How Much Money Do I Need To Retire Comfortably?
To answer the question “How Much Money Do I Need To Retire Comfortably” you need to consider 6 sub-questions. The answers to these questions will help you crystalise your retirement plans. So let’s begin…
What Does Retirement Mean To You?
Retirement is traditionally associated with older age and stopping paid work. However, this does not need to be the case. It could mean a lifestyle change where work is not the central part of your life or taking a lower-paying job with flexible hours.
What Does Comfortably Mean To You?
What kind of lifestyle are you expecting to live in retirement? What do you like doing now that you would want to continue doing in retirement? Are their activities you want to take up in retirement? Golf is popular but with retirement becoming more flexibly defined and at younger ages, more active sports and pastimes are also popular. How much will those new activities cost? What will it cost to retire comfortably?
How Will Your Expenses Change?
What changes will there be in your expenses? Without work to fill your days, you will have more time to spend money. Some like to think of retirement as the longest holiday of your life. If that is the case, then think of how much you spent on your last holiday. Other expenses which may change include having to pay for your own medical insurance unless you live somewhere healthcare is provided free at the point of use.
Where Will You Live?
A key factor in your cost of living will be where you retire. Expats tend to think in terms of continents or countries. But within countries, there are big differences in the cost of accommodation etc. Many clients I speak to are not sure where they will retire. However, this should not be an excuse to delay your plans. The best solution is to save based on the most expensive location. In this way, if you have more money than needed you will have a greater choice of where you can retire comfortably. Here’s some data on the cost of living in about 100 countries. Click here.
Who Will Be Important To You In Retirement?
Closely linked to where we will retire is the people who are important to us, family and friends. Having a good social life and home life is a major contributor to physical and mental wellbeing. Being close to grandchildren may be important or perhaps relying on children in later old age. So where are the people who are important to you located?
When Will You Retire?
Few people want to work until they drop. Although with better healthcare we are able to enjoy longer and more active lives. This means we can potentially work until an older age than our ancestors. A person in good health may work until their mid-70’s or possibly older. However, unless we plan for the event our choices will be limited or made for us.
Next Steps To Retire Comfortably
These questions should help you understand some of the aspects of planning to retire comfortably. Having answered some or all of these questions you can work with a qualified financial planner. They will be able to build a financial plan which will put you in control of your financial future and help you move towards the retirement you want.