Money Milestones: A Budget for Every Retirement Stage

For most people, a job is a step toward one day no longer having to work. Whether you’re retired or planning to retire soon, what’s the best way to ensure your decades of work continues to pay off? Is there a secret to making retirement savings last? With people enjoying longer, more active lives, your benefits and savings will have to cover your expenses for three decades or more, so financial planning and having a retirement budget is more critical than ever.
The solution is no different than your working years. You need to establish a financial plan for retirement. The type of retirement you’re able to enjoy will depend on your income stream for your retirement savings and the decisions you make after you retire. Retirement planning can help protect your nest egg while allowing you to enjoy the lifestyle you want.
How Your Life Stage Can Help Determine Your Retirement Budget
If you’re still working or recently retired, you’ll want to be sure to establish a strategy to help you navigate the four distinct stages of retirement and each of their unique priorities. Here’s how to plan for every aspect of retirement and what to do for each stage.
Pre-Retirement (age 50 to 62)
Pre-retirement is a good time to look ahead and estimate your monthly Social Security payment and any pensions and annuities you have. While you’ll be able to qualify for Social Security payments starting at age 62, doing so might not always be the best idea since your future monthly benefits will be permanently reduced. (Talk with your financial planner to figure out your best option.)
In your 50s and 60s, you can still have ongoing expenses – including kids’ college tuition, mortgage payment or paying for a wedding – which can make it difficult to balance your current expenses with your plans for tomorrow.
Early Period of Retirement (Ages 62 to 70)
During this phase of retirement, you’ll want to choose the exact age you’ll retire, because that will dictate how much of your savings you’ll be able to access each month. Before you decide, look at how much more you’ll make if you delay your retirement to 65, 66 or full retirement age, 67. Be sure to also look at how early retirement can impact your IRAs, 401(k) accounts or any pensions.
Once you’ve worked out your post-retirement income, you can then refine your budget to get a feel for your retirement expenses. During this time, you’ll probably spend more on traveling and exploring new hobbies. If you haven’t already, this is a good time to consider long-term care insurance to help cover unexpected health care expenses not covered by Medicare.
Middle Retirement (Ages 70 to 80)
During middle retirement, you’ll likely be receiving Social Security benefits, as there is no financial incentive to delay past age 70. Since you may want to travel less and stay home more, you could see your discretionary spending portion of your retirement budget go down.
You may have created a will and estate plan when your children were younger because you wanted to make sure that, if something happened to you, they’d be taken care of. However, this is also the time to think about creating both a financial and health care power of attorney in case you become unable to manage your money or need someone to make your medical decisions. This is when a lot of older adults start to think about moving to an independent living community that offers higher levels of care on site, like Lake Seminole Square.
Late Retirement (80 and up)
As you become less active in your 80s, you will likely see a reduction in your lifestyle spending. However, health care costs will probably become a higher percentage of your expenses because this is when medical spending tends to be the highest. Medicare will cover many of your costs, but you’ll still have out-of-pocket expenses for things like co-payments and deductibles.
Covering Retirement Health Care Costs
The U.S. Department of Health and Human Services estimates nearly 70% of people turning 65 today will require some type of long-term care during their lifetime. The annual Fidelity Investments Retiree Health Care Cost Estimate report found a 65-year-old who retired in 2024 would be expected to spend $165,000 (after taxes) on medical expenses and health care during the rest of their lifetime. This estimate doesn’t even account for the cost of long-term care.
To help cover their health care costs in retirement, many older adults turn to long-term care insurance and Medicare. That’s why it’s important to know about Medicare Parts A, B, and D, as well as Medicare Advantage and “Medigap” supplemental insurance plans. Medicare.gov can help you investigate the different aspects of Medicare in more depth, but here’s a short overview to get you started:
- Part A covers hospital costs after you meet a deductible.
- Part B is optional coverage for medical expenses and requires an annual premium. If you didn’t get Part B when you were first eligible, your monthly premium may go up 10% for each 12-month period you could’ve had Part B but didn’t sign up. In most cases, you’ll have to pay a penalty each time you pay your premiums, for as long as you have Part B. Moreover, the penalty increases the longer you go without Part B coverage.
- Part D is for prescription drug coverage.
- Medicare Advantage plans are all-in-one managed care plans that provide the services covered under Part A and Part B of Medicare and may also cover other services that are not covered under Parts A and B, including Part D prescription drug coverage.
- Supplemental policies, referred to as Medigap policies, are offered by private insurance companies to supplement expenses that Medicare Parts A and B do not typically cover.
Comparing the Costs of What You Have to What You’ll Gain
If your current retirement plan is to stay in your home, it’s important to compare your current expenses to the cost of a senior living community, because senior living may be more affordable than you think. Be sure to consider all your monthly expenses, including ones you don’t have yet, such as the cost of in-home care or accessibility modifications to your current home. Here are some other expenses you likely see today:
- Rent or mortgage
- Property taxes and insurance
- Homeowner association fees
- Cable, internet and utilities
- House-cleaning services
- Home maintenance and repairs
- Yard upkeep
- Transportation (upkeep, insurance, gas, etc.)
As a homeowner, you’ll also have to plan for unexpected costs, like replacing broken appliances, repairing the sewer line or patching up a damaged roof. At a maintenance-free Life Plan Community like Lake Seminole Square, monthly costs are often more predictable and manageable because you won’t have unexpected expenses. Plus, you’ll have access to higher levels of on-site care including assisted living, memory care, skilled nursing and rehabilitation.
Lake Seminole Square Is the Only Retirement Plan You Need
Choosing a community like Lake Seminole Square can make planning simple with predictable monthly costs, no matter the age or care needs. Plus, we’re sure to have a financial option to help you enjoy life now while making it easier to plan for every stage of retirement. Want to learn more about our contracts and pricing? Use our Community Assistant chat feature or contact us here.