Guest article provided by: Ed Morton from

Ensuring that funds are available for you throughout your retirement years is a key component to any successful retirement plan.  In order to do this, you must create a budget that ensures there WILL be sufficient funds.  The level of expense that you set for yourself each year must have that single goal as its purpose – sufficient funds to last you for your lifetime.

  Simply put, there are $ coming in, and $ going out.  Out must be less than or equal to $ coming in.  Simple, but not for some people.  I would like to concentrate on the out portion, or BURN RATE, so you have a system to categorize your expenses and can make intelligent decisions regarding what $ you should let out the door.


Step #1 – Calculate your total income from work, social security, interest and dividends, etc. 

Step #2 – Categorize your expenses into the following categories:

  • Musts: Medical, housing, utilities, food
  • High on the list:  Transportation, clothes
  • Desirables: Entertainment, meals out, gifts, furniture
  • Savings and Reduce Debt

Step #3 – Calculate the % of income (Step #1 above) consumed by each expense category from Step #2 above

  • Calculate the % of each major category
  • Calculate the % of each item in the category, for example the % of housing within the Musts category

Step #4 – Analyze

  • If your category %’s add up to more than 100%, then you must take action to reduce some expenses.  This is called a “shortfall” and you must eliminate it.
    • The shortfall is financed by credit card debt, which is very expensive and can lead to larger problems
  • Are any of the “High on the List” or “Desirable” expense items consuming an inordinate % of your outgoing $?
    •  If so, develop a plan to reduce them to eliminate your shortfall and close the gap between income and expense
  • Lastly, if you have a surplus, it will be reflected in the “Savings and Reduce Debt” category.  This is obviously the best of all situations and allows you some freedom with your $.  

  By completing the exercise above, you can help minimize your burn rate and understand where your $ are going and what you have to reduce $ going out the door.  

  Financial security in retirement is extremely important since, without it, you will rely on others, or the government, to care for your needs.  This is not a good situation, which can lead to loss of self-esteem.

  Lastly, if you do feel comfortable completing the exercise above, ask someone who you trust to do it with you, but be sure to have all of your documentation. 

Photo courtesy of NeONBRAND on Unsplash