In retirement, plan for your ongoing expenses to total 80 percent of your preretirement income.
The reasoning – Once the kids are grown and work-related expenses disappear, the annual cost of living could go down. And although in the past you may have set aside a chunk of your income for retirement savings, after you’ve retired, well, that line item will likely disappear.
The revision – When budgeting for retirement, pay attention to your expense, not your income. Identify your specific monthly spending needs, then create a cash flow plan to cover them. And leave some wiggle room for spending spikes. Commuting expenses may be gone, but retirees often drop more on travel or need to hire extra help at home.
Rev. Dr. Donna Taylor is the Pastor of Andrew Chapel United Methodist Church (UMC) in Montross, VA. Rev. Dr. Taylor promotes best practices by teaching financial literacy workshops and currently serves as Finance Chair in the Rappahannock River District for the UMC. In May 2015, Rev. Dr. Taylor received her Doctor of Ministry from Virginia University of Lynchburg in Lynchburg, Virginia. Rev. Dr. Taylor was born and raised in New York City and recently discovered her ancestral roots in Guinea-Bissau, West Africa. Rev. Dr. Donna Taylor is married to David Taylor and they have a son and a daughter. Their daughter is a educator and son is an Active-Duty Senior Seaman in the Navy married with three children. In her leisure time, she enjoys traveling, reading, swimming, writing poetry, crocheting and spending time with her family.