I’m a Middle-Class Retiree: Check Out My Monthly Budget
Written by
Laura Beck
Edited by
Jenna Klaverweiden
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Budgeting during retirement is not easy, nor is it simple. That said, millions of Americans do it every year.
GOBankingRates spoke with Diane P., a 68-year-old retired teacher who’s learning to live comfortably on a fixed income. After 32 years in the classroom, she’s sharing her real monthly budget to help other retirees navigate their golden years.
“Everyone talks about saving for retirement, but nobody tells you exactly what it costs to live once you get here!” Diane said. Here’s her monthly breakdown below, and also check out how to set a realistic retirement budget without sacrificing your lifestyle.
Fixed Income
Diane broke down the specific numbers.
“I get $2,850 in Social Security benefits each month, plus $2,200 from my teacher’s pension. I also withdraw about $1,500 monthly from my retirement accounts, which still have about $580,000 in them. I try to stick to the 4% rule for withdrawals to make sure my money lasts,” she explained.
Housing: $1,650
Diane loves her small house and plans to live in it for a long time to come.
“I paid off my house last year, thank goodness! But property taxes, insurance and utilities still add up. Michigan winters aren’t cheap to heat through,” she said.
Healthcare: $875
For Diane, healthcare is one of her biggest (and most important) expenses.
“Medicare Part B premiums take $174.70 right off the top of my Social Security,” she explained. “Then there’s my supplemental insurance, prescriptions and dental care — nothing is truly ‘free’ in retirement!”
Groceries: $600
Diane said she didn’t love cooking when she was younger, but now it’s a passion.
“I’ve gotten pretty creative with meal planning. My friends and I started a dinner club where we rotate cooking for each other once a week,” she said. “It saves money and keeps us social!”
Transportation: $200
Diane’s car is paid off, but she still spends a chunk of change on it every month.
“My car is paid off, but there’s still insurance, gas and maintenance,” she said. “I try to combine errands to save on gas — prices are crazy these days!”
Entertainment and Hobbies: $400
In her own words, Diane refuses to sit at home all day.
“Between my yoga classes, book club memberships (I’m in two and they buy the books for us!) and occasional movies with friends, staying active is worth every penny,” she said.
Travel: $300
Diane is willing to travel to see the people who matter — and she’s even saving up for a jaunt to Costa Rica.
“I set aside money each month for visits to see my grandkids in Colorado. Having a dedicated travel fund means I never have to miss the important moments,” she said.
Emergency Fund: $200
Diane learned to feed her emergency fund, no matter what.
“After my water heater died last winter, I learned the hard way about keeping emergency savings. Now I put away a little each month, just in case,” she said.
Miscellaneous: $400
Diane also keeps a smaller amount of money set aside for things she might not necessarily think of regularly.
“There’s always something — haircuts, gifts, clothes, those little things you don’t think about until you need them,” she said.
Add It All Up
Diane explained that her monthly expenses run a bit under $5,000, though it does vary some months. However, this usually gives her some money left over. “I keep that extra as a buffer or add it to my emergency fund,” she said.
And for those looking to retire, consider this advice from Diane. “Track everything for at least three months before retiring,” Diane advised. “And add 20% to whatever you think you’ll need — there are always surprise expenses!”
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