How would you possibly budget for an experience you’d never had?   For instance in the first home you ever owned, were you surprised how many expenses arose and how tight your  money could seem in that first year of home ownership?  But the question now isn’t cash-flow for a short time, but for life!   ...and a Retirement Budget will have to serve for at least three distinct seasons over the years ahead.


It’s been said, 25% of people who retire will be out of money within five years.  Surveys also show that at least one out of eight, in or near retirement, already feel they will run out of money.  Without proper care, more will certainly come to that conclusion.

Our point is NOT whether your nest egg is large or little.  $5Million will eventually fail if you’re spending 10% and earning 2%.  $¼Million may serve well enough if expenses are well matched to pension-income and your bucket-list can go ahead with $15,000 or so per year.   Our point is how we align your resources to the lifestyle you want to enjoy.

Rules of thumb – or dumb rules?

THE RULE OF 70 is a common approach, suggesting people need 70% of pre-retirement income to achieve a safe and happy retirement.  This may work for a lot of people.  If it doesn’t work, people may adjust satisfactorily.

But in my view, a 70% rule misses vital areas of personal planning. Let’s consider:  (a) If our dreams include knitting, gardening, and other low-cost endeavours, might we live happily on 50% of career earnings?  (b) If we’ve scrimped, slaved, and postponed our dreams and goals until retirement, might we need 120% of earlier income to satisfy our needs at least for the next 5-to-15 years?

And surely if we choose a number between ‘a’ and ‘b’ ...we're not assuming that fits our lifestyle forever, are we?  As I’ve shown in “Life Horizons Analysis” we’ll likely experience at least three periods during which we shape our lifestyle for early, middle, and later retirement years.  A 70% rule doesn’t match how we’ll want to adapt our life and spending over the years ahead.

THE RULE OF 20 is lesser known.  This says that if you have savings equal to twenty-times your last-year’s career income, then you should never run out of money.  Like the earlier rule though, it really depends on how you want to be enjoying your life.

Some will spend more, or less.  Some will have more fortunate timing and rewards with investing; others less so.  Some downsized their work and earnings in late-career, so a rule of 20 wouldn’t fit that income.

And then think of longevity:  living to 75 is vastly different than needing a strong income to 95 or 105.  To avoid shock and awe of being penniless in our senior years we’ll need a better rule.

AN UNSPOKEN RULE is that you have only yourself and your own dreams to think about – but this is seldom true.  Budgeting shouldn't plan to innocently forget the other events and interruptions, people and family members that over time may look for help from our personal piggy bank.

Rule of Three Horizons ... updated annually.

We now have software to properly address changing needs through early, middle, and later years or "horizons" of our retirement.  We’ll begin with an estimated budget for the first period and then continue to envision the seasons and stages that will follow.  What used to happen was the advisor’s software would illustrate a straight line to age 85 or so …what I’ve described as a “flat-line” retirement plan …which doesn’t sound too safe at all!


We're now able to illustrate changing cash-flows to fit life-as-we-live-it.  Let’s say we budget for our first period of retirement to include more traveling, to more places and greater distances than we’ve ever been before.  If that first horizon takes us from now to age 75 or 80, we may then reduce spending with a simpler and more sedentary lifestyle to age 85 or 90.   When additional help and personal care are needed in our final 5 or 10 years our expenses can logically become quite high once again.  (Here's a diagram that helps to illustrate this.)

Our retirement budget can now prove our capacity to live fully and expand our dreams in the first "horizon".  This is a time for more strenuous pathways and roads less traveled while we have the strength and stamina to enjoy them.  Some may even continue such a pace into their 80s but eventually we find a time that excursions and expenses recede.  This also preserves value (insured or invested) for dignity, comfort and personal care when physical or mental frailty is at hand.

Since the future is never guaranteed let’s not postpone our dreams.  Live now!  And meanwhile we continue to review the retirement budget every 6-to-12 months, keeping pace with your life-plans and progress.  Focusing through time on your life goals and resources we can safeguard these journeys through the years to come.

Retirement Budget worksheets.

As far as I know only about 12% of households today (please correct me if you have better data on this) have been using a formalized budget.  Some estimates range to 30% but it’s clear you may want some help framing the retirement budget that will secure your lifestyle over coming years.

On the web are some budget pages you can use freely, or have us tailor a specific plan for you.  Our planning also moves ahead to future seasons of life, showing how expenses will change along the way.  This is a vital and healthy exercise to ensure your planning is safely aligned with life’s changes.

Caution however:   a free retirement budget from the web or elsewhere will omit personal areas and options that would be important to you.  What we get out depends on what we put in.  Budgets will typically include home rent or mortgage, utilities, property insurance, maintenance, repairs, condo fees and taxes as these apply.  Certainly we’ll include automotive &/or public transport – maybe a new bike if you are self-powered!  Groceries, toiletries, and medical services will be in this budget.  Also life, health, and medical insurances.  Entertainment, clothing, gym/exercise, consumer debt payments, hobbies, reading, gifts and donations will appear.

Keep miscellaneous as small as possible because that’s the most dangerous category of all.  Think of everything you can and itemize it apart from misc.  As a separate item include vacations, shorter excursions of 3-7 days, along with distant trips or cruises ranging a month or more.  Remember that this budget can become our “permission slip” to enjoy the experiences of a lifetime (fitting with our savings and income).

Too often missed in budgeting are the following essentials you want to include these generously.  What hobbies could we start or expand in the years ahead?  What upgrades could we foresee at home, or in a new home?  Could special needs arise for parents or for a special-needs grandchild?  Might our children need help over a hurdle due to career challenges, business issues, family break-up or other issues?  Have you included gifts or savings plans for grandchildren?  Is charitable giving important to reduce tax and accompany personal involvements in community and faith-based organizations?

In a family business you'd also invest time and money to sustain successful transitions to a next generation.  LofWealth Book CoverPart of your retirement budget then may focus on professional advice and mentorship for family and business ...a safeguard against loading the whole weight on a child or children without providing the means to adjust successfully and build their next chapters in the family firm.  (See chapter 2, A Lifetime of Wealth).

Living Life Larger with your Budget

Rita and Dan were nearing a financial heart-attack.  She was on disability.  He was downsized at 58.  Resulting career was not what they had planned.  He also admitted they’d been poor stewards of their money, failing to save as they might have done.


Fear in that home was thick like old cheese.  They expected a devastating future of poverty and want.  One solitary desire they shared with me was to allow or find them at least one Caribbean cruise in their retirement budget.  Would that be too much to ask?  Reviewing everything in detail I replied that they could certainly have their cruise.  In fact I added, they might have a cruise every 2nd or 3rd year!  Since then, years ago, this couple has been healthier, enjoying a life they make for themselves.  And if there’s a bonus to low-income, it’s paying very little tax while living fairly stress-free from season-to-season.

Higher wealth and resources don't necessarily eliminate the worries.  Some of my clients have savings or commuted pensions worth $1Million, $2Million, or more.  Some have sold lands or businesses worth $2 to $5 Million or more.  Every day more people rise into the realm of being millionaires, or even ten-millionaires.  But in our gut the issue is often the same:  it's uncertainty!  Regardless of your wealth our planning and retirement budget must answer the questions:  “Can I afford to live?   How will I get an income?  What will our strategies be able to pay us, and for how long?  What calamities and catastrophes (family, health, investments) could arise that we can fit wisely into our planning today?”          

  •   Budgeting fits alongside investment management to Align        
  •   and coordinate your Wealth, Income, and Estate planning. 

So we focus together on a personalized Retirement Budget to keep your future safe and lively.  We discuss and document the values, dreams and desires -- “lifestyle goals” -- as you envision your own retirement horizons.  We “price” your desired lifestyle and health-needs through early, middle, and later years to assure a strong income to age 95 or beyond.  And with all that in hand, ponder for a moment if there may be “one more thing” -- anything at all which would add more to your joy?   When you come up with an answer to this question, do share it with me please.

Brian Weatherdon, MA CFP CLU CPCA CRC, MDRT.  905-637-3500 x 223
627 Guelph Line, Burlington, Ontario. L7R 3M7.   1-877-937-3500 FREE x 223
Ret.Coach SEALCertified Financial Planner.  Certified Retirement Coach. 


  1. Brian, I enjoyed your article. I like your idea of aligning retirement with lifestyle. Might I suggest that your lifestyle prior to retirement has a significant bearing on how much you will need for retirement. My speciality area is physical activity, aging and public health. The body of evidence in this area clearly shows that one’s retirement budget will be significantly impacted by a sedentary lifestyle it is strongly correlated to healthcare costs.
    One may falsely assume that insurance and death would mitigate the risk of exhausting retirement savings on healthcare expenditures; unfortunately, this is rarely the case anymore. Somehow, we’ve managed to create a healthcare system that is all too excellent at keeping people technically alive, without much quality of life.
    Millions of people are currently battling this aging experience…and the costs associated with it. While others believe that this is just what “aging” is. The good news is that it doesn’t have to be this way, in fact, it’s not supposed to be this way! We can to a large extent choose how we age, and choosing an active lifestyle is truly the best choice we can make for our physical and financial health.
    What’s less “mainstream” is the research that has proven that strength activity is actually even far more effective than just generally activity like walking. That’s because, as we age we will lose 30% of our muscle mass and respective strength by age 65, and another 30% every decade thereafter on average – if we don’t do anything to protect it. With our strength goes our ability to function and often live the lifestyle that we desire. So, even if one were smart enough with their money to be able to afford to live a particular lifestyle, he/she may not be able to do so, physically.
    This is a predicament that we see with regularity in our ActiveRx Strengtherapy Centers across the country. People who desire to travel, play golf, spend time with their family, etc. but do not have the strength or energy to do so. Here again, their is a silver lining…strength can be regenerated at any age! With it, just like we all believed in our 20s, 30s, 40s, we can do anything we want!
    So, yes, I agree that we must invest and steward our money well, and we should align our retirement goals with our lifestyle goals. We just also need to be sure not to take for granted the strength we will need to live the lifestyle we desire.
    I think if we do, we may also find that the concept of total retirement to be extreme, and instead maybe we’ll choose to just retire from work that we’re not passionate about to that which we are…because we’re well-able and strong enough to do so.

    • Thank you Matt for your thoughtful reply, affirming how life and wealth align so vitally, and the value of maintaining our health and strength so we can truly enjoy life. We know more than ever today about how to maintain physical and mental health while we age — and what a blessing this is. We’re not heading to pasture but climbing new mountains and fording new streams. Cheers to you! 🙂

  2. Once the budget is prepared, the next step is to make sure your portfolios are structured to produce about 30% more income than you need to spend (without touching principle…)

    • Hi Steve, in portfolio design I would phrase this as “net-net risk-adjusted returns” …. ie. net of tax, net of investment/advisory costs, income-sustaining returns, at a risk that is 1/4 to 1/2 of wider investment markets. If this is successfully achieved then our focus needn’t be 30% more income, but further provision for: (i) unforeseen needs and emergent family dependencies, and (ii) estate values we want to preserve for our families and desired philanthropy.

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