Regardless of your retirement plans, you’ll want to be financially comfortable. To maintain your current standard of living during retirement, experts estimate you’ll need between 70% and 80% of your preretirement income; more if you plan on pursuing expensive activities, like travel.
For example, Joe is planning to retire soon and currently earns $75,000 a year. He’ll need about $56,250 a year (75% of $75,000) to maintain his current lifestyle after he retires.
Retirement income usually comes from three sources: Social Security, personal savings and pension benefits. Understanding how all three of these sources work together can help you plan for a financially secure retirement.
The information in this section is designed to help you start thinking about your retirement and how much money you may need during retirement. You may want to consult a financial planner when considering the option that is best for you.
These questions may help you think about some expenses you may incur during retirement. During your retirement years:
- What will your out-of-pocket retiree medical costs be?
- Will you be paying for your child’s education?
- Do you plan to travel?
- Will your home be paid for?
- Will your household expenses be lower (children living on their
- own, smaller home, etc.)?
- When do you plan to begin receiving your Social Security
- benefit? How much will it be?
- Could you or your spouse have any health conditions that might
- increase your monthly budget?
- Will your hobbies require increased savings?
- Will you be responsible for caring for your parents or your spouse’s