Retirement Expenses and You
Most financial experts suggest that you will need at least 75 percent of your pre-retirement income, in order to maintain your standard of living in retirement. This may not be as easy as you might think. On the Social Security Agency's on web site, they state "Under current law, if you have average earnings, your Social Security retirement benefits will replace only about 40 percent, so you'll need to supplement your benefits with a pension, savings or investments." Thus, you as an individual, must create a plan that will replace the remaining 35 percent (or 75 percent, if you believe Social Security is not secure) of your pre-retirement income.
The majority of Americans mistakenly believe they can live on less than the recommended 75 percent. They think that in retirement they will have significantly fewer expenses, such as no mortgage payment. But, while this may be true, other expenses generally increase. These increased retirement expenses include - health care costs, travel expenses, and household expenses (i.e. you may need to hire a lawn service and snow removal, because you can no longer handle this responsibility physically). But, the biggest retirement expense really is not an expense at all, but rather a loss of purchasing power due to inflation.
Historically, the inflation rate has been about 3 percent. Did you know that with just the average inflation rate of 3 percent, costs double every twenty-four years? Most of us can expect to spend as much time in retirement as we did when we worked. Thus, we can expect to see our expenses double during our retirement years. Ouch.
So what can be done to ensure you have saved enough toward your retirement? The first step is to check your current status using a retirement calculator, like Bob's Free Retirement Calculator. Using this calculator will help you to identify any shortfall now before it is too late. The next step is to educate yourself about finance and investing. You should read finance magazines, newspapers and web sites. Attending classes is another great option. Two national nonprofit organizations that offer investment education classes are BetterInvesting and AAII. You can also check the course offerings at your local college.
But, perhaps the best next step you can take is to subscribe to our FREE Financial Tips & Hints which is a monthly newsletter provided by Retire Fast. The newsletter mission is to help you, the individual investor, become informed and empowered to take over control of your investments. If you have a particular investment or financial question you would like answered, the Financial Tips & Hints newsletter can answer it. Subscribers are encouraged to submit questions or topics you would like to see covered in the newsletter.
You have worked hard for what you have; do not let your retirement comfort be compromised. Take the next step toward your secure retirement today. Bob's Free Retirement Calculator will provide the education; the rest is up to you.