services
- Monthly cost: $370
Having a home or apartment means paying for water, electricity and occasionally gas. Further, more modern amenities — like the internet and cell phone service — also come at a cost.
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Travel
- Monthly cost: $200
What’s the point of retirement without the ability to see the world (or at least the rest of the country)? Allotting a monthly amount for occasional travel ensures a freer, more adventurous retirement.
Clothing
- Monthly cost: $100
Whether its high style or casual attire, retirees should always have a little financial leeway to replace aging clothes or be able to purchase new vacation wear.
Entertainment and Hobbies
- Monthly cost: $280
Trips to the movie theater get more and more expensive with every passing year. Concert tickets are increasingly costly. Falling into a new hobby, like painting or chess, can also be pricey as they require supplies. Entertainment and hobbies are not always cheap, and having a pocket in your budget to cover them can aid in a stimulating, fun-filled retirement.
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Emergencies
- Monthly cost: $100
Retirees, especially on a fixed income, should always have a cushion built into their budget. As they age, the potential for medical issues that spiral beyond their normal budget grows. Additionally, it can help to have a cushion for such other emergency situations as car accidents, excessive storm damage to homes or various other life emergencies.
Pets
- Monthly cost: $80
Companionship can be an integral part of any retirement. A little furry friend around the house can add joy and purpose to anyone’s life, retiree or otherwise. However, pets can come at a cost, especially in terms of food and regular medical checkups.
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This article originally appeared on GOBankingRates.com: 10 Things That Should Be in the Budget of Every Middle-Class Retiree at Age 70
