Many adults don’t know if they’re saving enough to live comfortably in retirement. Figuring out how much you will need is challenging. Any estimates you come up with will be based on numerous assumptions and best guesses. Here are some tips to help you figure out a range so you can know if you’re saving enough or if you need to begin setting aside more for your future.
Where Will You Live?
If you will still be paying off your mortgage when you retire, figure out how many years will be left on the loan and include that cost, plus other expenses related to homeownership, in your projections. If your house will be paid off before you retire, remember to account for maintenance, repairs, property taxes and insurance.
You may decide to move to a cheaper area, buy a smaller house or move in with relatives. If so, those types of changes may significantly reduce your housing expenditures.
You may eventually be unable to care for yourself and have to move into an assisted living facility or a nursing home. Prices can vary widely. Long-term care insurance and government assistance may defray all or some of the cost.
How Much Will You Need for Essentials?
Costs for food and utilities may vary based on location and individual preferences. Your current health can give you some insight into how much you might have to spend for medical care in the future. If you want to retire before you will qualify for Medicare, think about how you will pay for health insurance in the interim.
If you drive, plan for gas, maintenance and insurance, as well as the cost of a new car down the road. Estimate costs for other forms of transportation if you can’t drive now or may be unable to in the future.
How Do You Want to Spend Your Retirement?
If you long to see the world or take up a new hobby in your golden years, plan for those anticipated costs. If you think you would be bored with too much time on your hands and want to continue working part-time, that can offset some of your living expenses. Just consider the possibility that your health may decline as you get older and you may not be able to work, even if you want to.
Get Professional Help With Retirement Planning
Figuring out how much money you will need for retirement is complicated since so many individual factors and unknowns can come into play. A financial advisor can discuss your current income, expenses and savings, as well as when you plan to retire and how you envision yourself spending your later years. A professional can also talk about problems that may arise and help you prepare for them so you can have confidence that you are on firm financial footing as you get older.