Retirement Expenses
Retirement Expenses: Where Dreams Meet Budgets
Many studies on retirement expenses and retirement spending show that people’s retirement living expenses end up being less than their expenses while working. Some economists say that’s because people don’t have enough retirement savings and are then stuck having to make do with less.
Your retirement expenses will certainly be affected by rising inflation and rising health care costs – and you’ll also need to plan carefully around how you set up your retirement income, a topic we cover in our section on retirement spending.
On the other hand, studies also show that retirees are living happily on less because they’ve paid off their mortgages, don’t have work-related costs (from dry cleaning to dinner out), and can substitute time for money. And that’s where dreams meet retirement budgets – you’re going to have free time, more than you had during your career, and (given the rises in life expectancy) probably for longer than your parents did. That gives you room to dream – there are many, many ways to enjoy the open time retirement brings you – but will your retirement expenses fit within your retirement budget?
Planning Your Retirement Expenses
To make your dreams happen, there are at least three major areas of retirement expenses you’ll need to think through: day to day living, emergencies and, yes, the good stuff, fulfilling your dreams.
Day to day living is a retirement expense no one can escape – but is an area where you can surprise yourself with what you can put in retirement savings. There are many online calculators that can help you think through the differences between work life expenses and retirement living expenses, and you can also get tips in our sections on retirement spending and retirement budgets.
If you don’t want your retirement expenses to outrun your retirement savings and retirement portfolio, make sure you’ve got a clear grasp on what day to day life will look like once you retire.
Next: emergencies. Be prepared. Make sure you can afford the insurance you’ll need; make sure your portfolio is flexible enough to provide you any ready cash you may suddenly need. Take a look at our sections on retirement insurance and retirement investing.
Finally, what you’ve been looking forward to: your dreams.
Retirement Living Expenses Should Be About Living Retirement Well
So what’s your dream? With your career behind you, how will you want to spend your time? What makes for good retirement living – and what will it cost you? Start planning now, because, even after you stop working, time will still equal money.
Once you get past day to day costs, and preparation for emergencies, retirement expenses are as individual as people’s passions, so to make sense of what your retirement will cost, you need to put some clear thinking into how much your passions will put you out of pocket.
Don’t let your dreams hover in some vague future – treat them like a living, present reality and get down to the work of figuring out how much they’ll cost, or they’ll never happen. You’ve always wanted to partake in retirement travel? Talk to a travel agent today – find out about senior discounts, and the benefits of traveling in off-peak times (remember, you won’t have to keep to a job schedule anymore).
Maybe you want to turn your kitchen into something Julia Child would love, and cook gourmet meals every day. Talk to a contractor about putting in that gas stove; pull out a cook book and price out the exotic ingredients you’ve always wanted to sample. Make a retirement budget and stick to it for awhile to see if it works.
Always remember: living your retirement well demands being prepared for your retirement expenses – from the little daily costs to the big dreams.
