In addition to
increased spending on travel and leisure activities, which may be pricier than
expected, retirees generally find that other costs loom large. "When people get
older, there are costs associated with aging, and spending on health care and
prescription drugs can also increase the expenses," says Jennifer Kim, senior
partner at Signature Estate & Investment Advisors in Los
Angeles.
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She points to long-term
care, which often necessitates hiring people to provide custodial, intermediate,
skilled nursing or hospice care. If not properly planned for, those expenses can
erode a lifetime of savings, Kim says. "Many also forget that since there are no
more tax deductions enjoyed while working and contributing to 401(k)s and
pension plans and having a house all paid off, their taxes are just as high
during retirement as they were while they were working," Kim adds.
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Retirement Calculator
Inflation is another
cost that many investors fail to take into account.
While a financial
planner can do a sophisticated and comprehensive analysis of an investor’s
overall situation, it often helps to begin with some do-it-yourself calculations
to get the big picture.
"Online calculators
have become much more sophisticated in the past five years," says Melody Evans,
wealth management advisor at TIAA in Andover, Massachusetts.
"A simple Google search
or visiting the website for your employer’s retirement plan will usually point
you to a calculator to determine roughly how on track you are in your savings,"
she says.
The closer you are to
retirement, the more accurate these calculators are likely to be, Evans
adds.
Planning is the most
important aspect of a successful transition into retirement, says Kim Gattis,
wealth advisor and team leader at UMB Bank in Wichita, Kansas. "Instead of
thinking about how long your savings can last you, consider instead calculating
your retirement needs and work toward hitting that number until you reach
retirement age," she says.
When doing your
calculations, Gattis suggests reviewing factors including:
-
Current
savings.
- Average living
expenses.
- Health care
costs.
- Mortgage or
rent.
- Property or other tax
obligations.
Those are good places
to begin, as they cover many of the essential life expenses before factoring in
the more fun expenses, such as travel, hobbies and
entertainment.
"There are a variety of
calculators available to assist with retirement planning," Gattis
says.
Source
https://money.usnews.com/money/retirement/articles/how-long-will-my-retirement-savings-last
