As retirement draws near, you might want to create a detailed budget for your life after work. If so, start with your most recent bank statements. This will help you understand your current spending. Then make some adjustments:
- What expenses might reduce or disappear? Will you have paid off your mortgage? Will you no longer need to commute? Perhaps you’ll spend less on clothes and take fewer expensive holidays?
- In contrast, what will you spend more on? Energy bills could increase if you’re at home most of the day. Maybe you’ll need extra income for new hobbies and interests?
Split your spending between essential expenses, important expenses and optional expenses. This way, if you need to make cuts, you can start with optional expenses first.