The Reality of Retirement
Closing in on sixty makes you realize that in the next decade you could retire.
Retire.
Have time to do things you want, but don’t seem to fit into your normal day.
Knowing this is coming up, I met with my financial advisor to see what steps I should be taking to prepare. (I have always been one to be prepared for the future, I really hate surprises!)
The best advice he gave me was to wait until 65 to really figure out when to retire. With social security, it is a numbers game as to when you can get the most money.
Sometimes it is 67. Sometimes 70.
In the meantime, he suggested I take a closer look at how much money I will need each month…
…money for mortgage (we don’t have our house paid off, 15 more years, and the taxes are rising like crazy!)
…utilities, cable, phones, insurance, food, gas (thank goodness the cars are paid off, hoping they last forever!)
…traveling, new hobbies?
The list I came up with seemed a little daunting but the number was much higher than I expected (even though I know our monthly expenses, I pay all the bills.) It helped me realize why average people don’t retire in their sixties…
…there isn’t enough money saved to do so.
Balloon busted.
But at least I have time to make some changes…
…save more, invest more, get this online business producing.
Things to consider:
What age do I retire (perfect age? NOW! Realistically 70)
How much more can I save? This will directly impact my end value of the IRA’s and savings accounts.
What is my rate of return on these investments? I did discuss this with my advisor as I thought my IRA’s could be growing more. We made some tweaks to those accounts…
Then there is inflation and taxes.
I am not sure we ever account for those expenses but they are always something to be factored in. Inflation should be calculated at about 2% per year. Taxes on the investment earnings reduces my capital growth now but taxes on the distributions after I retire will reduce that income.
Both these factors mean saving more because if I think I can live on $60,000 per year, in 10 years that amount will actually be closer to $73,000.
And how long will I live?
My parents are still living.
It is amazing because I have so many friends who have lost theirs, but that means we have a lot of longevity in our family.
If I am retired 20 years, that is over a million and a half.
SHOCKED!!
Maybe I need to think about 75.