Retirement is something that we should all be looking forward to. If you have planned correctly then you will have an ample fund put away to allow you to enjoy your twilight years of life. If you have looked after your body and mind then there will be many things you will want to do with your spare time. Experts suggest that you should plan to live off of 80% of the annual income that you earned while working. If you were putting 20% of your salary into savings each year then it takes you four years to save for one year of retirement. If you plan to live for another 20 years off that fund that means you should start saving from the very start of your working life. This 80% figure makes sense. You should have fewer expenses now that you are retired. However, some things will cost more and you must be careful to ensure that you don’t end up overspending when you reach retirement.
Things that cost less
By the time you reach retirement, you have hopefully bought a house and paid off the mortgage. This is step one in the game of life and completing this step takes a lot of pressure off of you when you retire. The money saved from paying your mortgage is a huge expense lifted and will save you a considerable amount.
Transport will also likely cost less. You are no longer traveling to work every day and this not only saves you the costs of buses, trains or taxis but it also likely saves you that coffee that you tend to pop out for around 11 am or that sandwich that you are forced to buy from the expensive cafe around the corner.
The time you have during retirement will allow you to plan your meals a lot better and to save money on food costs by making large meals and freezing many of them. Special discounts are available when you retire too. Never be too proud to pay the lowest price available to you so always ask if there is a discount for old age pensioners.
Things that cost more
It is surprising to think that anything could cost more when you retire. When you visit places before you retire all you see are special discounts that aren’t available to you. So when you retire you expect to pay less for everything. In many places, it is not the case.
Health insurance is one cost that will continue to go up as you age and when you retire you are seen as quite a costly individual. Of course, health insurance doesn’t cover everything and you will likely need to pay even more for other healthcare costs during your retirement too.
Life could cost you more. As you approach retirement you will start to think of all the amazing things that you can do with that free time. You will travel the world, go to the cinema in the middle of the day, and basically live the dream. Yet living the dream tends to cost a little bit more. There is a tendency during retirement to overspend especially at the beginning so you need to ensure you live by a budget or you may face a tight squeeze in the later years.
When you start your retirement you will be young and able to do more. It makes sense to budget more for these early years when you can do more things and less for the later years when you will be less active. It is important to understand all the costs you will face during retirement or this great period of life could come with a nasty surprise.