Considering today's financial marketplace, it's unrealistic to believe the future is always “someday.” It’s up to YOU to take care of you with at least a few queries::1. How long will you need to work? Most people think that age 65 is "far off." It creeps up fast. Most don't see it coming. I understand that when retirement is many years away, it is hard to see the future. But times have changed, and you must protect your future.
Consider these numbers: What if at age 55, you no longer have a job, and your monthly living expenses are $2500, you need $30,000 for every year until social security. That could be 15 years or more. Do you have $450,000 in savings and investments? What if social security check is no longer available? Politicians talk about that possibility.
Like it or not, unless you are one of the fortunate ones with a million dollars in the bank, there's a fact you must face:
"The vast majority of Americans are going to work until they die... if there is a job and if their health permits it.
“They're going to live their golden years pinching every penny, dependent on someone else (if there is someone) feeling humiliated, miserable or worse."
Solution: Make a budget and manage debt.In fact, make a vow to eliminate debt. Make a personal plan that forces you live below your means today, so you can save that money for the future when you are really going to need it.
2. How much money do you need to cover expenses after you don't work anymore?
First, consider your basic living expenses, then add any debt and monthly expenses you want to pay for hobbies and such.
Basic living expenses mean those costs that you must pay no matter what, such as food, housing, utilities.
According to Newsweek, the average monthly Social Security benefit for a retired worker is about $1,230 at the beginning of 2012. It’s may be a bit more by 2025, but that just means “costs will be a bit more, too.” You’ll need more savings to pay for basic essentials.
For a married couple, it could be a total of about $1,800 per month.
Add to that a modest nest egg of $250,000: (1) If you have it in savings; and (2) how much is invested, your drawdown strategy, and the inflation rate), you could retire with something around $3,000 per month.
Some people can live on less, others need more. It often is not what you want, but what you are forced to live on like it or not.
Living beyond age 62, 65, 67 is likely. If it's a struggle today to pay bills... then just wait until you're in your 60s or 70s. What if because of age, health or any number of other unforseen factors, you can no longer work a traditional job or earn the paycheck from a job?
Solution: Estimate how much money will be needed for retirement life in stage three, including rent or mortgage, utility bills, medical care, food, so that you know how to proceed.
Plan for an average of 15% of your income – more if possible – to be spent on healthcare. Even with Medicare, there are numerous out of pocket expenses and premiums for which you will be responsible.
If you can't set aside money now for the future -- how are you going to live in the future when you no longer have income from a job?