Don't get hit by retirement sticker shock
Life is full of surprises, but the cost of retirement doesn't have to be one of them. While it may not be as clear as the price of a new car, you can anticipate many retirement expenses. Here are some steps you can take to help ensure your retirement plan stays on-track:
1. Determine retirement goals
To figure out potential retirement costs, the first step is to think about your goals. Basic goals may include having enough income to pay your bills for the rest of your life, creating an extra cushion for unexpected expenses and leaving money to heirs. You'll also want to think about your lifestyle goals for retirement. Will you live simply near family, travel the world or buy a second home someplace warm?
2. Identify anticipated expenses
Once you know your goals, you can begin to estimate how much these goals will cost. One of the best ways to do this is to begin to categorize expenses, similar to how you may make a monthly budget.
Categories may include:
- Necessities, like utilities, food, health care, transportation and housing. These are items that aren't optional when creating your retirement plan.
- Leisure, which could include items like travel and entertainment. These are discretionary items that can be reduced or eliminated if necessary.
- One-time only, such as helping with a grandchild's college expenses. These are non-recurring costs, but may still be substantial.
3. Evaluate where you are
After you've taken a look at what your expenses may be like, it's time to see how prepared you currently are. Take stock of retirement savings, expected Social Security payments, pensions, annuities and any other income sources. Does your current rate of investment seem to put you on track to cover anticipated expenses? It's also important to take inflation into account.
4. Adjust your course
If where you are and where you need to be don't currently align, then it's time to make adjustments. You may need to increase savings, or consider additional income sources in retirement such as a part-time job.
We can help
There are a lot of factors to consider when planning for retirement. We can help simplify the planning process and help you map out your financial future. Visit one of our branches or speak with a banker at 1-800-288-3425 to review your retirement savings goals.