Planning For A Comfortable Retirement
How much money do you think you'll need to retire in comfort? Researchers at Georgia State University concluded the answer is 72 percent to 84 percent of pre-retirement income for married couples living on one income with no dependents.*
Not surprisingly, the researchers reported the percentage of the total needed that will come for Social Security drops as pre-retirement income rises, so the percentage that will have to come from pensions and personal savings plans is larger for those in higher income brackets.
Ups and Downs of Retirement
Some people can expect to need less money in retirement. After All, your mortgage probably will have been paid off by then, and the kids will be out living on their own. Also, there will be no more will be no more daily expenses for work attire and commuting to work, and there may no longer be a need for two cars.
Realize this, however: Medical expenses likely will rise as you get older. The Wall Street Journal Guide to Planning Your Financial Future in 1995 estimated the average retired person spends $500 a year on prescription drugs that aren't covered under most insurance plans.
If you're home much of the time, your utility bills are apt to go up, too, and home and car insurance premiums are likely to rise as you get older. You may want to protect yourself with long-term-care insurance. Meanwhile, inflation will be quietly nibbling away at the buying power of your savings, even if it stays near this year's historically low rate.
Longer Than You Think?
Finally, remember this when considering how much you'll need for a comfortable old age: Retirement could last longer than you imagined. It's not uncommon for people to live to be 100 these days and medical advances improving longevity are occurring on a regular basis. If you retire at 60 you might have another 30 ears to enjoy, and you'll want enough money to make them pleasurable.
If you're concerned that you need to save more for retirement, call Great Plains Trust Company at 1-888-529-2776 for a free consultation with our investment professionals.
*Source: Georgia State University Center for Risk Management, 1998.