How to Create a Realistic Budget on a Fixed Retirement Income

Why Budgeting Matters More in Retirement

When you were working, an unexpected expense could often be absorbed by your next paycheck. In retirement, most of your income is fixed — Social Security, a pension, or scheduled withdrawals from savings. That makes a clear, honest budget one of the most powerful tools you have.

The good news: budgeting on a fixed income is very manageable once you know exactly what's coming in and what's going out.

Step 1: Calculate Your Total Monthly Income

Start by listing every reliable income source you have each month:

• Social Security benefits (after any Medicare premium deductions)
• Pension payments
• Required Minimum Distributions (RMDs) from IRAs or 401(k)s