- Personal Finance
How much money do you need to live on after retirement?
How much money you will need to live on after retirement will depend on your lifestyle. How much are you spending per week? Per month? Per year? If you will not change your lifestyle, the figure that you arrive at now is roughly, what you will still need when you retire. A change in lifestyle may mean quitting some or all of the following:
· Don’t drive your own car – take the bus, train or walk.
· Don’t live in a leafy upmarket neighbourhood – move into a flat (apartment building).
· Stop eating out in restaurants and drinking expensive wines and spirits – Eat healthy food at home and don’t drink at all except tea, coffee and water.
· Quit that expensive club – Do menial jobs around the house, jog and do pushups to remain healthy
If you will live in your own house and will no longer pay rent, then you can deduct the rent money. But if you will still pay rent, you must consider that property prices usually appreciate and your rent will be higher. Look at the increase in property values in the last ten years to get an idea of what the appreciation will be ten years from now. Add that inflation rate to the money that you will require in each decade of your retirement and plan a source for it, or save it now. The best situation however is when you live on your own property with an annexe that has tenants. The rent from those tenants could go along away in keeping you out of penury.
If you already have a medical insurance cover that is a good thing, because you can stay with your current provider even after retirement. But note that as we age, we have aches and pains, and the insurance companies are warry of that so the premiums are higher. You can talk to your health providers and insurance company for an estimate of what the increase in insurance could be as you age. If you do not have a cover now, some insurance companies will deny you the cover after a certain age, so you had better take one now. If you are working for a company that gives you a health cover, go for annual check ups so that any condition that could deny you a health cover in future is treated now at no expense to you. Men need to get prostrate check-ups as that is one complaint whose risk increases with age. 70 % of men in the age of 70 have that complaint - 80 % of 80 year olds and 90 % of 90 year olds. They say it is the same ratio for men in their 40s and 50s but I know enough men in that bracket to dispute those statistics. The truth is that men cannot ignore the prostrate gland.
Do you have dependants?
If you will still have dependants as often happens, you must factor them in - maybe a last born still in college? Work out how much the college and other upkeep money will cost before the dependant(s) are out of your hands. That includes their health cover too. Sometimes it is easy to tell which of your dependants may depend on you for longer due to special circumstances like divorce or even joblessness. If they are your children, they will forever be your children even if they are married.
How long will you live after retirement?
Some people live very long after retirement. You can actually plan now how long you want to live, accidents aside. You can start changing habits that may shorten your life, like smoking, poor nutrition and lack of excercise. Maybe you can live another 30 years after retirement (depending on when you retire, you could live longer.) Multiply the amount you need per year for sustenance by the 30 years (or whatever your estimate was) and the whooping figure is what you need for the period of retirement. If you do not have a Retirements Benefits Scheme, see your insurance company for such a scheme. Most governments encourage every worker and employer to contribute to retirement schemes.
What exactly is retirement?
Assuming that you are working for someone right now, retirement is when your employer no longer needs your services because he can pay a younger more energetic person less than you are currently earning. Showing you the door does not mean that you can no longer work. In other words, there is a working life after retirement, if you plan now. I once attendend a retirement workshop and one thing I learned was that you should start planning for retirement the day you start working. If you did not do that and you have a few years to retirement from employment, start doing things in your free time that will contribute an income when you stop working for a company such as:
· Writing hubs (blogs); books or articles for magazines.
· Turn your hobby into a business – whatever your hobby is there is someone who needs it as a service. Do you love dogs? Help other to acqure or train them. Do you keep fish? Help others with making tanks, cleaning etc. Do you knit? Turn that into a business now. Do you cook well? Kentucky fried chicken was started by a man who retired from the army at the age of 60!
· Watch your every minute. You cannot afford to waste time. If learning a new skill will ensure that someone else can give you a job when you retire, go back to college – be an apprentice in a workshop, a garage, a canteen – anywhere but do not waste any more of your precious time.
In other words, do not do anything in your free time that will not contribute to your retirement days.
I have not given any figures because, as I stated earlier, the amount of money you will need upon retirement will depend on the lifestyle that you will want to lead. I hope that the above points will help you to start planning now.