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Retirement CPA discusses a Budgeting Technique

Retirement CPA Wilmington NC

Gary Bode, CPA: I hope you don't need to budget. But this post discusses a neat tool if you must. For a free phone consult call (910) 399-2705.

I’m a retirement CPA with a virtual office to accommodate long distance clients.

I find that most retirement folks are sharp about their income. But generally don’t understand the cost side as well. One tool I’ve deleveloped, as a retirement CPA, is a spreadsheet that calculates the cost of your desired lifestyle. Or, helps you back into a retirement lifestyle you can afford. It’s a customizable rolling budget, for short to medium range planning. Most folks can produce it themselves. There are two components, discretionary spending and required spending. The actual Excel mechanics are the same. The trick is all on the assumptions worksheet. It takes a few months of tweaking, but eventually you get a good feel for what you spend a month and how you spend it.

Some Retirees associate budgeting with fiscal restriction. I’m not retired, and see my personal budget as a planning tool to use every month or so.
– Gary Bode, Retirement CPA

Assumptions and Assumptions

Remember that even a mortgage payment, usually considered as required spending, can change. You can sell your place and rent. You can sell and downsize. Conversely, if there’s a discretionary expense you refuse to change, it becomes a required cost. While you can afford it at least.

Time Frame and Limitations

  • Realistically, no retirement CPA uses this budget for long-term planning. Things change. Typically this tool forecasts three months into the future, based on all current known factors and assumptions. But it’s a rolling three months and useful indefinitely if you continue to tweak it.
  • Budgeting uses alternative scenarios. Programming a spreadsheet to view multiple alternative scenarios simultaneously is beyond the scope of this post. But you print multiple versions to compare and/or make multiple copies of the Excel file.
  • Handling annually paid items isn’t automatic. But you can have an area on the assumptions page that lists them for handy reference. Some folks budget these expenses monthly, essentially paying them in advance.
  • Actual cash flow often differs from the budget. Businesses analyze budget versus cash flow variances. Amateurs get discouraged.
  • In business, budgeting is an art. Any tool is only as good as you make it. It pays to spend some time reading up on budgeting.

Discretionary Retirement Spending

Just as an example, let’s look at eating breakfast at a restaurant. The assumption worksheet allows you to select the number of times, per week, you expect to eat breakfast out, and the average expected cost. Why not just have a Restaurant line item in the budget?

  • Eating dinner out is more expensive than breakfast.
  • Some folks do combine the three meals as a single line in the actual budget page. Too much detail can blur the big picture.
  • Some folks like to see their choices beyond the assumptions worksheet.

The rule of thumb? Segregate out expenses that you can, and are willing to control. Retirement income is usually fixed, so most folks have to make choices. I hope you’re not one of them! Want to use a monthly assumption for some items, like say RX costs? That works too. The spreadsheet uses all your assumptions and carries them forward into the actual monthly budget worksheets. Because it’s customizable, the budget is personalized and therefore more likely to be useful. For example, I pretend I can play the guitar. And I spend about $35 a month for two tuition magazines. There’s a line item in my budget, in the personal indulgences section, called Guitar Stuff. For you, it might be Green Fees or Hobbies. In the budget worksheet, I use green text to automatically focus on what I could control, if push comes to shove.

Required Retirement Spending


  • Food. Assumptions can be used to derive this cost.
  • Taxes. Annual expenses are harder to handle.
  • Mortgage payments.

I’m a retirement CPA because I help clients plan, mostly on the cost side. I leave the revenue details to CFPs. Some folks want us to check their CFP’s statements. We do offer customized Excel programming, if we have time for it, or you’re a tax client. Remember distance isn’t a factor for our services. Please read some of the hundreds of posts on this website to get a feel for our abilities and philosophy. For a free phone consult. Please call (910) 399-2705.

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