It is generally agreed among finance experts that the average person will require about 70% of their regular income for a comfortable lifestyle after retirement.
Some of the reasons for this are:
- Decreased costs associated with being in the workforce ie. commuting
- Most people have payed off their home loans by the time they reach retirement so they don’t have mortgage repayments
Despite this, it is likely that a number of other costs will increase for you during retirement. These include:
Increased medical costs
Medical insurance costs will increase with age and there is an increased likelihood that you will require medical assistance as you age. It is vital that you factor in the possibility higher medical costs.
Increased maintenance costs
As you age, so does your home and that means you will be forking out more money for repairs. It is imperative that you are prepared for major expenses in the event that you have to replace a water heater, or fix a leaking roof. If you haven’t got enough savings to absorb the costs, it could significantly impact your savings and quality of life.
Maybe you’ve been planning to go on a cruise for years, or you’re hoping to move closer to the beach. Everyone has dreams for their retirement and those dreams, more often than not, will cost you money. When you are working 8 hours a day, the majority of your time is occupied. Once you hit retirement, you’ll suddenly find yourself with a lot of spare time and will start spending money keeping yourself busy. This isn’t necessarily a bad thing – after so many years in the workforce, you deserve it, but you need to make sure you have a financial plan in place and the best way to set yourself up for a comfortable retirement is to talk to a financial advisor. They may be able to set you up with a self-managed super fund that will work in your favour.
Don’t leave preparing for your retirement too late; the sooner you start making plans, the less you will have to worry about when you do hit retirement age.