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Personal Finance Information |
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Retirement Income Needs---Less Than You Think?
It is widely written that you need 75% of your presentincome to maintain your present life-style in retirement. Ifyou make 100 thousand now, figure 75 thousand inretirement. Fifty thousand now, figure 37.5 thousand in retirement. Theaverage retirement income in the US is 27 thousand. See whatyou think after reading these ideas. Some really significant expenses you won't have inretirement: 1. Life insurance. Usually paid up by now or it has run itscourse. Also there is little need for it. No premiums topay. 2. Mortgage payments. Houses are usually paid off by now. 3. Child-rearing expenses. A big one. Unless you got areally late start. 4. College costs. You saved for it and then paid for itover many years. See #3. 5. Work expenses. Transportation, clothing, lunches, etc. 6. Large house. Selling and moving into smaller digs canadd significantly to your nest-egg and reduce expenses fortaxes, maintenance, insurance and utilities. A reversedouble whammy for this one. 7. Automobile expense. It/they should be paid off and mightbe used less. 8. Credit card payments. Most everybody has learned by thistime not to have this debt. 9. Some people move to an area where the cost of living isvery significantly lower. 10. Last and this is my favorite. You don't have to savefor retirement anymore! Jot down a figure for each one and see what you get. These are some further considerations that might reduce yourexpenses. Where is it written that you won't want to changeyour life-style at all? After all as we get older ourtastes change, often towards those activities that cost lessand we appreciate simpler things. A walk on the beach or in the quiet woods, in the morningsun or even in a light rain can be as enjoyable as anything.Some of the best things in life really are free. A coldwinter evening by a warm fire with a great book (free fromthe library), a visit with the grandchildren and pullingvine-ripened tomatoes from your own plants are more examplesof inexpensive activities. Who needs a riotous evening in anightclub or an expensive day at a casino? Linger over coffee and the newspaper in the morning, havebreakfast with friends, take a little nap in the afternoonor day trips to attractions like museums, planetariums andnature exhibits. Aren't there things you always thought youmight like to do and explore like writing, playing music,dancing, sports (non-contact) and crafts and hobbies? Theseneed not cost a lot. Also remember you are free to take advantage of early-birdspecials, two-for-one nights and eating out at lunchtimeinstead of dinner. These can save as much as half onrestaurant bills. Don't forget senior citizen discounts,either. What might cost more now that you are older? Health care, ofcourse. Putting these in table form: 1. Health insurance premiums. Mainly Medicare supplementalinsurance. Figure 2000 dollars and up. 2. Prescription drug costs, both premiums for insurance andout of pocket expense. Most medications not yet off patent(have no generic) are 800 to 1200 dollars a year each. Thearithmetic here is easy. 3. General out-of-pocket expense. 4. Long term care or nursing home care. Premiums forinsurance if you elect to buy it, although the jury is stillout on whether or not you should according to a leadingconsumer's magazine. The biggest expense of all is nursinghome care if you have no insurance. People who have goodsupport can often remain at home for a long time utilizinghome care facilities, which costs a lot less. Naturally every situation is different. Hopefully thesethoughts will help you in your calculations. If you add upall that you don't have to pay and what you can reasonablyexpect to pay and can avoid a long nursing home stay you mayneed less than you thought. A recent article in Money magazine had a good idea. Duringthe last year before retirement, try to live on what youexpect to have, pretend to be retired. If it is comfortable,you are probably good to go. Play music like you always wanted. Gain the knowledgeyou need to learn rapidly and cut out most of the practicedrudgery. Dr. Moloney is a retired Family Practitioner witha lifelong interest in music and teaching.Empower yourself to take charge of your music learning bystudying his E-book. http://www.musicsimplified.com/
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