For many people their job-description becomes their self-description and so when they retire from work they can feel worthless and wither away fast. To cap things off, many retirees at 65 die within 2 years of retiring. Jeez, what an anti-climax! It’s no wonder people don’t bother planning their retirement!
No Job, No Stress, No Pay!
A popular rule-of-thumb claims you need roughly 70% of your pre-retirement income (90% if you wish to maintain your pre-retirement standard of living). Work-related expenses will decrease whilst health care, leisure-related expenses increase. This assumes you’re in relatively good health and medical care costs are modest. If your health is poor your health care expenses will escalate.
Financial security during retirement is probably priority no. 1 for most people. To live securely and comfortably in retirement for many people means at the very least generating sufficient income passively by means of some retirement savings plan or other financial assets to allow them to live according to their usual standard of living.
There are 4 typical sources of retirement income:
- Social security benefits
- Employer-sponsored retirement plans
- Post-retirement employment income
- Personal savings and investments
Whilst you may be diligently putting away for your retirement, the real challenge is to know your retirement income needs way before you ever want to retire. Try one on the many retirement income calculators available online to work this out.
When calculating the expenses you will have in retirement, keep in mind that they are in today's dollars. To get a better idea of what they will be when you are ready to retire, you should adjust them for inflation. A current income need of $20,000 per year adjusted by 4% inflation year on year translates to a requirement of $43,800 per year 20 years later.
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To the readers: What is your preferred retirement plan? Share in the comments below
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After retirement life gets tough and for this I agree with the author that 70% of the pre Retirement Online Income Tax Calculator is important to spend a luxurious life.
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