A good number of financial experts recommend approximating your retirement budget at eighty percent of what you currently spend while you still work. Although this figure has been accepted as conventional wisdom by many, in-depth research on the economy and its effects on the lifestyle of many retirees prove the percentage wrong.
Although eighty percent may seem reasonable, as you no longer have to figure in costs for going to and from the office, work clothes, eating out, and retirement account contributions, there are also a lot of expenses that are going to increase. There’s even a likelihood of depleting your nest egg within the first ten years of your retirement – you might spend more in this decade because of expenses associated with much travelling, new hobbies, a more active lifestyle, and other things.
On the bright side, some findings do indicate that retirement spending can decrease as you age, although the savings you get from lowered everyday spending can be overshadowed by the rising costs of medical attention, expensive prescription drugs, and gradually increasing inflation rates.
Pegging your retirement budget at eighty percent of what you’re spending while working may not be a good buffer against nest egg depletion for some. For other retirees, eighty percent might actually be too much to aim for. Since you know your situation, spending habits, and financial capabilities best, plan your retirement budget well by working closely with a financial planner or retirement advisor so you can take other influences, such as longevity, investment value, and inflation into account. Because some spend less than they did during the years they worked, while others spend much more, blindly following the eighty-percent approximation for your retirement income may be imprudent, or even dangerous to your financial health.
Although eighty percent may seem reasonable, as you no longer have to figure in costs for going to and from the office, work clothes, eating out, and retirement account contributions, there are also a lot of expenses that are going to increase. There’s even a likelihood of depleting your nest egg within the first ten years of your retirement – you might spend more in this decade because of expenses associated with much travelling, new hobbies, a more active lifestyle, and other things.
On the bright side, some findings do indicate that retirement spending can decrease as you age, although the savings you get from lowered everyday spending can be overshadowed by the rising costs of medical attention, expensive prescription drugs, and gradually increasing inflation rates.
Pegging your retirement budget at eighty percent of what you’re spending while working may not be a good buffer against nest egg depletion for some. For other retirees, eighty percent might actually be too much to aim for. Since you know your situation, spending habits, and financial capabilities best, plan your retirement budget well by working closely with a financial planner or retirement advisor so you can take other influences, such as longevity, investment value, and inflation into account. Because some spend less than they did during the years they worked, while others spend much more, blindly following the eighty-percent approximation for your retirement income may be imprudent, or even dangerous to your financial health.
This review was brought to you by Puritan Financial Group. Puritan Financial Group is owned by Puritan Financial Companies, based in Dallas TX. Puritan Financial Group is a leading provider of financial solutions for clients beginning in their peak earning years and continuing through retirement, helping them to accumulate, protect and transfer wealth.
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