CURRENT BUDGET

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Of all the issues impacting retirement, the amount of money you project to spend during retirement has a significantly greater impact on the amount of funds needed than the projected inflation rate, return on investment or anything else. Further, using a rule of thumb- say 60% to 80% of current budget- is invariably a simplistic method designed for very superficial analysis and should never be used for any long term planning. If you are off "just a bit", the amount of funds you believe you will need may not remotely match the funds you will spend during retirement. You don't want to find out at 70 years of age that you are going to run out of money in the next five years because you didn't do the number properly when you were 50. It's too late at that point to make adequate adjustments.

The following is the most detailed personal budget currently in use. (Admittedly, it does not include investment properties and businesses, but those are defined separately.) It may take quite a bit of time to get all the figures (remember some of your payments may be made only annually and you therefore must track down payments made many months previously).

Now this is how you do retirement budgeting. Look at each one of the line items. See how they might change when you retired. One example is clothes purchases. You obviously are not going to be buying lots of new clothes- certainly business suits- and you should reduce the amount accordingly. Maybe you are going to retire to Florida where you can forget snow removal- by the same token your utilities will be higher in the summer due to air conditioning. The point being is that you simply don't take 65% or 75% of current costs because there are two many factors impacting the decision. So take your time before putting just "any" number in the retirement column. Add up the numbers when through and you should have a pretty good budget on which a good plan may be developed. I also know that the younger you are- certainly age 45 and under- the more difficult to determine valid retirement numbers. But you have to start someplace. For those 45+, the need to focus on retirement numbers is mandatory and you have no choice but to complete carefully.

Expense Item (annualized)

....................................	Current Expenditure	Upon Retirement	....................................	Current Expenditure	Upon Retirement
FOOD	.........................		COMPUTER	..........................
Groceries			New Computer
Alcohol/Tobacco			Upgrades
Restaurants			Software
Personal			Repairs
Work Related			Supplies
Appliances and Cookware/Kitchen			On line Services
			Miscellaneous
ENTERTAINMENT AND RECREATION
Vacations
Travel			GIFTS AND CONTRIBUTIONS
Recreation Equipment and Activities- Biking, Kayaking, Fishing, Hunting, Hiking			Religious and Charities
Sporting Events			Christmas gifts
Movies/Theater			Personal
Parties hosted in home
Fitness Club			CHILD/ DEPENDENT CARE
Cable TV			Daycare
CD's/Tapes			Cleaning
Country Club			Medical care
Other Hobbies			Babysitting
TRANSPORTATION			Respite care
Car payments			Sports (Registration fees, uniforms, travel)
Auto maintenance			In home Assistance
Auto insurance			PERSONAL CARE
Parking			Hair care
Parking Tickets			Toiletries
Parking permits			Personal care appliances
Public transportation			Pocket money allowances
Carpool costs			Massages
Taxes and fees
Tolls
Gas			EDUCATION
Oil			Education/training expenses
Registration			Newspapers
Car Wash			Books/Book clubs
CLOTHING			Magazines
Mending/repair			Professional dues
Dry cleaning/laundry			Personal tuition
New purchases/personal			Personal room and board
New purchases/work			Child tuition and room and board (current)
			Child tuition and room and board (future)
			Miscellaneous
OBLIGATIONS			SAVINGS
Income Tax			Personal Savings
Medicare			Retirement savings
Social Security			Company stock/options
Consulting fees			401(k)
Tax preparation			TSA's 403(b)/501)c)3
Other tax			IRA's
Life insurance			Keogh
Term			SEP
Whole life			SIMPLE
Universal life			Investments
Variable			Individual securities
Disability insurance			Mutual Funds
Umbrella insurance			Real estate
Credit card fees			Annuities
Credit card payments			Fixed
Interest			Variable
Principal			Equity Indexed
Finance fee
Cash advance fee
Alimony/support			PETS
Child support			Veterinarian
Child care			Food
Child allowances			Board and care
Business expenses			Insurance
Attorney fees
Other debt
Union Dues
Storage fees
Postage
HOME
Home mortgage/rent			MEDICAL
Interest			Hospital
Principal			Physician
Home Equity Line			Dentist
Maintenance			Prescriptions/Vitamins
Furnishings			Health Insurance
Gas			Medigap insurance
Oil			Long term care insurance
Electricity			Dental insurance
Telephone			Vision insurance
Home
Mobile
Property Insurance
Fire Insurance
Earthquake Insurance			Subtotal All Yearly expenses
Flood Insurance			Miscellaneous 5% to 10% extra
Umbrella/liability insurance			TOTAL CURRENT ANNUAL EXPENSES		*********
Contents/personal property insurance			TOTAL ESTIMATED RETIREMENT ANNUAL EXPENSES	*********
Property Tax
Condominium/ Association fees
Garbage
Water/including bottled water
Sewer
Well Maintenance
Mowing service
Landscaping service
Septic Tank Cleaning
Snow Removal
Maid service/cleaning

This is one of the most comprehensive budgets I have seen to date and a lot of people are adverse to completing all the areas. But I designed it this way because I found that the short form, simplistic budgets missed key areas. And if you miss a bunch of those, the whole budget may be useless. For example, look at one of the last items- PETS. I have rarely seen a line item in any budget for this, but vast numbers of people have and love their pets- and they have also been shown to extend life. But the costs for care can be expensive and obviously need to be recognized.

If you have other areas that you think should be considered, just

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