The theme this week on the One Minute Retirement Tip podcast is: setting your retirement budget. 

Today, I’m talking about planning for spikes in your spending

Talking points:

• Your spending, like life, isn’t a slow moving lazy river. There’s going to be bumps along the way, rushing rapids, and maybe a couple waterfalls. 
• You will have a new car to buy every 5-10 years. Your roof may need replacing. Your house will need to be painted. You may have a child who is getting married or one of the most important goals is to help pay for your grandchild’s master’s degree, or take your kids and grandkids to Hawaii all on your dime. 
• Whatever your planned or unplanned expenses are, there needs to be room in the budget for these spikes in spending. 
• Much harder to budget for these. You may buy a car 2 years earlier than planned out of necessity. 
• First - plan for them. Write them down and in what years you’ll expect to have the added expense
• Then you’ll need to see if your income sources that we talked about earlier in the week will cover that adequately
• Lastly, it’s wise in retirement to keep a little bit more in cash on hand. I’ve talked about this before but it’s not just for these extra expenses. It’s so you can maintain your spending even if the stock market has another 2008-like year during retirement. 
• I use the formula of 3-6 months of your essential living expenses in the bank + another 12 months worth of whatever your portfolio withdrawals are. This will cover most emergencies and extras without needing to sell your portfolio at a bad time. In all, it shouldn’t be much more than about 5-7% of your overall portfolio in retirement, which is not an excessive amount of cash to keep on hand

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance