Most of us realize the importance of saving for retirement. You want to be sure that you can cover your living expenses once you stop working, and it would be nice to enjoy some travel or leisure activities as well. But how much is enough when it comes to retirement savings? Every situation is different, so there isn't one answer that will work for everyone. Consider the following six factors when establishing your retirement savings goal.
Retirement age. When do you plan to retire? The earlier your retire, the longer you will spend in retirement. It's important to consider your retirement in terms of “how many years?” This way you can save and budget appropriately. Of course, also consider the fact that illness, disability, or other circumstances could force you to retire earlier than you'd planned. Leave a bit of leeway in your plans.
Life expectancy. This is another factor which cannot always be predicted with pinpoint accuracy. But the longer you live, the more money you will need for your retirement years. How long did your parents live? What is the state of your current health?
Healthcare costs. Speaking of your health, don't forget to factor in the cost of healthcare. When establishing a budget for retirement, remember the out-of-pocket costs for equipment, medications, and so on. A huge consideration is the possibility of long-term nursing care. You cannot predict whether you will need this type of care, and it isn't always covered by Medicare. Make provisions for long-term care for yourself and your spouse.
Lifestyle. Do you want to travel? Move to an expensive retirement community? Pursue hobbies or spoil the grandchildren? The lifestyle you expect to lead in retirement will determine your budget, so think carefully about your goals.
Inflation. Whatever you can buy with 10 dollars today, you probably won't be able to buy with 10 dollars next decade. Remember to factor in the effects of inflation, so that you are sure to save enough money to cover living expenses in retirement.
Social Security. When do you plan to claim your Social Security benefits, and how much will your monthly checks be? Keep in mind that most retirees cannot afford to live on Social Security benefits alone. While your monthly checks will make a good supplement to your budget, it's important not to rely too heavily upon them.
The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.
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This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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