Many people miscalculate sufficient savings for the retirement period and set up financial plans far from reality, which transforms retirement from a period of rest and freedom from restrictions into a period of austerity and confusion.
In a report published by the newspaper “Daily Progress” American ( Daily Progress ), the author reviews some Kylie Hagen the most common problems with respect to the expenses of retirement, and offers a number of tips to avoid mistakes and calculating expenses more accurately. Read also How can you achieve your financial goals?When should you reconsider your financial plan?So that you do not regret it in the future .. 3 financial decisions that you must make Do not wait for your retirement … 5 things to secure your financial future while you are young
Watch for high inflation
The cost of living increases over the years due to inflation, which forces you to spend more to maintain the lifestyle that you are accustomed to, so it is very important that your strategy includes estimating the extent of the high rates of inflation, which has increased in the United States at a rate of 3% annually since 1980.
First, you must estimate the approximate cost of spending a full year during the retirement period based on today’s prices, then add 3% for each subsequent year to get a rough estimate of the amount you need to cover your expenses in light of high inflation rates.
For example, if you think that you need 40 thousand dollars to cover your expenses during an entire year under the current circumstances, you must provide 41,200 dollars to cover your expenses for the following year, which is 3% more than the previous year, and if the inflation rate was low during one year, You don’t need to spend the full amount you budgeted.
Planning for a long retirement period
It is very important that your retirement plan is long-term, which may last for decades. The average life expectancy of 65-year-old men is just over 84 years, and for women, the average is over 86 years.
This means that if you retire at the age of 65, another 20 years await you during the retirement period, and if you retire early, you may wait 25 years or even 30 years, in this case, you should plan well and not limit your savings to a limited period to find yourself afterwards in trouble. Difficult financial solution.
Take taxes into account
You can get a rough estimate of the taxes that you will have to pay by estimating the amount you expect to spend annually during the retirement period and any tax bracket that you may get, and you have to take into account that the income levels for each tax bracket will be adjusted according to the high rates of inflation, which means higher Costs steadily.
Start saving early
After following these steps, you will need to make changes to your pre-retirement financial plans so that you do not get into trouble during your old age, and the simplest way to do so is to recalculate the annual amount you need for retirement to include the additional costs. Advertising
Delaying retirement age is a convenient option that gives you more time to save and reduces the amount of money you need after retirement. Sometimes, unexpected costs may arise forcing you to spend more, and the best option is to reduce your expenses now so that you can invest more money in retirement savings.
The sooner you start saving, the better things will be, as you will have more time to grow your retirement investment before you need to spend it later.