15 Budgeting Tips for New Retirees

Retirement can be a tricky period of life. That's because your income and expenses might change in a very big way, so it's important to have a handle on budgeting from the start. Here are some essential moves to make in that regard.

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Your retirement income may come from different places -- a pension, Social Security, your IRA, and part-time work. Take note of your various income sources to try to get an estimate of how much money you'll have at your disposal.

ALSO READ: 3 Reasons to Expect Less Income From Social Security

You may kick off retirement with a large sum of money in your IRA or 401(k) plan. But that doesn't mean you'll want to spend down that cash quickly. Rather, you may need it to last for decades, so take some time to figure out what yearly withdrawal rate works for you.

You may own your home mortgage-free in retirement. But you'll still need to pay to maintain it. Determine what costs you'll be looking at in that regard, as they may be substantial.

Not having to report to work daily could mean enjoying a lot of savings -- or maybe just a little. Run the numbers to see what you're dealing with. Along these lines, you may even want to see if it's worth owning a car if you're not driving every day.

Once you're no longer working, you may end up spending more time at home. And that could mean higher heat and electric bills. Work those into your budget from the start.

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Groceries will likely be a large expense during retirement. It pays to comparison shop at different neighborhood stores to see where you can snag discounts. Remember, once you're retired, you may have more time to shop -- so visiting multiple supermarkets on a regular basis may be feasible.

Your expenses under Medicare can vary based on the plan you choose. Spend time researching plan options and costs so you can accurately account for healthcare spending.

ALSO READ: 3 Strategies to Make the Most of Medicare

Not having a job could mean having to spend more money to fill your days. Be sure to budget for day trips and outings so you're not stuck at home bored all the time.

You may have certain goals in retirement, like traveling to different countries. Those need to be accounted for in your budget to turn them into a reality.

You may need to make larger purchases once a year, or every few years -- think things like a new car, bike, or furniture. Allocate money for those so you're not suddenly faced with costs you can't cover.

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Your income might change during retirement, which means your tax bracket could follow suit. Try crunching some numbers to see what taxes you can expect to face. Better yet, sit down with a tax professional who can walk you through that and offer some strategies for reducing your IRS burden.

It's not just federal taxes you have to think about in the course of budgeting. Be sure to account for local taxes you may be on the hook for.

Your home could end up being your largest expense in retirement. If you've started putting your budget together and you don't love how the numbers are turning out, it may be time to consider moving to a smaller space that costs less.

If you're worried money will be tight in retirement, look at holding down a part-time job. Working just a few hours a week could give you more leeway in your budget to do the things that make you happy.

ALSO READ: Working in Retirement? Here's Why That's Great... and Why It's Really Not

Once you set up your budget, don't just put it aside. Instead, check in once a month to make sure it's spot on. If changes are needed, you're better off making them early on.

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Retirement can be a stressful time for many people -- but it doesn't have to be. Use these tips to master budgeting as a retiree and increase your chances of being able to do all the things you've always dreamed of.

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