One of the most common questions people will ask before they retire is how much money they will need. This is not a question that someone else can answer for you because it depends on a few different things.
Your retirement needs will vary over time. Before you establish what amount of money you think you'd need, you'll need to ask yourself a few questions.
How much money are you spending now?
Many people start off on the wrong foot: By looking at their income. But what you should be looking at are your expenses. If you're already saving a decent amount of money per year for retirement, then you might not need that extra money, since you didn't need it before.
Also, be careful to track what you're actually spending, not what you think you're spending. Keep your receipts and check your credit card history to see where your money is actually going.
Where are you going to live when you retire?
Most people spend a large percentage of their income on paying their mortgage. But if you're lucky enough to have it paid off by the time you retire, it's going to make a huge difference.
At retirement, some people may decide to downsize and move to a smaller house/apartment. Some may want to move to a cheaper area, like a small town or even rent a room or two in their house to a student. The place where you're going to live after you retire is going to define your retirement needs.
Will you travel more?
People who are getting close to retirement can't wait to have all the time in the world to travel. But this also means that you will need a lot of money, especially if you're one of those people who likes to travel in style.
Of course, you will save some money because you won't be spending it on transportation to get to and back from work. If you're considering traveling, then Asia and South America are some cheap options to take into consideration.
Will you be eating more at home?
You may want to spend your newfound free time cooking and experimenting in the kitchen, basically doing all those things you didn't have time to do when you had a full-time job. Eating at home is going to save you a lot of money over time.
Will you be helping your kids financially?
Even if your kids may be all grown up by now, you may still want to help them buy their own house or car, especially if you have saved up some money. You have to take this aspect into consideration for your retirement.
Paying for health care
Health care expenses are probably the biggest and the most important ones here. You have to figure out how much a retiree medical insurance would cost you, since you'll need it before the Medicare. According to a recent study, on average, a 65 year old couple is going to need over $200k to pay for their health care during their retirement years.
You may want to think about long-term care insurance as well and purchase a policy because Medicare will not cover it and you wouldn't want to spend all of your assets in order to be qualified for Medicaid.
Figure out what your retirement needs are going to be a few years before you retire
You may not know how to put your finances together, but we do. We've been helping over 30.000 people with their retirement planning since 1974. We know that each person has a unique financial situation and we have the experience when it comes to approaching every situation.
Financial planning can be overwhelming and it can all start by requesting a retirement needs analysis report. All the information you're going to provide us is confidential and it does not mean that you have to invest in our services as well.
Based on the information you'll write in the form, you'll receive a custom analysis plan that is going to show you how much money you're going to need in order to live a comfortable life when you retire.
You can stop procrastinating by completing the form right now. What's stopping you?