If retirement is a goal, then why is it that so many of us shirk the necessary good savings habits we need to get us there in good, sound financial condition? One might think it would be an easy thing to do- to live a tad more simply than we do, to avoid the kind of hyped-up trashy fads that always seem to tug at our attention, and put some of the money we earn every month away until the time comes for us to kiss the working world goodnight and get on with the business of enjoying life as we see fit. Unfortunately, the way many people today save for retirement, there won’t be any retirement at all. It simply won’t be affordable. Perhaps it will be taxes, or health care that really wreaks havoc with the post working world we’ll inhabit. Whatever the case may be, if you’re even thinking about retirement, then you have to think very carefully about what you want out of it, and then plan accordingly.
That’s why it’s so important to have a goal you can work toward. Sure, you’re probably not going to retire a millionaire. In fact, statistics hold that 36% of Americans save nothing at all for their retirement, while as many as 80% of workers today between the ages of 30 and 54 believe that they won’t have enough retirement savings in place by the time they’ve decided to retire to actually get by, much less thrive and go on those vacations they’ve always dreamed about. How many of them will end up vacationing at their kids’ house every year? Likely a whole lot more than would be pleased with the thought that Europe might just be out of reach - an impossible dream.
In order to set a target you can reach for your retirement, you first have to know how much you’re going to need to get by, adjusting for inflation and taking into account how long you expect to live in retirement. A number of online resources give you the opportunity to enter specific information about your current 401-k contribution levels, your desired standard of living at the time of your retirement, and then give you an idea based on those parameters of how much you should expect to come up short so that you can adjust what you’re putting into your 401-k or other retirement account. Take these three major expenses into account when you begin taking stock of what you’ll need to retire on. That way, you can be prepared for just about anything that comes your way.
Take into account your current health needs - some figures about how much retirees spend on medical expenses run to $250,000 or more. Sure, you’ll probably have access to medicaid by then, (assuming of course that the Washington power brokers haven’t gotten rid of it by then) but that doesn’t mean that it will cover everything. You’ll probably need a supplemental insurance as well as enough cash to cover overruns just so you don’t get into credit trouble. So, how healthy are you? Do you go for regular physicals? Does your doctor always remark about how fit you are? Then you may have nothing to worry about. On the other hand, If you just can’t seem to kick that morning doughnut habit, then you’ll want to allot more funds toward medical care.
Will you own your home by then? Another practical concern that you’ll need to plan for is where you’ll live when the time comes to retire. If you’ll be paying on a mortgage, you’ll want to figure that into your monthly expenses as a major expense at least until the house is completely paid off. Alternatively, if you’re planning to live in an over 55 community or purchase a condo, you’ll have moving expenses to deal with.
Finally, consider your vehicle. Chances are good you’ll be replacing it at least once during your retirement, so plan accordingly for that as well. To project how much you’ll need to cover an auto loan, look at the kind of vehicle you think you’ll be happy with, and then tack on a suitable amount for inflation.
Staying on track for your retirement is absolutely critical to your future success, and only setting and reaching goals will put you in a position in retirement to really enjoy yourself. Think of it as the gift you give yourself that you can cash in on later!