10.8 C
Los Angeles
Saturday, November 28, 2020

Changes In Living Expenses During Retirement

Must read

New Tax Legislation – Benefit Summary

Congress recently passed the Tax Cuts and Jobs Act changing the tax code beginning 2018. This new tax law made significant changes to the...

Tax Aspects of Working at Home

How much of their home office expenses can be deducted is one of the most misjudged tax questions faced by home workers. The reality...

Taking the Mystery Out of Capital Gains

The profit you make on the sale of stock is known as a capital gain. If you have owned the stock for a year...

Taxation on the Sale of a Home

For most of us, our home represents our largest asset. Over time, the management of this asset can make a big difference in our...

In order to plan realistically for the future you need to have a clear understanding of what money you need when you retire. This will include the cost of living and special activities you will have. It is estimated that you will need to replace about 80% of your pre-retirement earnings in order to keep the standard of living you have been used to.

Changing Costs

A good place to start is to estimate what you are now spending on essentials such as food, clothes, heat, utilities, insurance and taxes. These expenditures will certainly continue after you retire. As will your need for medical and dental care.

Next, calculate which of your day-to-day expenses will decrease and by how much. Perhaps your mortgage will be paid off, your children likely will be self sufficient, your income and Social Security tax liability may drop dramatically as your sources of income change, clothing costs generally go down.

In addition to your day-to-day needs, it is always a good idea to have funds set aside for an emergency, usually from 3 to 6 months worth of expenses in a liquid account should suffice. If you rely on investments in stocks or other equities for your emergency fund you risk being forced to sell assets at inopportune times such as when the market is down.

Determining The Need

One of the most important steps in retirement planning is accurately estimating how much income you will need. You should review your retirement needs at least once a year, as your financial situation and needs will change often.

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary therefore, the information should be relied upon when coordinated with individual professional advice.

More articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest article

New Tax Legislation – Benefit Summary

Congress recently passed the Tax Cuts and Jobs Act changing the tax code beginning 2018. This new tax law made significant changes to the...

Tax Aspects of Working at Home

How much of their home office expenses can be deducted is one of the most misjudged tax questions faced by home workers. The reality...

Taking the Mystery Out of Capital Gains

The profit you make on the sale of stock is known as a capital gain. If you have owned the stock for a year...

Taxation on the Sale of a Home

For most of us, our home represents our largest asset. Over time, the management of this asset can make a big difference in our...

Managing Your Assets

When you start organizing your portfolio you will want to consider how you will be spending your money after you retire. Some money will...