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    How to prepare for fixed and variable expenses

    oCTOBER 24, 2025

    fixed expenses

    When you think about your retirement, would you rather:

    Wake up each morning knowing exactly what your bills will be?

    Or embrace the freedom and uncertainty that comes with more flexible spending?

    The way you answer that question says a lot about how you'll structure your golden years. Whichever path suits you best, understanding the difference between fixed expenses and variable ones is key to building a retirement plan that covers both your wants and needs. 

    Let's explore how to balance your expenses and create a financial plan that supports your retirement lifestyle.

     

    What are fixed expenses?

    Fixed expenses are those recurring costs that remain consistent over time, month after month. These expenses are predictable and lay the foundation of your monthly budget. They are different than variable expenses, which fluctuate based on lifestyle choices. 

    You can't ignore your fixed expenses because they often include things you need to pay for to survive. Thankfully, these costs are relatively predictable and therefore easier to plan for. Some common fixed expenses are:

     

    Examples of fixed expenses

    • Rent or mortgage payments
    • Insurance premiums
    • Property taxes
    • Car payments
    • Utility bills
    • Phone and internet bills
    • Childcare 
    • Student loan payments

     

    Identifying your fixed expenses

    This is a key step in effective financial planning. Here's how:

    1. Review your monthly statements and list all recurring charges.
    2. Prioritize these items in your budget.
    3. Use this as a clearer perpective of your true financial situation before building variable lifestyle expenses around this foundation. 

    While fixed expenses offer predictability, it's important to regularly evaluate them. If they're taking up a significant portion of your retirement income, it will become more challenging to deal with rising costs and unexpected bills. 

    Now, your fixed expenses will only be one part of your retirement budget. It's just as important to understand and plan for variable expenses next.

     

    What are variable expenses?

    Variable expenses often change based on your consumption habits and lifestyle choices, or simply what you have going on from month to month. You should track your variable expenses in order to identify spending patterns.

    Variable expenses are usually where you can make the most adjustments and find ways to trim your budget as needed.

     

    Examples of variable expenses

    • Groceries
    • Entertainment
    • Medical bills
    • Gifts
    • Travel
    • Personal care (makeup, massages, haircuts, etc.)
    • Hobbies
    • Clothing
    • Credit card bills
    • Live events
    • Landscaping

    Here at Jackson we believe your retirement budget should reflect your unique values. So, variable expenses will vary not only from month to month, but from person to person. That's why taking a good, hard look at your spending patterns will help you feel confidenct in all of the financial decisions you make. 

     

    Identifying your variable expenses

    Once you have a clear picture of your financial obligations (fixed expenses), it's time to fill in the blanks. Here's how to identify your variable expenses:

    1. Review your monthly statements and track your spending patterns around the categories listed above. Include any others that are unique to you.
    2. Consider making this more simple and honest by using a budgeting app to monitor your expenses.
    3. Revisit and revise these expenses over at least three months to get numbers that tell the whole story. 

     

    How to adjust fixed and variable expenses

    At Jackson, we think your finances should align with your individual principles.

    If you need to free up some of your income—which is typically fixed in retirement—you may choose to trim your variable expenses and allocate more of your money for the essentials or savings. Or, you may opt to lower a fixed expense— like your housing budget, for example—to accomodate spontaneous adventures. 

    Cut what doesn't matter to you, so you can focus on what does. 

     

    Annuities can help cover your expenses

    Ideally, wouldn't it feel good to have stability for your must-pay bills, plus the opportunity to increase your income over time to help cover variable expenses like travel, hobbies, or unexpected splurges? 

    A fixed index annuity can play a powerful role in covering some of your expenses in retirement. A fixed index annuity with living benefit, available for an additional charge, can provide a guaranteed* base of income while also giving you the potential for additional growth tied to a market index. That means you can lock in a dependable income floor and allow room for growth without the constant worry of market swings.

    Talk to your financial professional and see if an annuity could help you reach your financial goals. 

     

    Ways to save money on fixed expenses

    Managing fixed expenses is an art, and there are many blogs, books, videos and podcasts dedicated to helping you save money. Just remember that in retirement, we're not trying to compromise quality of life.

    If you regularly evaluate your current expenses, you might find potential savings opportunities. Here are some ideas...

    Now or pre-retirement:

    • Switch to energy-efficient appliances and light bulbs to save on electric bills.
    • Replace an older vehicle that will end up costing you in repairs later on. 
    • Exercise, lose wight and/or eat a nutrient-dense diet to maintain your health (because medical bills are expensive!) 
    • Become debt-free.
    • Try a budget-friendly grocery store, like Aldi or Kroger's gas rewards program.

    Monthly:

    • Start or join a supper club, where households take turns providing an upscale meal.
    • Use an app like GasBuddy to find the most reasonable gas prices near you.  

    Annually: 

    • Shop around for internet, streaming, cell phone and insurance providers.
    • Consider relocating if your property taxes are high.
    • Negotiate rent with your landlord.
    • Consider downsizing if you have more space than you need. 
    • Monitor mortgage refinance rates.

    The sooner you start healthy financial habits, or find more economical alternatives, the more comfortable your retirement can be. When it comes to fixed and variable expenses, the goal should always be to lower stress and improve quality of life.

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    *Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York.

    Fixed index annuities are long-term, tax-deferred vehicles designed for retirement, combining the advantages of a traditional fixed annuity with the potential for additional interest linked to the return of an index. Earnings are taxable as ordinary income when distributed. Individuals may be subject to a 10% additional tax for withdrawals before age 59 ½ unless an exception to the tax is met. The embedded living benefit is included with a charge and the optional add-on living benefit is available for an extra charge. Living benefits may be subject to conditions and limitations. There is no guarantee that an annuity with a living benefit will provide sufficient supplemental retirement income. 

    Jackson, its distributors, and their respective representatives do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Tax laws are complicated and subject to change. Tax results may depend on each taxpayer’s individual set of facts and circumstances. You should rely on your own independent advisors as to any tax, accounting, or legal statements made herein.

    Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York and do not apply to the principal amount or investment performance of a variable annuity’s separate account or its underlying investments. They are not backed by the broker/dealer from which this annuity contract is purchased, by the insurance agency from which this annuity contract is purchased, or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York.

    Annuities are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and in New York, by Jackson National Life Insurance Company of New York (Home Office: Purchase, New York).  Annuities are distributed by Jackson National Life Distributors LLC, member FINRA. These contracts have limitations and restrictions. Jackson issues other annuities with similar features, benefits, limitations, and charges. Contact Jackson for more information.

    Jackson® is the marketing name for Jackson Financial Inc., Jackson National Life Insurance Company®, and Jackson National Life Insurance Company of New York®.