After years of hard work, it’s a comfort to think about years of good living, doing all the things you wanted to do without the constraint of employment. But while it’s easy to get distracted by that vision of freedom, so many of us lose sight of what needs to be done right now to be able to turn that dream into reality.
Majority of Americans need at least 70 percent of their entire employment income to be able to modestly live during retirement. But there are universal expenses that you should not underestimate and overlook when you put together a reasonable retirement budget.
On average, a retiree spends $1,294 every month just for housing expenses. The average even goes higher if the retiree is carrying a home loan into his or her retirement. Maintenance fees, taxes, HOA fees, insurance, etc. – it’s easy to not notice these things until they actually add up to some hefty monthly bills.
Although it’s naive to not factor in healthcare when calculating for retirement budget, a lot of people actually misjudge this expense and end up problematic. According to Healthview Services, the typical retiree couple aged 65 years old will spend over $300,000 during their retirement, given they are relatively considered healthy. That’s a lot of money. If possible, find healthcare assistance programs that would help you buffer the potential burden in the future. Buff up your insurance coverage too, and see to it that you are adequately covered during your golden years.
Long term care is not included in our previous estimation for healthcare. Unfortunately, majority of seniors during their retirement period will require some kind of care, entailing cost that could be devastatingly significant to the underprepared. Being cared for in senior homes or assisted living facilities can cost the retiree around $40,000. If you choose to get nursing care at the comforts of your home, that would cost you over $80,000. Although your long term care insurance can take care of some of the cost, you should still prepare for whatever is left for you to carry.
For you to live that wondrous vision of freedom, you need to get the details done now. So while you still can, you should dedicate effort in building up savings that is adequate enough to get you covered in retirement. Max out your IRAs and 401ks. And if you feel like you don’t have enough saved yet, possibly delay your retirement for a year or two. And of course, align your lifestyle with your long-term goals. It’s only through prudence and self-discipline that the best things manifest.