I Earn $100,000 a Year in My 50s: Here’s My Monthly Budget
In some parts of the United States, a $100,000 income goes a long way in budgeting for a comfortable life. In others, like San Francisco or New York City, it often barely buys a middle-class lifestyle. And how far that money goes also depends on your age.
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If you’re in your 50s, consider the following three approaches to budgeting if you earn in the low six figures.
Sample Spreadsheet Budget
“Every household is unique,” notes Earl Yaokasin, CFA and owner of WealthArch Investment Services. “Their age, spending habits, tax brackets, number of dependents and how much they have in savings and investments vary.”
“For this template, I’ve ordered the expenses in my personal rank of importance. The first half is necessities and the second half is discretionary. I intentionally place savings as the second line item. When someone reaches the age of 50, it is extremely important to be saving at least 10% of your income for retirement,” he said.
Finally, Yaokasin stated that budgeting is a zero-sum game. “If you increase or decrease the amount in one line, you’ll need to increase or decrease that amount in others.” For example, someone in New York City might spend more on housing but avoid having a car and auto insurance.
Since he believes that a one-size-fits-all budget is not practical, Yaokasin starts with this template:
Category | Yearly amounts | Monthly amounts |
Estimated Income Taxes | $20,000.00 | $1,666.67 |
Retirement Savings | $10,000.00 | $833.33 |
Housing | $24,000.00 | $2,000.00 |
Utilities | $2,000.00 | $166.67 |
Insurance premiums (Auto, Medical) | $5,000.00 | $416.67 |
Medicine/Dental | $6,000.00 | $500.00 |
Groceries and Household | $16,000.00 | $1,333.33 |
Gas and Automobile | $4,000.00 | $333.33 |
Clothing | $1,000.00 | $83.33 |
Health and Fitness | $600.00 | $50.00 |
Dining and Entertainment | $5,000.00 | $416.67 |
Travel | $3,000.00 | $250.00 |
Gifts | $400.00 | $33.33 |
Emergency and unexpected expenses | $3,000.00 | $250.00 |
Total Expenses | $100,000.00 | $8,333.33 |
The 30/30/30/10 Rule
A rigid spreadsheet-style budget isn’t the only way to approach budgeting. Some people thrive on a looser, bucket-style budgeting strategy.
Armine Alajian, CPA and tax consultant at the Alajian Group Inc., explains the framework he recommends for 50-somethings earning in the low six figures: “I have a 30/30/30/10 rule, in which budgets should be broken down by:
30% fixed costs. These include housing payments, utilities, car payments and insurance and phone. If your employer provides health insurance that is taken out of your check, or if you are an independent contractor who pays out of pocket, also factor that in. Life or disability insurance should be considered as well.
30% taxes. The 30% number is a benchmark estimate. If taxes are deducted from your paycheck, you might owe more or get a refund.
30% discretionary: This includes food, living, travel and entertainment
10% retirement and other savings/investments
“The fixed, mandatory expenses should be paid first, including taxes. That is followed by savings, then travel and entertainment,” he advised. “Keep an emergency fund in cash savings. A good rule of thumb for savings is 3-6 months of living expenses.
“After 50, you want to make sure you are on track for retirement, and allocate more to that category if you can, in order to maintain a lifestyle you can afford.”
Beyond a Line-Item Budget
Some people prefer an even looser approach to budgeting. And the more you earn, the more leeway you have in your budgeting.
“Generally speaking, once you get to this level of income, you get to spend more money on fun stuff,” said Robert Persichitte, CFP at Delagify and affiliate professor at Metropolitan State University of Denver. “It’s not an unlimited amount of money, but still not scrimping to save.
He added, “The biggest change that I tend to see is that we no longer set budgets for individual line items like car payment, insurance or groceries. Many people at this income bracket just have a savings target.”
Consider setting aside 10-25% of your gross income as the first “expense” that comes out of each paycheck. You can split your direct deposit so part of it goes directly into a savings account, or you can set up automated recurring transfers to your savings account on paydays.
“It’s more imprecise because you can generally afford a bit more wiggle room. Some accounts will naturally be higher in some months and lower in others. Set the savings goal first and then don’t worry about the small details,” Persichitte said.
No matter how you budget for savings, don’t rely on self-discipline or motivation. With retirement in sight in your 50s, double down on your retirement investments to finish strong.
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