A Fixed-Income Budget

The story: The deposit was smaller

Walt and Grace build a monthly retirement budget from what actually lands in their account, with a jar for bills that come once a year.

1. Narrator: Grace expected Walt’s Social Security deposit to match the award letter. It was smaller.
2. Walt: The Medicare Part B premium comes out first. And we asked SSA to hold back some tax.
3. Narrator: So the budget starts from what lands in the account: the net benefit.
4. Grace: Then the property tax bill came, and the car insurance. They’re not monthly at all!
5. Narrator: Bills that come once or twice a year become monthly set-asides: add up a year of them, divide by twelve, and save that much each month.
6. Narrator: One automatic transfer from savings each month makes it feel like a paycheck. In the first year, they check the plan every three months.
7. Narrator: Pay yourself a steady paycheck, and plan for the bills that aren’t monthly.

What you’ll learn

1. Start from net income

   Medicare premiums and any tax you ask to have withheld often come out of Social Security before it reaches you. Build the budget on what actually lands in your account. The standard Part B premium is $202.90, and people with higher incomes pay more.

2. Essentials first, matched to steady income

   List the must-pay bills first: housing, food, utilities, insurance and health care. Try to cover them with guaranteed income like Social Security and pensions. Flexible spending comes after the essentials are covered.

3. Make yearly bills monthly

   Property tax, insurance, car registration and holiday gifts don’t come monthly, but they’re certain. Add up a year of them, divide by twelve and set that much aside each month, so a big bill is already covered when it arrives.

   Example: $6,000 a year of these bills ÷ 12 = $500 a month set aside.

4. Your retirement paycheck

   Set up one automatic monthly transfer from savings to checking, like a paycheck. It’s easier to live within than many small withdrawals. In your first year of retirement, review the budget every three months and adjust.

Key words

net benefit

your Social Security after deductions

irregular bills

bills that aren’t monthly but are certain

retirement paycheck

a set monthly transfer from savings

Common questions

Can I have tax taken out of my Social Security?

Yes. You can ask SSA to withhold federal income tax from each check, which can save a big bill at tax time. SSA.gov explains how.

Remember this

Pay yourself a steady paycheck, and plan for the bills that aren’t monthly.

Try it: Turn yearly bills into monthly ones

1. List every bill that isn’t monthly, with its yearly cost.
2. Add them up and divide by twelve.
3. Set that amount aside each month, and check your cash flow.

No account: list your yearly bills on one sheet of paper.

Live facts

Numbers that change over time, with when they were last checked and where they come from.

• Medicare Part B standard premium

  $202.90a month

  What most people pay each month for Part B; higher incomes pay more

  As of 2026

  Source: Medicare.gov(opens in a new tab)

• Income tax and your Social Security, including withholding

  Source: SSA.gov(opens in a new tab)