Retirement is a phase in life that everyone looks forward to. It’s a time when you can relax and enjoy the fruits of your labor. However, one of the biggest questions that people have when planning for retirement is: How much do I need to retire? The answer to this question is not a simple one. It depends on a variety of factors, including your lifestyle, health, and how long you expect to live. However, there are some steps you can take to help determine your retirement needs.
Calculate Cost of Living
The largest determinant of your retirement costs will primarily be associated with where you want to live. Whether you are considering moving down south or choosing to downsize and live closer to family in retirement, it is important to anticipate these costs in advance while you are planning for retirement. Things to consider in your budget may include housing, groceries, transportation, taxes, and more.
Retirement should be one of the most rewarding and fulfilling experiences of your life. Years of hard work and planning come to fruition, and you are finally able to fill your calendar with plans of relaxation, travel, and time with your loved ones. Do you plan on traveling frequently, pursuing expensive hobbies, or living a more frugal lifestyle? Maybe you’re planning on you plan on working part-time or starting a small business? Your lifestyle during retirement will directly affect how much you need to save for retirement.
Take Healthcare Expenses into Account
Healthcare expenses are a significant but often overlooked cost for many retirees. It’s crucial to plan these expenses when considering retirement. Unlike when you were working, Medicare may not cover all of your healthcare expenses in retirement, and you may have to pay a portion of these expenses out of pocket. You can estimate these costs by considering your current health status and your family’s medical history.
An essential factor to consider when planning for retirement is the rising cost of living over time. Historically, inflation has hovered around 2-3% every year, after a few years, changes in prices may not seem significant. However, if you are planning to live for 30+ years in retirement, they can be monumental. You may have less purchasing power in the future than you do now, which can impact your ability to maintain your desired lifestyle throughout retirement.
Work with A Trusted Financial Advisor
A financial advisor can help you determine your retirement needs, calculate how much you will need to save, and develop a plan to achieve your retirement goals. When you need a knowledgeable and trustworthy financial advisor, look no further than Summit Financial. We take the time to understand your individual needs and goals and create a customized financial plan that works for you. If you have questions about how Summit Financial can help, or if you’re ready to get started, contact us today.