Planning for your golden years can be an exciting yet challenging process. While it’s a milestone that many people anticipate, knowing what expenses you should plan for as a senior can be overwhelming.
Just like most other things in life, our best advice is to prepare in advance. Start by taking a step back to assess your current expenses. This will allow you to get a clear picture of where you are now vs. where you would like to be in your retirement. What actions can you take now to help your future self down the road? For example, can you afford to pay off your mortgage ahead of time to lower your living expenses?
Don’t get caught off guard. Plan ahead so your golden years can be just that. Here are some tips on how to make the most out of your retirement income.
A Real Look at What an Average Retirement Costs
So, what does an average retirement cost?
As we mentioned previously, the best way to know what expenses you will need to account for in your retirement is to take a look at your expenses today. Things like food, electricity, cable, and internet, for example, might stay the same. You can always lower your costs by cutting the cord or eating out less frequently, but for the most part, you can count on these expenses staying about the same.
Other things like transportation, clothing, and housing (if you can pay off your mortgage ahead of time) may go down. Leaving the workforce means cutting out your daily commute. This could save you a fair amount of money on things like public transportation and fuel. Depending on where you live, you may even be able to get rid of your vehicle altogether after retiring, saving you even more money on insurance and maintenance.
Healthcare and insurance premiums, on the other hand, are likely to take up more of your retirement income as time goes on. If you have any known medical issues, you should plan on spending more. Different insurance premiums, such as life insurance, long-term care insurance, and even auto insurance, are all likely to go up as you continue to age. It’s essential to budget for these increases, so they don’t catch you off guard.
Lastly, you need to budget for your leisure activities. What are you going to do with all of this spare time on your hands? If you plan on traveling and living out some of your bucket list items, plan ahead for it. How much money do you need to make it happen, and where can you cut corners elsewhere? If you’re looking for ways to fill your time closer to home, you might consider volunteering in your community or with an organization that you are passionate about. Many places also offer senior discounts, which can help keep your expenses down.
Don’t underestimate how much money you’ll need in retirement. Map it out. Get an idea of the activities you’d like to fill your time and the lifestyle you’d like to live. Be realistic about how much all of that will cost you.
Nervous about Retiring? Test the Waters First
Going from a 40+ hour work week to suddenly having no daily routine or schedule can be difficult. If you’re nervous about it, we encourage you to test the waters first before diving right in.
To ease into this new season, you could cut back on your work and start working part-time instead. See what it’s like to have less income and more free time. This could be in your same job or field, or it could be something entirely new.
No matter what complex problems you are facing, we are here to help you find simple solutions.