Here’s The Estimated Amount of Money You Need To Retire Comfortably: A Guide To Retirement Planning

There's really no exact figure that experts recommend before one can retire comfortably. Retirement planning will require you to think of the lifestyle you're going to live in and match that with what you've saved. Retirement planning can also be tedious because you are assessing if you could already stop going to work to live comfortably even without a monthly income stream.

Experts recommend that your retirement allowance per year should be 80% of how much you are making before you retire. So if your annual income is $200,000, you would need a yearly allowance of $160,000. Don't be intimidated by the figure if you have pensions and other passive income streams which can provide you with such amount. 

Retiring comfortably does not only mean that your daily sustenance can be covered by your retirement fund. The following are the major expenses that you have to prepare for.

The expenses for medical care of an elderly alone can go as high as $98,000 per year. As one grows older, the need for checkups has become a necessity. Diseases and complications are also starting to show, hence, medicines will also take part in your budgeting. Expect this figure to go up with the rising hospital costs and changes in the government regulations. 

However, medical insurance can help with the costs so add this goal of procuring health insurance for you in your retirement planning.

Without any work and office to go to anymore, retirees will focus more on experiencing the best things in life. Consider entertainment expenses as one of the biggest factors in your retirement planning. More often than not, the elderly would find joy in shopping online, watching unlimited TV series and movies, and a lot more than this. They tend to subscribe on streaming services and other subscription plans they can find online. An average household is reportedly spending at least $2,482 per year on entertainment alone. 

Retirees sure have fine dining and restaurant shopping as one of their goals when they do retirement planning. It’s a good way to relax with friends while reflecting on their own lives. However, daily food consumption is also a big part of one’s daily expenses. Moreover, older people are always advised to go for healthier alternatives. The truth is, organic food are generally more expensive than non-organic ones. The average food expenses of a person per year is around $2,641.

Most of us just want to travel around the world when we get rich. It’s uncommon to see retirees who have not gone to another country or two for leisure as soon as they retire. Consider travel expenses as a part of your retirement planning. Expect to spend around $2,600 per person on international trips. 

An average American monthly household bill amounts to $22,666 per year. Household bills are usually composed of rent, mortgage, loans, utilities, cable/internet, mobile phone, etc. Moreover, there are still taxes. Your pension and other social security benefits may still fall within the taxable income. 

When you do retirement planning, it’s just as if you are also budgeting for your monthly or yearly expenses when you already have no active day job or an active income stream. These expenses might look overwhelming, that’s why most retirees are keen on finding a passive income stream before they retire. Invest your money as early as now to cover these retirement expenses in the future.