Significance

• A retirement budget is essential to make sure you will be able to live without an active monthly income. In fact, most people will want to work on their proposed retirement budget before they even retire. Beginning to work on this budget five years or so before retirement is an excellent way to prepare yourself for this time in your life.
  
  

Active Income

• As the health of seniors improves, many of them are opting to continue working at least part-time until they can no longer do so. Some seniors must keep working because their budgets do not support retirement. Jobs such as retail greeting and clerk positions are excellent places for seniors to find employment. Money from these jobs should be used to pay off debts and to prepare for the time when you will not be able to work.
  
  

Passive Income

• Retirement income comes from a variety of sources. The most basic retirement income is Social Security. The Social Security Administration disburses this benefit. The earliest you can start collecting Social Security is age 62, but you will receive a reduced rate from then until you reach full retirement age, which depends on the year you were born. Other sources of retirement income include pension plans from employers and money earned from an IRA or other retirement account.
  
  

Debt

• In generations past, people typically did not retire with debt,but that is not true today. Many seniors retire with debt, either from their mortgage or from consumer credit. You should pay off this debt before you retire. Try to get new loans at lower interest rates during your last years of employment. That way you can pay off the debt faster.
  
  

Line-Item Budget

• A retired person will have a slightly altered budget from the working person's needs. Basic costs, such as housing, will stay the same until you pay off your mortgage. Utility costs may increase for people who are now at home all day, but the costs associated with working will go down. The money spent on eating lunch out or buying a work wardrobe will be dropped from your budget. At the same time, many seniors want to add in some income for hobbies since they will have more free time.