The years leading up to your target retirement date are an important part of your financial plan. This is the time to determine how much income you’ll need during retirement, where that income will come from, and how much more you’ll need to save.

A financial advisor can recommend the best investment strategy for your savings as well as the most tax-efficient way to make withdrawals. It’s no surprise that the foundation of a good retirement plan starts with a budget – because the less you spend, the more you are able to save.

Here are four ways to set a budget before retirement:

Track daily and monthly spending

It’s a smart idea to track both your daily and monthly spending when setting a retirement budget. This will account for regular monthly expenses as well as daily splurges and unplanned purchases. Using software such as Mint or You Need a Budget can help make tracking your expenses easier.

Cut unnecessary expenses

Once you start tracking your spending, you’ll be able to identify unnecessary purchases and start to cut them out – or at least reduce them. Getting rid of a credit card or two may help in this regard. If you still have trouble, you may want to consider going to a cash-only system to get the job done.

Continue saving

After you free up some disposable income by tracking spending and cutting unnecessary expenses, you can start increasing your retirement savings. Setting up pre-authorized transfers into your retirement accounts ensures your savings are invested – and not spent elsewhere.

 Get professional advice

According to Marketwatch seeking professional financial advice can have a positive impact on your retirement budget as well as your investment accounts. Partnering with a financial advisor can help you keep track of your monthly expenses and keep you accountable for your retirement budget goals.

Your needs in retirement will differ from your pre-retirement budget needs…sometimes significantly. A financial advisor can help adjust your spending levels to help achieve your retirement goals.

To learn more about creating a budget before retirement or to start setting your retirement goals, contact us today. We are happy to start the conversation and help you make smart retirement plans.


Brian Littlejohn is the Founder and CEO of Sherwood Investment Management, a fee-only financial advisor firm in Sonoma County, California. Brian is a CERTIFIED FINANCIAL PLANNER(TM) professional who specializes in investment management. He holds a MBA and a Master’s Degree in Financial Analysis. He has over a decade of experience helping clients achieve their financial goals and occasionally teaches investing and financial planning courses as an adjunct professor.