As a Financial Coach, I’ve seen that a lot of people are worried about retirement and making sure they have enough to retire someday. Whether people are in their 20s or their 60s, whether they have no money put away or lots of money...everyone worries about retirement. As Chris Hogan says, retirement is not an age; it’s a financial number.
So how much do you need to retire? That depends on you and your goals, but here are 5 things to remember when looking at retirement.
#1: Inflation. This is the rise of the general cost of living over time and it usually hovers around 3%. While inflation over a few years may not matter, if you’re planning on being retired for 20 years, inflation can be an issue. If your monthly budget in 2020 is $3000, you would need over $7000 a month in 2050! This is why investing for retirement is so important, you need your money to be growing, not just saved. More on this next week.
#2: Cost of Living. This is where you want to spend your time living while in retirement. If you plan to relocate once you retire, make sure you look at the cost of living for your new location.
#3: Health Care. This can be a big-ticket item in retirement. According to Fidelity, a couple retiring today will need about $285,000 to cover their health care expenses during retirement. Make sure you apply for medicare, save a “medical” emergency fund, and get long-term care insurance.
#4: Social Security. Make sure you include any social security into your budget...but remember that this is the icing on the cake for what you’ve already saved. We do not want to count only on Social Security for our retirement.
#5: Your Lifestyle. Dream about what you’d like your retirement to look like, and then save for it! Figure out how much you want to travel (and where), how much time do you want to spend with family, and are there non-profits you want to give money to now. If you’re married, make sure you and your spouse are on the same page!