Hey, career person! You’re only 25, 35 or 45 years old. Who cares about what happens 20 or 40 years from now? Answer: You do, and start some serious thinking about it right now!
It’s never too early nor too late to anticipate financial needs when reaching retirement age. If within even 20 years of hitting that critical time, do serious thinking about it. Plan to have enough income to take care of all post-retirement living expenses.
The best way to start is to make a list of anticipated sources of income. They usually include pension, Social Security, interest-bearing investments and other assets. It’s total income you expect to be immediately available at retirement time.
Alongside that list, create another that shows expected living costs. Rent or mortgage payments, utilities, food, medical care, pharmaceuticals, clothing, travel, entertainment and other needs. And don’t forget to factor in that creeping inflation in the years ahead will continue to dig into buying power.
For example, expected total costs of living during each retirement month will be $3,000, but income from all sources will be no higher than $2,500. Do more serious savings now to make up the differences. Some suggested actions could help fill the gap.
1. Put more into savings and sensible investments. For example, if you already have a budget of saving $50 per payday in an interest-bearing account, raise it to $75 or higher.
2. Cut back on casual spending now for vacations, entertainment, clothing and restaurants. By doing this, you’ll not only increase available retirement money, but actually enjoy simpler and healthier sunset years.
If retirement time is sneaking up on you, and suddenly realize it will happen in just a few years, do something about it now. Consider total expected retirement income and what you anticipate as the amount of money it will cost to enjoy sunset years. Then, take necessary steps now to make it happen.