How much money should you expect to spend in retirement? That’s an important question to answer as you’re planning for retirement.

If you prepare a budget for your current monthly spending and irregular spending, then you have a target amount of annual retirement income you need to generate. If you’re regularly spending more than what you expect your retirement income to be, then sooner or later, you’ll run out of money while you’re still alive.

Let’s look at how budgeting in retirement should be part of your plan to be financially secure for 20 to 30 years, which is how long most people’s retirements will last.

Tip #1: Analyze How Your Spending Will Change In Retirement

Financial advisors commonly recommend that your retirement income should replace 70% to 85% of your pre-retirement pay. There are two problems with that goal. First, this goal is designed to deliver nearly the same amount of after-tax, spendable income you have while you’re working, which assumes—often incorrectly—that your life won’t change in retirement.

The second problem is that most people don’t have enough retirement income to meet this goal. As a result, it’s important to analyze how your spending will change in retirement, so you can manage your spending to match your retirement income.

For most retirees, some expenses will drop and some will increase compared to their working years. For example, income taxes typically reduce since you’ll have less income and you’re no longer paying payroll taxes such as FICA. Your  spending might also drop if your children have moved away and are no longer dependents. You might also have no work-related expenses such as commuting costs and work-appropriate clothing.

On the other hand, medical premiums and out-of-pocket spending for medical care could increase, compared to your working years. You might also want to spend more money on travel during your early years of retirement, while you’re still vital and healthy.

The three top living expenses for retirees are typically housing, transportation, and medical expenses, so those are the targets to manage if your retirement income is less than your total estimated living expenses.

Tip #2: Determine Your Needs Vs. Wants

It’s also important to itemize both your basic and your discretionary living expenses. Your basic expenses, aka your “needs,” typically include housing, transportation, food, utilities, insurance premiums, basic clothing items, and income taxes. If you own your home, it will also likely include property taxes and home insurance premiums. One good rule of thumb is to cover your needs with protected sources of retirement income that don’t drop when the market crashes; examples include Social Security, pensions, and annuities.

Next, itemize your discretionary living expenses, aka your “wants,” which typically include travel, hobbies, entertainment, gifts, and spoiling your grandchildren. In theory, you could reduce these expenses if a portion of your retirement income drops due to a market downturn.

Finally, when budgeting for retirement, it’s smart to include an estimate for surprises, such as car and home repairs, unexpected dental bills, and so on.

Tip #3: Pick A Budgeting Method That Works Best For You

There are several ways to prepare a retirement budget, including using common budgeting software, spreadsheets, and the old-fashioned graph or lined paper. Do an internet search on “retirement budget,” and you’ll find many helpful articles and worksheets.

Choose the method that works best for you, and prepare a budget every year, being sure to save your budgets from year to year. This way, near the beginning of the calendar year when you’re preparing your income tax information, you can take a little extra time to review your budget from the prior year and make any necessary adjustments for the coming year.

Tip #4: Motivate Yourself To Stick To Your Retirement Budget?

If you need a little extra motivation for budgeting in retirement and sticking to that budget, consider the consequences of a common dilemma many retirees encounter: They might have had enough money while they were in their 60s and 70s, but then money starts getting tight in their 80s. At that time, they may no longer be able to afford their home and be forced to downsize at a time when they’re frail and might need help from their kids or friends to make the move. I’ve witnessed this happen with several older friends and neighbors, and it’s a heart-breaking situation.

Another problem that commonly happens for retirees involves those who have significant money saved in a 401(k) plan or IRA. It seems like a lot of money, so people treat it like a checking account, spending it without considering that it needs to last for the rest of their lives. They’re often spending this money at a rate that means there’s a good chance they’ll outlive their savings. To avoid this problem, consider any retirement savings you have to be a generator of lifetime monthly retirement paycheck, and only spend your monthly income.

Consider the time you spend budgeting in retirement as part of your “retirement job.” You’ll thank yourself when you reach your 80s and 90s, financially secure and still living the life you want in retirement.