Retire Debt FREE!
Retirement. We dream about it, whether it is five years or 15
years away. We fantasize about the day when we march into the
boss's office and declare that we are retiring in one month and
plan to take off to Bora Bora to unwind from decades of stress
and office politics.
Retirement can indeed be the "golden years," if you are not
bogged down with money issues such as keeping current on
mortgage payments, affording medical insurance, buying a car,
taking vacations, enjoying golf, enrolling in continuing
education, etc.
Retirement means that you will need less money because expenses
such as professional attire, lunch, weekly parking and commuting
gas will be gone. However these expenses will be replaced with
other expenses.
It is estimated that the average American will need 70% of the
income that they earned during their peak earning years for
retirement. In other words, if you make $50,000 per year when
you are nearing retirement then you will need approximately
$35,000 per year as a retiree. This may seem like a lot of money
but consider these facts:
Medical Expenses. Your medical expenses will be higher
since you are older. In addition, since you are not working, you
may have to foot the entire bill yourself. To give you some idea
of your medical expenses per month, a family of two on a Kaiser
Permanente plan with a copay of $10 - $20 will be around $1050
per month. This is a nice chunk of change.
Leisure Expenses. Now that you have all the time in the
world, you will want to do something nice for yourself. Your
leisurely activities such as golf, vacations, and shopping will
take up a bigger portion of your budget. You may also want to go
back to school and take that Astronomy or photography class that
you always wanted to take.
During you working years your monthly expenses looked something
like this: