How much money will you need for retirement? This is one of the biggest questions people ask when preparing for their senior years. Budgeting for retirement is not as simple as budgeting during your working years. Many variables can affect your cost of living once you retire. Learning more about retirement finances can give you an idea of what you need to do to prepare for an enjoyable retirement lifestyle.
At SeniorSmart, we realize the importance of planning for your retirement expenses. Budgeting for retirement is not cut and dried, but we can help you determine how much money you will need to live your desired retirement lifestyle. Call us today at 205.460.1124 to take advantage of retirement planning assistance offered through our concierge-level member services.
How Much Will It Cost to Retire Comfortably?
There is not a specific amount of money needed for retirement that applies to everyone. However, retirement finance professionals have come up with general estimates to help give people a rough idea of what to expect. A popular retirement estimate is $1 million, but this does not account for where or how comfortably you will be living.
One of the largest factors that determine the cost of retirement is the area in which you plan to enjoy your retirement years. That million-dollar nest egg can get you a better or worse quality of life depending on the state you live in and whether you live in the city or the suburbs. Alabama is one of the lower-cost states to retire in, with an estimated $55,000 needed annually for a comfortable retirement.
The Variables That Affect Your Retirement Finances
Retirement estimates for the general population will not necessarily apply to you or your situation. Where and how you desire to enjoy your retirement years will affect how much money you will need to finance your lifestyle.
The cost to retire will depend on several variables, including:
- Where do you plan to live when you retire? The cost of living varies greatly from one area of the country to another. If you plan to move to an upscale retirement community, live on the water, or in a big city, you will need more money for retirement. However, without the restrictions of living close to your place of employment, you may have the flexibility to move to an area with a lower cost of living where your retirement finances can stretch further. This will allow you to enjoy your best quality of life.
- How much money do you plan to spend each year in your retirement? It may be hard to estimate, but it is often suggested that you plan on spending approximately 80% of your pre-retirement income. In most cases, this will allow you to continue enjoying the same quality of life since your expenses will be lower. You will no longer be paying into your pension, Social Security, or retirement savings, or spending money on your work commute, all of which can lower your monthly expenses.
- How many years will you live after retirement? You cannot predict this, but the earlier you retire, the more years you will likely need to plan for. It is recommended to estimate for 20 to 25 years of life after retirement.
Keep in mind that your budget may need to be adjusted from time to time, so plan to revisit your retirement finances every year or two to keep them up to date.
Get Help with Your Retirement Planning from SeniorSmart
Do you feel like you need more information about how to prepare your finances for retirement? The retirement planners at SeniorSmart are available to help our members with concierge-level services that include retirement finance guidance. Call us today at 205.460.1124 to get started with your customized retirement planning advice.