The key to making your money last during retirement is knowing about how long it needs to last-a 'guesstimate.' For instance, a 65-year-old man today has a life expectancy of about 16 years, and a woman of the same age, an expectancy of about 19 years. However, keep in mind that these are average figures. Lots of people live longer than these mean numbers, which is why many financial planners will suggest that you add 50% to the average life expectancy as a safety cushion. Some planners even go to the extent of figuring that clients will live to age 100, which is becoming more and more feasible. To get an even better estimate, head to the doctor, and explain your situation. Factors such as smoking, nutrition, and genetics can all factor into your life expectancy.
By the time you hit retirement, you should have a pretty good handle on how much money it will take to live the way you like. The rule of thumb that retirees can live on 70 to 80 percent of pre-retirement income does not work for everyone.
Retirement spending, especially in the early years when you are active and healthy, often pushes your budget above those pre-retirement levels. Travel expenses may go up. Medical-insurance costs may soar if you retire when you are to young for Medicare and you have no employer-provided retiree health benefits.
Other expenses may go down. Job-related costs will disappear, including the portion of your salary you're now shoveling into retirement accounts. Your mortgage payments may end, too. Will you drop or cut back on life insurance?
Once you have a target of how much you'll need each year, consider the resources you have. Although social security is likely to be remodeled in the future, current and soon-to-be retirees are still in luck. To find out how much to expect, ask the Social Security Administration for an estimate of your benefits by going to the agency's website You'll also need to figure how much you'll get from company pensions you racked up in various jobs over your career. This will help you budget accordingly for to live a comfortable retired life.
