A three-column spreadsheet can help you track your finances and plan for retirement. The columns track fixed income, fixed expenses, and discretionary spending.
Column one lists fixed income sources like Social Security, pensions, and annuities. This shows your financial floor, the amount you receive each month before withdrawing from savings.
Column two tracks fixed expenses that you must pay monthly. These include essentials like your mortgage, insurance, and groceries. Comparing this column to fixed income tells you whether you need additional funds or have money left over.
Column three covers discretionary spending on items you want but don't need, such as vacations, hobbies, and dining out. These expenses may require withdrawals from retirement savings. During economic downturns, retirees can cut back on discretionary spending to protect their nest egg while still enjoying retirement.
You can build this spreadsheet using Google Sheets, Microsoft Excel, or similar programs that automatically calculate totals. The spreadsheet provides visual clarity on how much you earn, how much you spend on basics, and where you might trim costs like unused streaming subscriptions or expensive gym memberships.