Here’s how much seniors think retirement will cost each year
Your old age might be some of the best of your life, but retirement comes at a high price. Especially with older people living longer and general living costs continuing to rise, you may need to save more than you think.
While everyone’s financial situation is different, and the amount you need to comfortably retire can be significantly different from what someone else may need, getting a feel for the cost of retirement for other Americans. older can help you determine if you are in the right situation.
How expensive is retirement?
It can be difficult to price the retirement itself, but the best place to start is to estimate how much you plan to spend each year. Among American adults aged 55 to 75 with at least $ 100,000 in savings, the average person expects to need about $ 135,100 per year in retirement to live their “best life,” according to one. Charles Schwab poll.
Again, what others expect to spend in retirement may differ from your needs, so it’s important to base your savings goals on your particular situation.
To determine how much you should expect to spend, start by creating a retirement budget. You might end up spending more or less in retirement than you currently do, so think about how your costs might change as you get older. You may need to budget more for travel and recreation, for example, and you may need to set aside more than you planned for health expenditure. Also, if you are planning on making major life changes, like moving to a new city or moving to a smaller house, think about how this will affect your retirement expenses.
Set a savings goal
Once you have an idea of how much you plan to spend each year in retirement, the next step is to figure out how much you will need to save when you retire.
First, think about how much money you will receive from other sources of income, like Social security benefits or a pension. From there, you can determine how much of your retirement income should come from your savings.
Then run your information in a retirement calculator to see how much you should aim to save when you retire, as well as how much you should be saving each month to reach that goal. If that goal isn’t realistic, try fine-tuning your calculations. For example, consider changing your desired retirement age or adjusting the amount you plan to spend each year, as this may reduce the amount you will need to save.
Finally, be prepared to make sacrifices. If your goal is to be able to afford to spend $ 135,000 per year in retirement, you will probably need to have saved well over $ 1 million by the time you retire. Depending on your financial situation, this may or may not be feasible. But if you’re prepared to cut budgets now to save more or find ways to cut spending in retirement, it will be easier to reach your goals.