>

Determining Retirement Goals Living Expenses Now let's turn our attention to the basic living expenses in retirement. First, we'll look at basic expenses that generally decrease in retirement. Click on each of the living expenses that usually decrease on the left to view the explanation of each. Mortgage Payments       Most retirees will have purchased a home to spend their retirement in. Ideally, this home would be paid off or nearly paid off at retirement. Clothing       Bermuda shorts and t-shirts cost less than business suits or other work clothes! Taxes       With careful financial management, most retirees will pay less in taxes during retirement. Generally, this is due to less earned income. Care must be taken to meet guidelines on tax-qualified plan distributions. Debt Repayment       Hopefully, you won't have any! Transportation       Most retirees drive less (no more commute!) and many are able to get by with one vehicle for the household. Disability Income Insurance       Generally not necessary for someone truly retired. Savings and Investments       You are now in the "keep it" stage as opposed to the "accumulation" stage. Of course, several other expenses typically increase in retirement. Click on each of the living expenses that usually increase on the left to view the explanation of each. Rent       For retirees who have not purchased a home, it is important to remember that the cose of renting will usually increase during your retirement years. If not planned for, this could cramp your lifestyle! Home Upkeep       If you live in a home that you have owned for many years, it is likely that maintenance costs will increase throughout your retirement. Utilities       Utility costs can skyrocket in the short term, with energy crises, heating oil shortages or freezing spells. Insurance       As the cost of autos and homes continues to increase, so does the cost of insurance. Long-Term Care       This applies if you do not already have long-term care insurance. Vacation/Recreation       This is one expense we want to increase! Contributions and Gifts       Retirees tend to contribute more to charitable organizations and often make monetary gifts to children and heirs. Health Insurance       This is a main area of concern for retirees, many of whom may rely on medicare. The cost of prescriptions, preventive care and major medical coverage increases each year faster than the general rate of inflation. How can you use this information? Use it to evaluate your personal situation and determine whether your total basic living expenses will increase or decrease in retirement. See below for three different scenarios of how basic living expenses during retirement can change. By adding the cost of your preferred lifestyle in retirement and your expectations of basic living expenses, you have determined your retirement income goal in today's dollars. You are on your way! Now let's identify your retirement income sources. < PREVIOUS NEXT > #38599