How to Create a Budget When You're Retired

Retirement changes how your finances work. During your working years, budgeting meant keeping spending below a paycheck that came regularly and usually grew. In retirement, income is often fixed — Social Security, a pension, and withdrawals from savings. Expenses, especially healthcare, can grow faster than that.

Start your retirement budget by listing your income. Include your monthly Social Security benefit, any pension payments, required minimum distributions from retirement accounts (these begin at age 73 under current rules), any part-time work income, or rental income. This is your fixed monthly base.

Next, list your expenses by category. Housing covers your mortgage or rent, property taxes, homeowners or renters insurance, and upkeep. Healthcare needs special attention: Medicare premiums (Part B comes out of Social Security), supplemental or Medigap insurance, prescription costs, and copays and deductibles. Healthcare costs tend to grow about twice as fast as general inflation, so leave room for that. Food, transportation (gas, insurance, maintenance), utilities, and personal spending round out the list.

The 4% rule is a common starting point: withdraw about 4% of your savings in year one, then adjust each year for inflation. Under this rule, your savings have a good chance of lasting 30 years. This is a guideline, not a guarantee. Adjust it to your situation, and talk to a financial planner for advice suited to you.

Free tools can help. The AARP Retirement Calculator at aarp.org estimates how long your savings will last. The Social Security Administration's Benefits Calculator at ssa.gov shows what your benefit will be at different claiming ages.

For tracking and planning, a few apps stand out. Simplifi by Quicken costs about $4 a month and tracks spending clearly by category. Monarch Money, at $10 a month, has strong visual dashboards for seeing the big picture. Empower (formerly Personal Capital) is free and good for tracking investments and net worth alongside spending. YNAB (You Need A Budget) costs about $14 a month and works well if you want to assign every dollar a job.

If you prefer spreadsheets, search "retirement budget template" in Google Sheets for free, ready-made templates you can customize. These have no monthly fee and work offline.

Build a budget that includes occasional large but predictable expenses: car replacement every 8–12 years, home repairs (a roof, an appliance, exterior paint), and vacations or family events. Setting aside a small monthly amount for these in a separate savings account prevents them from disrupting your regular budget when they arise.