Retirement…a dream?
posted in General Finance, Retirement |Expenses in later life are proving to be bigger and more unpredictable than many retirees anticipated, says the WSJ in their Money Matters column.
Key takeaways from the article:
[There is a standard rule of thumb that...] your spending needs in retirement will likely amount to 75% to 85% of your pre-retirement salary. [However] …many retirees said their financial needs equal or exceed their spending during their working years.
Among the primary reasons is discretionary spending for far-flung travel and home renovations. “The reality is that when people retire, they want to do more than when they were working and had no time,” says Larry Ginsburg, a certified financial planner in Oakland, Calif. But retirees also are encountering some surprising expenses, like higher-than-expected costs for homeowner’s insurance and health care.
Figuring out how much you need is only one piece of the puzzle. Unsaid, of course, is how you will build up a nest egg to generate that level of income and determining if that is even feasible. If not, and if you figure out this out early enough, you’ll be able to modify expectations and avoid making promises you can’t keep.
If this isn’t spurring you to start your own financial planning you are not alone. Many don’t and those that do plan don’t particularly enjoy it.
Aetna, the health insurance provider did a study that showed 31% of pre-retirees would rather clean their bathrooms or pay bills than plan for retirement. [Link]
But like going to the dentist or getting your annual physical, the fact that it isn’t particularly isn’t a good enough reason not to do it. And here’s one bad side-effect of poor financial planning:
A new Employee Benefit Research Institute survey finds that almost half of today’s workers have less than $25k in savings and investments.
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