Estimating Expenses for Retirement

Have you attempted Estimating Expenses for Retirement?

If you are in the least worried about having enough for retirement, figure out what you NEED first! We all need to estimate our expenses for the retirement years.

Wait -- aren't we all worried about having enough, pension or not?

We can't see the future (where is that crystal ball of mine?) and don't know how our investments will work (or not), what our health care or food/gas costs into the future, we can't easily estimate inflation at all.

The term "expenses for retirement" implies a very different number for each person...

  • If you presently live on $500/week and need the same income in retirement, you have to figure out where $2000/month will come from ($500 per week x 4 weeks per month). 
  • Maybe the opposite happens - your present income is more than you need as you aren't spending your net income... you voluntarily put $100/week into a savings account. Good for you! That means you only NEED $400 per week x 4 weeks or $1600./month, right?
  • A gal earning $30,000 a year may need the same spendable net income, or may not. She might be married and can lessen her income in retirement as he is still working. She might simply  save less, or spend less.

How much DO you SPEND every month?

Use this WORKSHEET to figure out your expenses for a normal month with no additional things -- like birthday parties, day trips, etc. You want the absolute bottom line here... the least monthly income you can live on, comfortably.

How much could you SAVE every month?

You could go a step further to figure out what you SAVE when you retire. Some won't save any money in retirement -- they have no long drive to work so they won't save on gasoline and the wear and tear of their car. They don't eat out for lunch so they won't save money on all those restaurant bills.

One simple example:

John spent approximately $100 per week on gas as he had a gas-guzzling truck and a long drive to work each day.

He also (as a bachelor) went out to lunch daily, and spent a minimum of $8 on lunch (usually more), plus coffee twice a day.... so his working expenses look something like this:

  • $100 per week gasoline
  • $ 40 per week lunch ($8 per meal x 5 days)
  • $ 10 per week for coffee ($1 per coffee, twice a day x 5 days)
    $140 per week X 4 weeks =

Simply by Retiring and Spending Those Dollars Elsewhere!

Finally, as you might expect, John's working expenses were actually even more... but my example looked SO high, I opted for lesser numbers here.

Bottom line: it depends on monies YOU spend each week to work!

More on Money Matters here!