Create the Perfect Retirement Budget With the 6 Accounts Framework


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There are a lot of different ways to budget your money in retirement, and everyone has their own favorite method.


But one system that works wonders for creating and managing your retirement budget is the Six Accounts framework. 


If you give it a shot, you’ll be ahead of the game, especially when you consider the fact that only one in three Americans prepare a detailed budget


Budgeting helps you in so many ways — you can avoid spending money you don’t have, ensure you stay on track, and shed some light on your spending habits. 


Plus, you’ll avoid being caught off guard when a bill comes due or if you need to make a big purchase. 


Without further ado, here’s how to use the Six Accounts framework.


The Six Accounts Framework

create the perfect retirement budget with the 6 accounts budgeting framework


The idea behind this system is that you divide your money into different categories, or “bank accounts.” Every time you receive any income, you divide the funds into each account accordingly. 


If you’re feeling like the thought of managing six separate bank accounts is too much, there’s an app for that. All it takes are a few clicks on your smartphone. 


Instead of actually opening a physical account and dealing with all the hassle (not to mention fees), download an app like WalletApp


wallet app screenshot for creating and managing a budget
Use an app to have a clear overview of your spending habits and retirement budget.


You can create the six accounts directly in the app to track your retirement budget in every category, beginning with Lifestyle for your first account. 


Account #1: Lifestyle

lifestyle account from the six accounts retirement budgeting framework


Your lifestyle account takes up the majority of your expenses — a whopping 55%. 


When following this framework, you should use it to cover any usual living expenses, from toilet paper to Netflix. Think in terms of recurring bills, groceries, home essentials, clothes, or entertainment. Or anything else that you consider normal in your day-to-day life. 


If you find yourself overstepping the lifestyle retirement budget, you’re simply living beyond your means. This might seem like a harsh reality, but all it takes is a look at your spending to determine where you can make changes.


For instance, if you(r):


  • Utility bills or mortgage are too high, consider moving or downsizing
  • Spend too much on eating out, try to meal prep and cook at home
  • Notice you spend a large chunk of your lifestyle budget on gas, try taking the bus, carpooling, or walking more


Spotting the problem areas may be easier than fixing them, of course, but ultimately, you are the one who decides whether things like eating out or paying for a subscription are a necessity or a luxury. 


If you can’t fit certain expenses in the 55%, move them to your second account.


Account #2: Fun

fun account from the six accounts retirement budgeting framework


The fun account is designated to splurge on things you consider a luxury. 


Dedicate 10% of your retirement budget to treating yourself without feeling guilty about it. For instance:


  • Go to the expensive restaurant you’ve been wanting to try
  • Purchase an amazing bottle of wine
  • Splash out on a new outfit from your favorite brand


By having a dedicated account for enjoying the finer things, you can avoid dipping into your regular savings unnecessarily and also know how to pace yourself. 


And you’ll know that you always have a little bit of extra money to enjoy a special occasion or buy something you really want. 


So go ahead and treat yourself — you deserve it!


Account #3: Short-Term Savings

short-term savings account from the six accounts retirement budgeting framework


Another 10% of your retirement budget should be dedicated to short-term savings.


For example, save up for:



Sadly, 22% of Americans have less than $5,000 saved for retirement, and many don’t have any savings at all. But planning for larger expenses and giving yourself more wiggle room will make saving seem less daunting, give you some peace of mind and improve your finances overall.


retirement savings of americans


Whenever you have to make a bigger purchase, if you save up for it over time and set the money aside ahead of time, you can easily track if and when you can afford it.


Account #4: Emergency Fund

emergency fund account from the six accounts retirement budgeting framework


One of the smartest things you can do to make your money last in retirement is have an emergency fund. 


Life can throw some unexpected curveballs your way, and you don’t want to be in a position where you have to go into debt or raid your savings just to cover a sudden expense.


For example, you(r):


  • Car could break down
  • Might get sick and need expensive medical treatment
  • Roof might start leaking


Many Americans live paycheck to paycheck and 19% have $0 saved to cover emergency expenses. What’s more, 31% have less than $500 in emergency savings. 


But this doesn’t have to be your story. By having an emergency fund you can avoid being a part of this scary statistic.


You should dedicate 10% of your retirement budget to your rainy day savings. Aim to reach an amount that could cover at least 3-6 months of your bills and usual spending. 


My mom always joked that whenever she makes ends meet, someone comes along and moves them. And that’s why it’s always important to have a cushion to fall back on.


Account #5: Giving Back

giving back account from the six accounts retirement budgeting framework


Giving back to your community is one of the cornerstones of living a fulfilled life. That’s exactly why it should be included in your retirement budget.


However, we do understand that being on a fixed income can make it difficult to give even 5% of it to others. If you can’t afford it, you can always donate your time. 


the benefits of giving back and volunteering include lower stress, better physical health, and more sense of purpose in life
Giving back is investing in both yourself and others.


Budget aside, it’s so important to find a volunteer opportunity that serves a cause you care about. Giving back can pay itself back in more ways than one, so check out these 20 volunteer websites (or our favorite charities) to find your perfect match.


Account #6: Education

education account from the six accounts retirement budgeting framework


When you stop learning, you stop growing. Lifelong learning has so many benefits and your budget should reflect that.


Allocate 10% of your retirement budget to education. For example, you can:


  • Invest in an online course
  • Sign up to learn a new language
  • Take a cooking or dancing class


​​With so many online learning opportunities available these days, there’s no excuse for not continuing to learn and grow. 


Not to mention, it’s hugely important for boosting your cognitive health and neuroplasticity.


Budget Your Way to Financial Stability

Tracking your expenses and knowing exactly where your money is going might seem like a pain, but it’s worth it – especially in the long run.


You’ll know that you can actually afford to buy that cashmere sweater you’ve been eyeing, that you have an emergency fund to fall back on, and that you’re investing both in yourself and others.


The mental freedom of having a well-thought-out retirement budget is a truly wonderful feeling.


And using the Six Accounts, you may be surprised how easy it is to stick to your budget using this simple framework.