Figuring out how much you need to live off of after you retire is tricky business. You can't overdo your retirement budget to the point where it prevents you from enjoying your present lifestyle, but you also can't save less because then you won't have enough money to enjoy your retirement.

Importance of Creating a Retirement Budget Plan
Creating a working budget will offer some much needed perspective on that important question. You will find that expenditures don't change much post-retirement, such as food, utility, and entertainment. In fact, transportation costs actually get reduced since you don't have to commute to and from work every day.

Cost of Healthcare
Healthcare-related expenses constitute a large portion of your financial obligation during retirement. People retiring at 65 years of age will require more than $200,000 to cover their healthcare needs. This estimate is based on the average life expectancy statistics. If you live longer than 65, the costs can dramatically increase.

Basic Living Necessities
Some expenses, like college and home loans, may continue into retirement. In addition to these, you need to budget for basic, ongoing expenses. Expect utility bills to continue coming into the mailbox every month as well as other service charges like garbage disposal.

Recreational Lifestyle
No retiree looks forward to doing nothing every day. Instead, people use this time to engage in activities and endeavors that they couldn't undertake previously due to family or work obligations. Envision your recreational lifestyle decades from now. Will you be spending the weekends golfing at a prestigious local club? Perhaps an avid goer to basketball games? The grander the lifestyle, the more money you'll need.

Unforeseen Expenses
Even if you face retirement fully prepared, you'll encounter unexpected bills that you will have to account for in your budget. For example, a family member may need money to undergo a surgical procedure or perhaps you get slapped with a lawsuit for an accident you were ruled responsible for. Allocate a portion of your monthly income to building a financial safety net for these unexpected costs.

Consult a financial adviser to get a more detailed insight on what other factors you need to consider for your retirement plan. After you get the clear picture, work on finding ways to create passive income pipelines for when you retire. Diversify your investment portfolio and manage time wisely to generate more income from your efforts.

Author's Bio: 

Hannah Whittenly is a freelance writer and mother of two from Sacramento, CA. She graduated from the University of California-Sacramento with a degree in Journalism. She interviews with small businesses and educational institutions regularly to learn new career building strategies.