Retirement Assessment:

This is going to be your retirement, not some abstract financial computation. You need to assess your personal needs, now and after your working life, in order to figure out just how much money you will need and just how you are going to save that money.

When trying to figure how much you'll need after retirement consider the fact that you will, in all probability, be spending much less. All work-related expenses will be greatly reduced if not eliminated altogether. Depending on your profession, work clothes such as uniforms, suits and other types of specialized clothing will no longer be needed. Also the attendant laundry or dry cleaning and maintenance costs will stop or at least be lowered significantly.

You'll not be buying lunches and other work-day foods or snacks. That may not sound like a lot, but if one were to spend only $2.00 a day for coffee at work, over the course of a working life that alone could add up to almost $500.00 per year. Work for forty years and you've spent approximately $20,000 just on coffee!

After you do retire, you'll be collecting Social Security money rather than paying into the system. Most people will have their mortgage paid off and their children graduated from college by retirement age, eliminating house payments and tuition costs. Since your income will probably be less than when you were working, you'll now be in a lower tax bracket, maybe even not owing any taxes at all. And, now that you are retired, you no longer need to be putting money into a savings program or an employee/employer-shared contribution plan such as a 401 (k).

 

Retirement Expenses

We must remember however, that even while some expenses are diminishing or completely disappearing, others may grow. If you plan to travel after retirement, naturally that expenditure and attendeant expenses will grow. Spending more time on a golf course, gambling in Atlantic City or seeing a show in Branson costs a good bit. Usually, retirees take the more expensive trips, often to places they dreamed about visiting, early in the retirement. The first two or three years are the "extravagant" years. People who have worked all their lives want to get away from that work-day routine and enjoy the things denied them until now. For some, these first years may not be years of full retirement, but a paring down by working part-time. Many people try to use the gradual approach to wean themselves from the work routine. During these years there is still an income to augment the funds from whatever retirement plan one has. These "final income" funds can make a significant difference later on if they are applied to your retirement savings plans.

 

Retirement Health Expenses:

Unfortunately, the older we get the more likely we'll be needing the services of the health care industry. Healthcare costs and medicines prices are increasing dramatically every year. According to report from the Bureau of Labor relations, household of people over 65 pay almost 55% more for healthcare than do those households under 65. There is no real way around many of these expenses except to be healthy. Health is not something one can expect however and therefore it must be considered when planning a retirement regime. Like your savings, the sooner you begin a health enhancing lifestyle, the greater the rewards are down the road. It's a hard fact that an unhealthy lifestyle is a costly lifestyle. Eating healthy and regular exercise not only makes sound physical sense it also makes sound fiscal sense.

 

 Retirement Long-term:

According to studies and projections done by the American Association of Retired People (AARP), just about half of all Americans who reach the age of 85 will eventually need long-term care. Currently, it costs from $1,000 to $3,000 a month to live in an assisted living facility or community. That is a major expense that many retirement plans, no matter how well thought out will adequately cover. Long-term care insurance may be an option, but that too is a very expensive product. Premiums for persons over 65 can run as much as $10,000 per year. That will eat into most retirement fund accounts quickly. Also, if you plan to take care of your parents, who are of an age or physical condition that requires long-term care, the expense can be staggering. So much so, that if you haven't a plan that has been in place for many years, it may not be achievable. Added to that is the fact that you may need to be prepared to pay for your own care when and if you need it.