How Much Will I Need in Retirement?
When you begin to do your retirement planning, there are a host of questions you must answer – but first and foremost is “How much will I need in retirement?” With increasing life spans for both men and women, the likelihood you will live for twenty years after leaving your job is high. The reality of rising costs of medical care, not to mention the possibility of needing to spend your final years under some sort of long-term skilled nursing, leave many outliving their money and scrambling to make ends meet.
How can you prevent yourself from facing those worries? Work with a trusted financial advisor to come up with a good number after you clarify your answers these three issues that will be key to your retirement:
Decide On Your Last Day of Work
It seems like this should go without saying, but many people forget to set a concrete target when it comes time to determine when they will leave the workforce. Naturally, you might point to the federally-mandated retirement age – as late as 67, depending on when you were born – but that may not be what’s best for you. You might, for example, consider part-time employment consulting in your industry after your primary career is over, meaning your career won’t truly be done for an additional five years or more. Once you have a plan for transitioning out of the daily grind, you have a much better idea of how long you will live on nothing but your investment portfolio.
Figure Out Where You Are Going to Live
Though your first answer will likely be that you plan to remain in the home you currently live in, you must set aside emotion and consider whether or not it is financially wise. A house with enough bedrooms for all the kids (despite the fact they have homes of their own) is a lot of space to heat and cool for just two people. By opening up to the possibility of moving elsewhere, you can consider options in less expensive communities – say, in Arizona or Florida – and local housing developments that will take the stress of home ownership (like lawn mowing and maintenance) off your hands. Depending on where you choose to go, the cost savings can be significant when compared to upkeep on the house you own now.
Determine What You Would Like to Do
After years making your life all about work, you will have earned the right to spend your time just as you like. What sorts of dreams have you put off? Are you in the mood to travel around Europe for a few months? Would you like to drive around the country in a rented RV for a year? Have you always wished you could help on an archaeology dig in South America? Once you have come up with a set of plans you must fit into your post-career life, you can begin planning for the costs associated with them. Further, you might be able to find programs geared toward retirees that help you experience the world at lower rates than the typical traveler.