You
know that one day you will say goodbye to your 9-5 job. You may have
made plans for your retirement. Everyone desires to spend a peaceful
and comfortable life, but this comes to happen when you have enough
money to live the way you want.
Most
of the retirees fail to afford the lifestyle they want. Reason being
they are left with little pension funds to survive on. Even you would
always fancy living a comfortable life after retirement, but it can
be easier said than done because of little state pension funds.
Therefore, you need to plan right now.
The
amount you need for your retirement depends on your lifestyle. On
average,, a Brit needs £18,000 a year to live commodious life. This
amount can go up if your lifestyle is luxurious, for instance, you
want to go to restaurants frequently and your unexpected expenses
including medical expenses increase.
A
retirement calculator will give you an estimate
A
retirement calculator will help you determine the amount you need in
your retirement after evaluating your current earnings and savings.
Once you get an estimate of money you will need in your retirement,
you can change your savings plan accordingly.
Online
retirement calculators will ask you to feed some information like
your current age, the retirement age, current annual salary, the
amount you have already set aside, and much more. Feeding genuine
information will get you as accurate figures as possible.
You
need to understand your current spending
Spending
behaviour stays the same throughout life. If you are fond of
travelling, you would like to have a travelling budget even post
retirement. First off, you need to find out how much you spend now.
Grab a bank statement of the past three months and evaluate your
monthly expenditure.
You
may think that your expenses will go down after retirement, but this
is a myth. In fact, your expenses will go up. During old age, health
issues arise and a proportion of your money goes in your medical
bills.
Your
current spending will help you decide your retirement spending
patterns. Your utility bills, food, and mortgage payments will
naturally be a part of your retirement spending. However, you need to
consider your additional planned expenses too.
Some
people after retirement spend more money on vacations, hobbies and
exploring the world. However, those people do not need to save extra
funds who are not fond of travelling and do not want to invest in
their hobbies for one reason or the other.
Do
not forget to take into account the soaring cost of living
You
will have to start making your retirement budget from now. However,
you need to bear in mind the rising living cost to support your
lifestyle. Inflation destroys your spending power. Your retirement is
far into the future, and you need to have an acute vision to prepare
your budget to live life the way you want. Therefore, you should try
to plan for a higher cost. The bigger your retirement budget, the
better it is.
Retirement calculators generally suggest considering the inflation factor.
However, you should verify it. Take the advice of financial
counsellors. They can help you assist with creating your retirement
budget leaving the room for additional expenses.
Consider
your healthcare cost
Healthcare
cost is one of the most troublesome expenses for the retired. Though
your consumption cost will dwindle during your old age, medical
expenses will likely go up. These costs are high and unpredictable.
Medicare
and other programmes can cover a portion of your medical expenses,
yet you will have to pay out of your pocket. Therefore, the size of
your retirement funds will be based on your healthcare needs.
Leave
the room for unexpected expenses
Passing
a whole month on your pension funds is not quite possible. It is
natural you will dip into your retirement funds, but unexpected
expenses never stop chasing you. For instance,
- Your pet may need to undergo surgery.
- Your car may need repair.
- Your children may need a large amount of money.
- You may need to have refurbished your house.
Unexpected
expenses can catch you off guard anytime. You will need an additional
supply of funds to meet these expenses. Retirement funds will
generally help you meet your regular expenses, but you need to be
concerned about unforeseen expenses. Try to set aside money
separately for creating an emergency cushion. Since your entire
saving is based on your estimation, you may face cash shortfall when
financial emergencies pop up, but you do not need to worry because
you could borrow
money from direct lenders in the UK such as British-lenders.uk.
The
amount of money you will need at the time of your retirement depends
on your lifestyle and retirement goals. The rule of thumb says that
you should start setting aside money as soon as you can. It is a
long-term process. Whether you will retire 20 years later or 40
years, do not ignore the importance of building retirement funds.
Retirement
is a time when you stop living at work and start working at living,
so do not lose the moments of experiencing a fulfilling life by
ignoring retirement
funds.
Description:
To know the money you need in your retirement, understand your
spending, consider retirement goals, and take into account unforeseen
expenses.
