How Much Does It Cost for the Average Person to Retire?
Maybe you dream of traveling the world. Perhaps you just want to live near your grandchildren. Or, in your mind’s eye, you are finally writing that novel you never got around to during your working years.
Everyone has a different vision of retirement. Making sure you have the means to do the things you want to, after toiling for years at a job, is the reason people save for those special years.
But do you have any idea how much you should be saving? Too many simply sock away money in their 401(K) and assume whatever they have when they hit age 65 is enough.
Yet retirement is like any other time of your life. You will need to budget and plan to ensure you have enough to live the life you desire. Recent data from the Bureau of Labor and Statistics (BLS) give a ballpark for how much retirement will cost. Take a look at these numbers and see how your savings stack up.
Healthcare in Retirement
This is, of course, one of the more volatile averages, as healthcare regulations in this country have changed a lot over the past decade. BLS says the average policy runs about $499 per month, though most people also become eligible for Medicare by the time they retire.
Other Insurance or Pensions in Retirement
You may still be paying into a pension for someone in the household or have Social Security to contribute. This runs about $237 per month.
Housing in Retirement
Many people try to plan their savings so they have paid off their home by the time they retire. However, this doesn’t always work out. You may have drawn on your equity in a second mortgage to finance home improvements or medical bills. And no matter whether your home has been paid off, you still have to account for property taxes, insurance and repairs. This costs an average of $1,322 per month, by far retirees’ highest expense.
Transportation in Retirement
Retirees pay well less than the average transportation cost of $9,000 per year for all Americans. But that still calculates to $567 a month for gas, car payments or public transportation, another one of the higher expenses.
Charitable Giving in Retirement
Do we get more generous as we get older? Perhaps, considering retirees spend an average $202 per month on cash contributions, including charitable giving. That’s higher than the national average for all ages.
Food in Retirement
No matter what age you are, you have to eat. Retirees do spend 20 percent less on food than the average, but it’s still a major budgetary outlay at $483.
Entertainment in Retirement
Entertainment, such as movies or concerts, accounts for $197 per month for retirees, which does suggest those “golden years” have a lot of fun to offer, when you plan things right.
Of course, these numbers don’t cover everything. There can be surprises in retirement you should also be ready for, which go beyond your monthly budget.
Wondering how you can ensure you have enough for your retirement? Contact Jay to discuss your needs and how you can achieve them.