At REAP Financial, we have successfully guided families in Central Texas and across the United States through retirement for 16 years. When you’re preparing for retirement, there are metrics that obviously matter, such as your rate of return on investments, inflation, Social Security claiming strategy, and more. However, the most important number for a successful retirement is your budget.
When you’re working, you don’t have to worry about keeping a strict budget, but when you retire, it is very important to know your boundaries. Your budget provides the framework for what you can spend, since there’s only so much money at the end of the day.
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Here is how to build the best 2025 budget, step by step:
Step 1. Design Your Income Stream to Be Tax-Efficient
There are many ways to build a budget, but following the correct steps will help you create the best one. When it comes to the money you’ll live on in retirement, it will often be taxed differently depending on the type of account. In most cases, you’ll have cash at the bank, Roth IRAs, 401(k)s, brokerage accounts, and more. Each type of account comes with distinct tax implications. For example, money from traditional IRAs and 401(k)s is fully taxable as income, while other accounts, like Roth IRAs or HSAs, may offer tax-free withdrawals.
When you’re starting to build your budget, it’s important to determine which accounts you’ll draw from first and during which stages of retirement. This process can be more complex than it appears, as the accounts you draw from affect your overall tax burden. With effective planning, you can potentially have greater control over your tax obligations in retirement. While working, your income is often fixed, but in retirement, you can make strategic decisions about how much and where to withdraw funds. By carefully selecting the accounts you use, you can reduce taxes and extend the life of your retirement savings.
To avoid exhausting any one account too early, you should balance your withdrawal schedule. A tax-efficient distribution strategy ensures that you don’t compromise your future financial flexibility.
Step 2. Define Your Budget
Many people don’t operate on a formal budget during their working years. Instead, they rely on intuitive spending, paying off credit cards each month and loosely adhering to their financial limits. However, this approach needs to shift in retirement. Before retiring, it’s essential to craft a detailed retirement budget. At REAP Financial, we work with families to create their retirement budgets using a comprehensive analysis worksheet. This powerful tool helps you map out both pre-retirement and post-retirement spending.
Many families are surprised to discover how much they’re actually spending. By using our comprehensive budget analysis, we aim to help you understand your financial habits and ensure that your portfolio can sustain your desired lifestyle in retirement. If you’d like a copy of our budget worksheet, email us at retire@reapfinancial.com with “YouTube budget sheet” in the subject line, and we’ll send it straight to your inbox.
Step 3. Track Your Progress
A successful budget isn’t static; it evolves as your needs and circumstances change. Tracking your progress annually ensures your withdrawal strategy remains optimal as your expenses and inflation rates fluctuate. Regularly comparing your spending to your budget allows you to identify and address overspending early. For example, if your budget is $7,000 per month, but you’re actually spending $8,000, the long-term impact could be significant.
Even modest overspending, such as $500 per month, can erode your retirement funds over time. While it might not seem like much in the short term, these excess expenses accumulate quickly. Over 12 months, an extra $1,000 per month equates to $12,000 annually. Over a decade, this amount compounds dramatically, threatening your financial security. Monitoring your progress helps prevent small missteps from turning into major issues.
Optimize Your Retirement Budget with REAP Financial
If you’re preparing for retirement in Austin or Central Texas, REAP Financial can help you design a tax-efficient income plan and craft a sustainable retirement budget. Our fiduciary financial advisers specialize in retirement planning, helping you build confidence in your financial future. Whether you need guidance on withdrawal strategies, tax planning, or portfolio management, we’re here to support your goals.
Contact REAP Financial
Contact REAP Financial today for a complimentary consultation and learn how we can help you create a budget that ensures your retirement is everything you’ve dreamed of. Email us at retire@reapfinancial.com or call (512) 249-7300 to get started. Let’s make 2025 the year you take control of your retirement plan!
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REAP Financial
9414 Anderson Mill Rd #100
Austin, TX 78729

Chris Heerlein, a Texas native, is the CEO of REAP Financial and founder of REAP Private Client Group (RPCG), specializing in wealth creation, preservation, and growth for affluent individuals, business owners, and executives. RPCG provides expert financial and investment advice, advanced tax strategies, business succession planning, and unparalleled client service. Chris is a trusted financial advisor, author of Divorce With Dignity (2019) and Money Won’t Buy Happiness But Time to Find It (2017), and a columnist for Kiplinger Personal Finance Magazine.
He has been featured in Fortune, Money Magazine, Bloomberg Businessweek, and U.S. News & World Report. Chris also hosts Wealth Radio on NewsRadio KLBJ and is a sought-after speaker. Based in Austin, Texas, he lives with his wife, Hannah, and their three children and actively supports charitable causes.