HOW MUCH INCOME WILL YOU REALLY NEED?
Many people underestimate lifestyle costs, medical expenses and inflation.What is enough? What is not enough? If you’ve given even the slightest thought to retirement, you’ve probably heard or read that you need about 70% of your final salary to live comfortably in retirement. This estimate is frequently repeated … but that doesn’t mean it is true, but at least it’s a reference point.
You won’t learn how much retirement income you’ll need by reading this article. For that you’ll need to meet with someone who can talk common sense about your lifestyle needs and short-term and long-term expenses.
And I don’t mean a financial planner. I mean someone who doesn’t have a vested interest in selling you financial products. I mean someone who can talk common sense.
That said, there are some factors which affect retirement income needs – and too often, they go unconsidered.
Health.
Most of us will face a major health problem at some point in our retirement – perhaps even multiple or chronic health problems. We don’t want to think about it, but it’s a reality. And if you don’t have enough money for day-to-day living, you’ll probably end up with a mental health problem. My solution is to find some form of modest employment – even perhaps a “profitable hobby”.
Heredity.
If you come from a family where people frequently live into their 80s and 90s, you may well live longer. Imagine retiring at 65 and living to 95. You would need 30 years of inflation-protected retirement income.
Investments.
These must be diversified, and inflation protected. You’ll need to find a path between carrying too much risk, and being conservative.
Spending habits.
If you’re like most of us, you probably spend 90% or 95% of your income. Will your spending habits change drastically once you retire? Probably not.
Government Welfare (or lack thereof).
Over the years, the government has progressively restricted access to welfare. This can only be
expected to continue.
So will you have enough?
Let me know if you’d like me to help you explore your options. Contact me – Bernard Kelly – anytime via admin@retirelaughing.com
With acknowledgments to Bill Losey of Retirement Intelligence Labels: baby boomers, dignified retirement, good health, healthcare, hobbies, leisure, lifestyle, retirement, retiring gracefully, superannuation, wealth creation, well being, writing your memoirs |
