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Budgeting in Retirement: Balancing your needs and wants [Budgeting Tools]

April 20, 2021

The Covid-19 pandemic has caused many to re-evaluate their retirement plans. Certainly, some of these re-evaluations are occurring at a core level – determining whether basic necessities in retirement can be met by current resources.

As staffing requirements are streamlined and employment trends like working from home become more of a permanent solution, forced retirement has been an unfortunate effect of Covid-19.

Budgeting for Retirement ‘Wants’

The above retirement planning situation focused on needs: ensuring that food, shelter, and other necessities can be met.

But what about your wants in retirement: the things that enhance your life but are not absolutely required.

Travelling in Retirement

In some discussions over the past year, I have heard clients indicate that one effect of the pandemic has been that they have re-evaluated their desire to travel. In some cases, this additional reflection has caused some to conclude that while they still want to travel, it may not be to the same extent as they originally planned.

Travel is often one of the first items on the “wants” list of retirees. Other wants in retirement include hobbies, sports, or continuing education. The consideration of these wants points to the importance of budgeting in retirement planning.

The Importance of a Retirement Budget

Investing the time to work on a retirement budget is more than allocating your financial resources effectively. A retirement budget acts like a health benefit flowing from the peace of mind created by taking control over your circumstances.

For example, one of the conclusions of a 2017 pilot budgeting project by the Financial Consumer Agency of Canada (FCAC) involving the Carrot Rewards application (now known as Optimity) was that:

“Individuals who did not have a budget and who progressed through the pilot program demonstrated measurable improvements across all three tracked metrics (confidence, knowledge, and behaviour).”

Click here for more about this study.

The study shows us that many people who don’t have a budget simply don’t know where to begin. That’s a huge obstacle to overcome, so by reading this article you're taking a step in the right direction.

Budgets can help you prioritize your expenses, especially when under financial stress. With a retirement budget, you will have control and will be more prepared to handle financial stressors in retirement.

Retirement Budgets and Your Investing Strategy

The process of preparing and monitoring a retirement budget is a deliberate one – it is certainly not a game. To extend this thought to investing – given some of the current financial headlines – we can say that investing is certainly not a “Game Stop”! 

Stories like GameStop convince many that this is what “investing” is all about. Just as the process of developing your retirement budget is a deliberate one, so too is the one surrounding successful investing.

It involves understanding yourself as an investor – both the timing of your requirements as well as your psychological tolerance: the amount of variability you can accept in portfolio returns.

Setting targets (and a range they can fluctuate) for the portfolio asset allocation between equities and fixed income will help prevent falling for fads or the “hot item” at a given point.

READ: Do you suffer from FOMO?

Sticking to your plan will help resist the temptation to run to cash when markets turn negative. These considerations need to be blended together with your personal situation in terms of your income, overall net worth, and family situation in order to obtain the total picture.

Retirement Budgeting Tools

The FCAC site also provides useful tools to help you with your retirement budgeting. 

Retirement Budget Worksheet

The “Retirement Planning Worksheet” will help you document your sources of income in retirement.

Click here to calculate your projected retirement needs.

Retirement Budget Planner

The “Budget Planner” will help you document your retirement expenses and provide tips, guidelines, and alerts.

Click here to budget your retirement.

Keep Your Retirement on Track With a Financial Advisor

This is where working with a financial advisor will help to keep you on track: the core responsibility of the advisor is to “Know Their Client” and document it accordingly. Following the “know your client” process may result in the advisor telling the investor things they don’t want to hear. For example, recommending against investing in an unsuitable high-risk mutual fund.

A portfolio review discussion with your Scrivens advisor will help identify changes as well as provide reassurance that your plan still makes sense.

Although in-person appointments are not possible at the moment, we can schedule face-to-face meetings via Zoom, Skype, and over the phone. Let’s budget some time to talk!

Contact your Scrivens advisor at 613-236-9101 or