An older man in retirement practices his hobby at a pottery studio.

Factoring in the True Value of Your Hobbies in Retirement


From picking up old hobbies to exploring new ways to spend time, here's how to prioritize finances and set budgets for hobbies in retirement.

It's a period that so many look forward to for so long: retirement. Passing into this phase of your life is exciting, especially since it gives you an opportunity to focus on your passions and the pursuits that truly thrill you—and that you may not have had the time for when you were working. Now that you do have that time, however, you can't simply dive in with abandon. You do need to factor in the cost of your hobbies while on a fixed income. Here's what to consider.

Know Your Retirement Budget

Retirement means doing the things you do daily on a fixed income. The downside of this, of course, is that you don't have a constant stream of income to help finance your lifestyle. However, there's good news, too: you can get a strong sense of your opportunities and limits, which is essential for mapping your financial future.

This all begins with knowing your budget intimately. You can't begin to make a plan to pay for your hobbies without having a sense of your budget now and how it will change in the future once you're on that fixed income. First, you need to figure out how much money you'll have to work with, and what portion each essential expense will take up before introducing spend for your leisure.

Knowing your budget comprises a few key elements:

1. Understand Your Monthly Retirement Income and Its Sources

This may include your pension, Social Security checks, annuities, retirement accounts, or other investments and accounts. Get a sense of how much you have in lump sums to draw from as well as what will be coming in on a recurring basis.

2. Price Out Necessities

Figure out what you simply can't live without. This may include expenses such as rent or mortgage, health care, utilities, food, or your car. These will differ among different people, so make sure this accounting is tailored to your lifestyle. Then, have a sense of what you need to spend on a monthly basis to maintain these non-negotiables.

3. Anticipate What You'll Spend on Other Leisure Activities

There may be other pursuits, such as travel, that you'll want to factor into your budget before understanding what you can spend on a certain hobby.

4. Prepare for Unexpected Costs

As you likely know, there are economic circumstances you can't control such as emergencies and cost inflation. Be sure that your monthly budget has a contingency so you're not up against a wall in case of big changes.

Price Your Passions

Now that you have a sense of what your income will be as well as what portion is earmarked for essentials, the next step is to get a sense of the financial commitment your hobbies will require. Estimate how much you anticipate your leisure activities will cost, and what proportion of your budget you can devote to them.

Begin by estimating the cost of a certain hobby. You can do this by looking into any fixed costs (such as equipment and supplies) as well as recurring fees such as membership, class fees, and more. Then, build in a pad in case your fees change, or you'd like to pursue an unanticipated track within your hobby that ends up requiring more money.

From here, total your expenses and factor it to the budget you've just made. Treat this number like any other expense, but do be aware that your essentials must come first.

Make Room for Priorities

Deciding between your hobby and other leisure pursuits is important; because you are on a fixed income, you may not be able to do it all, or at least exactly as you might desire.

Create a list of priorities, including putting your hobbies in order should you need to elect for one hobby over the other. This could also include subsections of one hobby: for instance, if you want to pursue your love of wine, understand the difference between being a casual oenophile versus joining a wine club with fees.

If you're finding that your hobby is stretching your budget too thin, then examine your existing budget for other electives that you can sub out in order to afford your hobby.

Create a Plan

Once you have a sense of how much your hobbies will cost and where your tradeoffs must be in order to pursue them, don't forget to plan with a few other factors in mind:

Think About Travel

If you want to do a lot of traveling, you may want to consider packing in your trips earlier rather than later due to having more cash in hand. Additionally, you may be in better health earlier, which can not only help you enjoy travel more but also keep down costs for special accommodations.

Consider Other Types of Fun

Don't forget to build in a buffer for other fun pursuits, too—for instance, if you are a grandparent, you may want to spend some of your leisure fund with family.

Keep Yourself Flexible

Remember that expenses are variable due to both economic factors and personal ones. If you have existing conditions or experience health issues down the road, you'll want to be conscious of higher cost-of-living as well as special accommodations that may have fees.

Remember that your hobby is secondary to your life-sustaining expenses, so you need to be flexible on how much you're able to spend. Also, don't ignore other essentials as they come up, such as end of life care or 529 gifts. Having a strong sense of your budget can help you in so many ways—and make you confident that you have the finances to pursue the things that bring you great joy.

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