The Real Costs of Retirement and What to Watch for in Your Budget
Saturday, June 27, 2015, 6:00 AM | Leave Comment
Planning for retirement has become a more complex process than ever before. Increased medical costs, cuts in pensions, and higher prices for ordinary goods require those approaching the age of retirement do a careful assessment of their needs are and will be.
It’s important to create a budget that serves both basic needs, as well as personal enjoyment.
Here are some thing you need to watch for in your own budget and how to cover the costs that come with retirement today.
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Retirement Spending Patterns
A body of research is beginning to be compiled about retirement spending patterns and how individuals can best plan for their retirement needs.
Studies find that spending forms a curved pattern, in which expenses fall gradually for a number of years, and then begins to tick upward in a steady curve toward the end of life.
This curved graph indicates that retirees should continue to plan for increasing needs as they grow older even if they spend less at first.
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Estimated Sources of Income
With the average length of retirement being around 30 years, individuals must ensure their income is able to sustain them an extended period of time.
Social Security provides for many people, and some are able to rely on pension benefits, although this source is becoming less reliable than it was in the past.
In many cases retirees are choosing to continue to work, often part-time, to increase their household income during the retirement years.
Others are turning to hobbies to produce additional income. Some apply for disability benefits or other supplemental programs to help provide for their support during their retirement years.
If denied by one of these programs it would be best to consult with a social security disability attorney who can help you navigate the right programs that will provide for you.
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Realigning Expenses for Retirement
In many ways, retirement itself helps to reduce an individual’s expenses in a variety of ways.
A special wardrobe of work clothes is no longer necessary. Transportation costs to get to work are reduced, and a number of work-related social expenses are often eliminated.
A person approaching retirement can also take a number of active steps to reduce spending.
Many downsize their homes to save money. Cutting cable and other extravagances can help to lower monthly outlay, and changing to a meatless diet, even for one or two days of the week, can help to lower food expenses significantly, as well as provide a healthier diet to reduce your risk for many diseases.
Being at home more will allow you to prepare healthier, low-cost snacks and dishes, which is another way you will be able to reduce food costs.
You already have ways to stop spending and reduce costs so make sure you make adjustments now to both lifestyle and budget.
A realistic look at your average expenses and your income from various sources can help to budget a comfortable retirement that allows you enjoy your time and pursue your favorite interests without financial stress.
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