The Cost of Retirement: Can I Afford to Retire This Year?
The time has come for you to retire. At least, you thought it was. After being out of the workforce for a few months, you find yourself putting in employment applications once again.
It didn’t take long for you to burn through your funds. This is a common situation for anyone who underestimates the cost of retirement before moving forward with it.
The amount you’ll need to save up depends on a number of factors. You’ve got to decide on the quality of life you want to have and plan for any unexpected bills.
These are only a few things that you need to consider when you’re plugging numbers into a retirement calculator. Keep reading to learn more.
Calculating Your Retirement
The first step toward planning a comfortable retirement is calculating how much you’ll need to have. To this end, you’ll need to abide by the 80% rule.
You’ll have to have 80% of your pre-retirement income to handle your expenses once you leave the workforce. For example, let’s say that you make about 100,000 dollars every year.
That means you’ll need to have about 80,000 every year to pay for the things you need. To reach that amount, most experts will suggest saving two times your annual salary when you’re 40, four times when you’re 50, and so on and so forth as the years go on.
When Do You Plan to Retire?
If you want to quit working when most people do at 65, you’ll need to factor more into the cost of retirement vs. if you were 70.
Depending on the age retire, you might have some padding to work with. Social security can be a big help, and if you need some extra money in a pinch, you can talk to Lighthouse Life about selling your life insurance settlement.
How Do You Want to Live?
How do you want to live when you retire? You’ll obviously spend a lot if you want to put yourself away in a beach paradise or an assisted living home that has all the bells and whistles.
The cost of living in some states is more expensive than in others as well.
Plan For the Unexpected
The last thing we recommend is to plan for the unexpected. You never know when you’re going to take a ride in an ambulance.
You might have to pull money out of your retirement budget to fix your car. If you don’t give yourself enough financial wiggle room, you may find yourself re-entering the workforce to handle your expenses.
Understanding the Cost of Retirement
One of the biggest mistakes that people make is underestimating the cost of retirement. If you fail to account for everything, you won’t be able to live out your days in peace.
In fact, you may have to start applying around for jobs again. Don’t let that happen to you!
For more tips that will help you save up so you can enjoy your golden years, feel free to explore the rest of our blog.
