If you are thinking about retirement and you are trying to work out the money that you will need then you won’t be alone. How can you compute what money you will need, retirement for many can be many years away? But it will creep up sooner than you think and planning for this will be your best move you will make. Having the plan ready so when you are going to retire you will know what money you have and you will know the areas of your budget that will change. This will mean that you will be prepared and know what you will have money for.
Preparation is going to be the key, if you have spent years planning for your retirement then you will want to be able to use that time for you. But with the increase in the length of time that a person lives will mean that you need to be aware of the amount of money that you will need as well as the length of time you need this money to last for. But this isn’t going to be easy as you will not know any of this information in advance.
For many people that are planning their retirement they look at a reduction in the required income to be around the 70 % mark, as per this article’s recommendation, but knowing if this is going to be enough for you will be a different matter. So by looking at your categories in your budget and working out which options will be reduced can save you time because it will give you a more precise figure for your expenditure.
The article has pinned down 7 areas that you can start to cross of your budget when you hit retirement. There are some areas that you might need to think long and hard about but because it has defiantly made me think about what I might be able to be remove from my budget when I hit retirement age.
You won’t be actively putting money aside each month just for savings for retirement. This is due to being retired but you will need to consider saving some of your income, but this could be more flexible than savings that are just for your retirement.
This is not something I had thought about, saving for me is automatic but once you are retired the money that you would have saved for retirement is not needed, but savings will be. I hadn’t thought about this area in depth because I haven’t got to the budgeting stage but it is something I will consider.
This will cut the amount that you will save and will be reflected in the amount of income that you need.
How I dream of these days, to be mortgage free would be such a blessing. It would mean that there is a substantial saving in my budget. The amount of income that you would not need could be cut each month because your home is mortgage free.
These dreams are not going to be possible for some, as the article points out that’s it’s not always possible to be mortgage free when you retire. If you are one of the people that still have a mortgage when you retire you must make sure that you will have sufficient income to pay the mortgage each month because you won’t want to lose your home.
Now this option shocked me when I first read the article, I have never considered this option, but if you are mortgage free and have no dependants then this might be an option. They suggest a small policy to cover the costs of funeral payments; this is an expense that you don’t want to leave to your family. But I am a firm believer in having money put aside for this, it is part of my retirement plan, some of the insurances you pay out each month and if you live for many years you can get less than what you have paid in. So, if I was going to consider opting for no life insurance then I would make sure there was money for my funeral expenses and this is noted in my will.
I am still not a 100% convinced of this though and I am going to have to spend some time thinking about the pros and cons before I make a firm decision.
This category the article is looking at the cost of bringing up a family and how this will no longer be the case when you retire. As you go through life and you think about the needs of bringing up a family, the electric and the gas that a family can consume as well as clothes and the food bill can sometimes be shocking. But as they start to grow up and leave home these expenses can start to decrease, the need for a large family home is no longer a must and it is common for people to consider downsizing at this time. It is a way to reduce the size of your property as well as reducing the energy bills at the same time and this could mean a reduction in the money that you will need in retirement and can also free up capital which you can invest, and use to increase the income that you have available each month.
I thought the articles article didn’t go far enough with taxes, I agree that you should have less tax to pay but you might still need to pay some taxes and it is important that you find this information out.
With no longer being employed you will not need to be paying lots of money on taxes, it is hoped that this part of your expenses will decrease and this means that you get more of your money each month. There might still be some taxes to pay and you should make sure that you get the right advice for the state that you are living in. You do not want to find a large bill come through the post demanding back payment of taxes because when you are retired you might not have access to the money required.
A way to cut expenses is to reduce the number of cars that you have available to you. It will mean a reduction in the costs associated with travel and this can be quite substantial but what this article doesn’t point out if you have been used to two or more cars going down to one car can be a challenge and it can take some planning too.
I gave up my car a few years ago and some weeks I didn’t miss it and other weeks I would have given anything for having my car back. But this is not at retirement and I still had dependent children home at the time. So, before you jump into selling your car and reducing to a one car home make sure you are happy with your decision before you sell.
For me this article made me think! It gave me time to question ideas that I had never considered and this is important in any article that you read. You need to be able to agree or disagree with the comments and learn to questions thoughts that you have, it can add depth to an article that you never thought possible.
This is what this article has meant to me, it stopped me, it questioned by thoughts and then it added in its own reasons. What I want are your thoughts your suggestions as to what other areas could you remove from a retirement budget and why.