Читать книгу Personal Finance After 50 For Dummies - Eric Tyson - Страница 60

If you’re like most people, you need less money to live on in retirement than during your working years. That’s because in retirement most people don’t need to save any of their income and many of their work-related expenses (commuting, work clothes, and such) go away or greatly decrease. With less income, most retirees find they pay less in taxes, too.

On the flip side, some categories of expenses may go up in retirement. With more free time on your hands, you may spend more on entertainment, restaurants, and travel. The costs for prescription drugs and other medical expenses also can begin to add up.

So what portion of your income do you really need as you make your retirement plan? The answer isn’t simple. Everyone’s situation is unique, so examine your current expenditures and consider how they may change in the years ahead. (Check out Chapter 6 for more information on budgeting and managing your expenses in retirement.)

To help figure out how much money you need, keep the following statistics in mind. Studies have shown that retirees typically spend 65 to 80 percent of their pre-retirement income during their retirement years. Folks at the lower end of this range typically

 Save a large portion of their annual earnings during their working years

 Don’t have a mortgage or any other debt in retirement

 Are higher-income earners who don’t anticipate leading a lifestyle in retirement that’s reflective of their current high income

Those who spend at the higher end of the range tend to have the following characteristics:

 Save little or none of their annual earnings before retirement

 Still have a significant mortgage or growing rent to pay in retirement

 Need nearly all current income to meet their current lifestyle

 Have expensive hobbies that they have more time to pursue

We can’t offer a definitive answer as to how much you personally may need to have for your retirement. Just make sure you carefully look at all your expenses and figure out how they may change (see Chapter 6).