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Home / Business / This assumption could completely destroy your retirement – the Motley Fool

This assumption could completely destroy your retirement – the Motley Fool



Many seniors are looking forward to retirement, especially those who feel overwhelmed and overwhelmed. But while the freedom associated with retirement is certainly something to be expected, many Americans who retire because of the prospect of being excited will become cashless and miserable early on. The reason for this often lies in a problematic assumption about their golden years:

They will need more retirement income than you think

. Many people assume that their living expenses will drop drastically if they stop working. In reality, however, many seniors notice only a small decrease in spending. Some spend 1945 more in retirement than in their working years, and if we really stop thinking about our bills, it makes sense.

  Senior man in hat inserting card in ATM

Source: Getty Images.

The only costs likely to disappear in retirement are your commuting and job costs, and your pension contributions. The rest of your spending will most likely stay the same or even increase to some extent. After all, you need food in retirement as well as at work. You also need housing, transportation, clothing, supplies and other such necessities that are by no means a function of a job.

And if you think your housing costs would take a bunch off, if you pay off your mortgage before retiring, think again. As they grow older, they tend to be more serviced, and as people age, tackling this maintenance becomes a challenge. Take a look at the fact that property taxes tend to go up over time (even in times when home values ​​are going down), and it's very possible that you could actually eliminate your mortgage payment on time for retirement, just to have them replaced with other housing costs.

Then health and leisure are to be considered – two issues that often go up in retirement. The former often increases because health problems tend to increase and escalate with age. Medicare can help with health problems, but there are a number of important services that the program does not cover. Medicare is also not free at all – between premium costs, deductibles and levies, self-covered services could cost you a small fortune.

Similarly, retirement means having more free time and taking that time to cost money. As a senior, you could easily spend more free time for your free time than you do as a working adult.

Boost your savings as long as you can

Hopefully, now you are at least somewhat convinced that retirement can end up being a pricier prospectus than you originally expected. The good news is that if you raise your savings, you have the chance to collect enough nest egg to cover the above cost of living, and then some.

Let's say you have a good 30 years until you & # 39; Retire and you can invest your savings to achieve an average annual return of 7% over this period. (This should be more than feasible with a stock-strong portfolio.) Your end-of-nest credit could be based on your monthly premiums:

Monthly savings amount

Total volume over 30 years with an average annual value of 7% Return [$196000

$ 227,000

$ 400

$ 453,000

$ 600

$ 680,000

$ 800

$ 907,000

$ 907,000

$ 907,000

19659017] by the author.

You have to admit, these are pretty impressive numbers, especially if you work the table down. So do not stress that retirement costs a lot of money. Rather, accept it and do your best to save appropriately. If you save, assuming that as a senior you spend much less, you will probably apologize for the fact.


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