If you are approaching retirement, you have probably begun to think about how much you will spend once you are no longer working.\u00a0 There is a long-standing rule-of-thumb that suggests that most people end up spending between 70% and 80% of the income they had just before retiring.\u00a0 The rationale is that retirees spend less on things like housing, clothing, transportation.\u00a0 It turns out this may not be the case.\u00a0 Recent research indicates that spending in retirement is nuanced and varies.\u00a0 As a result, financial planning for seniors is extremely important.<\/p>\n
What can you do in the decade or so before you actually retire to get ready?\u00a0 If you own a home and you have a mortgage, start making extra monthly payments, so that your mortgage will be paid off when you stop receiving a paycheck.<\/p>\n
If you have consumer debt (e.g. credit cards), work towards paying off them.\u00a0 These debts often carry very high interest rates.\u00a0 So, if you use credit cards, make sure that you pay off the balance every month.\u00a0 Don\u2019t carry a revolving balance.<\/p>\n
If you have an auto loan, try to pay off it before you retire<\/a><\/strong><\/span>.\u00a0 Over the past many years, the big automakers have enticed Americans with very low interest rates.\u00a0 But a vehicle purchase that is financed with a low interest loan probably could have been purchased for cash at a price significantly below the financed price.\u00a0 You should plan to pay cash when you purchase replacement vehicles in retirement.<\/p>\n Sound financial planning for seniors who are approaching retirement includes paying off debts in advance.\u00a0 You will sleep better at night knowing that you don\u2019t owe anyone money.<\/p>\n While there is no reliable simple estimate for how much people spend in retirement, if you are willing to put in a bit of effort, you can come up with reliable numbers.<\/p>\n First, determine all of the items for which you spend money.\u00a0 Let\u2019s separate your spending into two broad categories.\u00a0 Your core or fixed living expenses are those that you expect to have the rest of your life.\u00a0 Examples include property taxes, groceries, and utilities.<\/p>\n Your discretionary or variable expenses are those that will change over time.\u00a0 Examples include travel\/vacation, replacement vehicles, and home improvement projects.\u00a0 You won\u2019t spend the same amount on these things and you won\u2019t spend money on them every year. \u00a0 But these are often large expenses and you need to plan for them.<\/p>\n Financial planning<\/a><\/strong><\/span> for seniors involves projecting both fixed and variable spending.<\/p>\n <\/p>\n <\/p>\nEstimate Your Spending<\/b><\/h2>\n
Want to learn more about retirement planning? Contact our team at Springwater Wealth today to learn how we can help you develop a plan for your financial future.<\/span><\/a><\/strong><\/h2>\n
Sources of Income<\/b><\/h2>\n