Save Savvy: Tips for Calculating the Cost of your Retirement

When it comes to planning for the future, one of the main concerns for most people is saving enough money for retirement. With social security, inflation, and the rising cost of health insurance, there are many factors that determine the amount that is needed once entering the golden years. To determine the amount you'll require for retirement with accuracy, there are a few tips to follow to ensure that you can live comfortably.

Look at the Tax Rate

When calculating your retirement, it's important to consider how your money will be taxed. It may be easy to look at a marginal tax bracket, but your income will likely be taxed less and in the 25 percent tax bracket. Use an effective tax bracket rate online rather than depending on a marginal tax bracket to ensure that your numbers are accurate.

Consider Inflation

The cost of inflation will affect how much you'll need to live off of during retirement and should be accounted for to ensure that you can keep up with the rising cost of living. According to Forbes.com, the cost of living in your first year of retirement will likely increase by the fifth year of your retirement. Use an inflation rate of three percent and multiply your income from the prior year by 1.03.

Factor in Assisted Living

Although you may currently be healthy, it can be difficult to expect what age will bring once entering retirement. When calculating how much money you'll need in the later years of life, factor in the cost of assisted living or a live-in nurse to ensure that you receive the assistance needed if your physical or mental health declines according to Sunshine Retirement community.

Determine the Rate of Return

Most people use five to 12 percent of average annual returns after investing during their life, but there are a few factors needed to determine an accurate rate of return and how it will impact what you'll have in retirement. Consider the investment time period and if the rate of return takes inflation into account.


When it comes to calculating the cost of retirement, there are a few factors that will determine how accurate you come to finding the cost of leaving the workforce. Although it's easy to consider the cost of housing, utilities, and general expenses, there are a number of other influences that determine how much you'll need to live comfortably and enjoy the fruits of your labor. Look over here to find out more information about how much living in a retirement community costs.

Empty Nest: 4 Tips For Transitioning Into A Smaller Home

If you are planning on moving into a smaller home, you are in a unique moving situation compared to most people. Space may formerly have been in excess and now it is scarce. Do not let yourself get stressed out before the process even starts. Moving can be an entirely painless process as long as you make sure to think ahead and plan accordingly for your new home.

4. Organize And Plan Your Space

The key to a quick move is knowing what goes where. That means putting stuff into boxes and labeling them. When you label don't just put what is inside the box, but where the box is going. It is recommended that you draw up a sort of rough plan, so you have an idea of how your home will be laid out when all is said and done.

3. Prepare For Downsizing

As much as you might want to bring along everything, you are not going to be comfortable in a smaller house packed to the brim with stuff. Now is as good a time as any to let go of some of those items that you just don't need. You will feel better about it, and your home will look a lot better. A garage sale is always a great way to get rid of some extra stuff.

2. Consider A Storage Unit

Storage units can be a huge asset in the moving process that people don't always make use of. You may not have the time to fully go through every single item that you have lying around. A storage unit is a good intermediary for that stuff you are not sure about. Alternately, you can simply put your extra stuff that you don't want hanging around the house in the storage unit. A tidy storage unit can fit quite a lot of different items. Consider the Storage Center to see the variety of different sizes that storage units are available in.

1. Consider Alternative Decor

Not only is the house you are moving into smaller, but it is an entirely different house. Those huge couches in your living room might be too big, but they may also just not look appropriate in your smaller sized home. Look at this as an opportunity to get a new look going if it seems appropriate. Your old stuff may actually fit in quite well with your new home. However, it will be clear to you if things just do not look right.

Why Shouldn't Couples Plan Their Retirement Together?

It might be something you have been looking forward to for many years; the children have all grown up and by giving up work, it's finally time for you and your partner to enjoy your twilight years together in peace and quiet. 

Although it sounds like an idyllic lifestyle, you pottering around in the garden, your other half enjoying precious time enjoying their hobbies, problems can lurk where you least expect them. 

Before you carefully synchronise your retirement date with your partner, have a read through the guide below and discover why you might be better off staggering your departures from work. 

Be canny with your money 

Whilst you may both have been diligent about paying into a pension for many years and are comfortable that you will be able to cope when you lose both your wages, there's no harm in putting a little extra aside just to make your retirement even more enjoyable. Once you retire and can’t earn anymore money it’s important to look after your money. 

If one of you leaves work but the other continues with their job for a while – perhaps a couple of years more – you will be able to reap far greater financial benefits that could be useful in the long run. 

Firstly, continuing to earn a wage means you have longer to contribute into your pension plan, helping to crank up the value as high as possible. Your retirement is something to be enjoyed, a time to treat yourself, not spending it scrimping and saving, afraid to switch on the heating in cold weather. By taking those couple of extra years to boost your savings pot, you could make a difference to the amount of money you have to rely on. 

And speaking of pensions, if you continue to work, you will inevitably delay drawing your annuity from the fund available. If you delay your retirement by a few years, by the time you come to take your pension, the number of years left will have reduced and you will be able to receive a higher amount each month. 

If one of you is still in work, the amount of Social Security you can draw will also increase.

Health insurance

Making sure you have sufficient health insurance in place becomes even more important as you grow older but unfortunately it also gets more expensive.

Whilst you are in employment, this isn't something which causes too many problems as many firms offer health coverage not just for their workers, but also their immediate family. This means that there is no need to either take out a costly private insurance plan nor rely on the government sponsored programme known as Medicaid.
Health insurance is important, but can cost a lot. 

If one person continues to work for a few years, it will be possible to continue to enjoy the coverage which is in place without having to resort to paying a high price for the peace of mind it brings. 

Time to adjust

Moving into retirement may sound like a delicious thought, but many workers find themselves caught by surprise when they finally give up work. Many people anticipate an almost holiday-like lifestyle but not having a purpose and structure to each day can leave individuals without a sense of purpose, especially if they previously held a responsible, demanding or stressful position.

By postponing the retirement of one person, it provides the opportunity for the couple to be able to adjust to the transition slowly. Never having to return to work takes a lot of getting used to; the individual who has stopped working can sometimes find they struggle to find meaning in daily activities and can even feel sidelined. Their partner can also find it difficult having them around during the day, especially if they are used to having some time to relax on their own.

Imagine these difficulties multiplied by two and it gives you some idea of the potential room for problems to occur if both individuals retire at the same time. Experiencing the same doubts, fears and challenges can make the early days of retirement more fraught than fun if both of you are trying to retire at the same time.

Conclusion

In summary, although you might think that retiring together is a rather romantic idea and one which eliminates any discussion over who should give up work first. Whilst this is true, it also provides plenty of capacity for problems - financial, practical and emotional - so in reality, you may well decide to stagger your retirement so that you not only maximise your savings but also make the whole process that little bit smoother.

Bio: This post was written by Sarah Watson who works with leading accountants in Milton Keynes UK.