Looking for inexpensive resources to help you create your retirement budget? This free worksheet can help you create a retirement budget. Creating a retirement budget doesn’t need to be stressful or difficult. With this easy to understand worksheet, you’ll be well on your way to creating a great retirement plan. Here’s how you can use the free retirement budget worksheet.

How to use the free retirement budget worksheet

The retirement budget worksheet has two distinct sections. 

Estimating your income

The first section of the worksheet covers your estimated retirement income.

It’s important to note that this section covers your estimated retirement income, not your current income. You don’t want to base your retirement budget off your current salary. Instead, you’ll need to look into your expected income during retirement. This process may take a bit research. For example, you can use this calculator to estimate your social security income.

Knowing your income from your stocks and bonds is more difficult to predict. A common rule of thumb is that retirees can spend about 4% of their portfolio each year. To calculate your monthly income from the portfolio, start by adding up the value of all your retirement accounts and brokerage accounts. Next, divide the total value of your portfolio by 300. For many retirees this is a reasonable estimate of your monthly “income” from your portfolio. A fee-based financial adviser can help you understand if the 4% rule applies to your portfolio. (If you don’t have a great adviser, schedule a free 15 minute call with my team. We can use the call to see if we would be a good fit for your needs).

You’ll also need to estimate your monthly income from other sources. For example, some retirees will receive pensions. You should contact the pension plan provider to understand your expected payout. Other retirees plan to continue working in some capacity, and others have income from rental properties.

Estimating your expenses

The other part of the retirement budget worksheet will help you estimate your expenses. Generally, the best way to estimate your retirement expenses is to consider your current spending patterns. Some expenses (like your mortgage payment) will go away when you retire, but most of your other expenses will stick around in some form or fashion.

To estimate these expenses, you can look at your spending on each category in the last three months. You can look at your credit card, debit card or bank statements to see how much you spent on groceries in the last three months. Then you can average out the spending, to get an estimated cost during retirement. You can do the same thing with most other categories.

If you expect your spending to change during retirement (perhaps you plan to travel more, or you will need to buy supplemental health insurance), you’ll want to adjust your budget upwards or downwards to meet those changes.

Just beware, it can be tempting to believe that you’ll suddenly become much more frugal during retirement. However, the best predictor of your future behavior is your current behavior. This is especially true when it comes to spending.

Why the free retirement budget worksheet works

The retirement budget worksheet gives you a clear idea of your income and your spending during retirement. Since retirement planning is all about cash flow planning, you can use the budget worksheet to give you a good gauge of whether your retirement plan is on track.

The worksheet isn’t a perfect predictor of whether you can retire. But filling it in is an excellent first step in planning your retirement. If your expected retirement income covers your realistic expenses, you’ll have one measure that your retirement plan will work.

What to do now that you’ve completed your budget

Of course, having a notion that your retirement budget will work, and having confidence in your plan are two different things. Understanding your retirement budget worksheet is just the first step in retirement planning. You’ll also face some important decisions such as exactly when to stop working, whether to continue a part time job, and when to start drawing on Social Security.

You’ll also have to carefully consider risks in your retirement budget. For example, do you need long-term care insurance or supplemental health insurance? What options do you have if your house needs immediate repairs?

For added peace of mind, you may want to see a fee-based financial planner to review your retirement plan. A financial planner that specializes in retirement planning can help point out any blind spots in your plan. They can also help you figure out important retirement details like whether to pay for long term care insurance, or when to start drawing on social security.

Want to connect with a retirement planning specialist? Feel free to set up a free 15 minute call.

Related: 10 questions to ask when you’re interviewing a financial advisor

If you see that your expenses exceed your income during retirement, it’s time to start reevaluating your retirement plan. Of course, you can try to eliminate debts and reduce other expenses before retiring. You can also delay taking Social Security and work longer to increase your nest egg and your monthly social security payout.

Consulting a fee-only financial adviser may be even more important in this case. A financial planner can help you decide which route to retirement makes the most sense given your actual spending habits today.