How Long Will Retirement Money Last?

As your retirement comes near, you might have asked yourself how long your retirement money will last. To determine the answer, you need to take some time to sit and address these things:

Healthcare expenses

You think you can just go on with your retirement without the possibility of facing healthcare cost? Then think again!

Healthcare is expensive. Yes, you will have Medicare once you turn 65, but it is a common retirement myth that it will cover everything. On average, you can expect to spend about 30 to 50 percent of your living expenses in retirement on healthcare related things.

Take time to estimate your health care expenses in retirement. It is better to expect that it will be high than thinking you will be healthy all throughout. Think about the different health insurance in retirement that you can take to protect yourself from this devastating expenses. It is also never too early to develop a Medicare strategy and consider Medigap plan or an advantage plan.

If you are lucky to not spend your saved money on this expenses, then you are free to put it on something else. The important thing is when healthcare storm comes you are armed and prepared.

Life expectancy

If longevity runs in your family, then you can also expect that you will possibly live longer than anyone you know. On average, you can expect to live up to mid 80’s or more. But you have to remember, that you might live even longer. As you build your retirement plan and budget, it is important to keep this in mind and assume that you will live longer than average people.

You will also have to take into consideration the longevity of your spouse. The longer your retirement money should last, the more you should be conscious of the details of your budget and spending.

retirement money

Inflation

Things will be different in the future, especially in your retirement. Prices today may not be the same tomorrow or sometime in the future. These changes will also have an impact on how your money will last throughout your entire retirement.

Note that inflation has a bigger impact on lesser income households than those on higher income who have “extras” to give up once inflation gets high. Lesser income households are already in the tight budget, so when inflation gets high.

To alleviate the effects of inflation, you can monitor your spending year by year and make necessary adjustments. Consider starting a garden to have additional food sources or invest in energy efficient home.

Spendings

The way you spend your money will also have an impact on how long your retirement money will last. Estimating your retirement expenses inaccurately can pull you into bankruptcy earlier than you expect. You might overlook that you will also need to spend money on home and auto repairs, gifts, charitable activities, and healthcare.

To avoid spending uncontrollably in retirement, you have to create a retirement budget and a projection of your future income path.

How much you withdraw

Your withdrawal rate from your traditional retirement plans will also determine how long your retirement money will last.

It is important to create a plan that calculates your anticipated withdrawal rate not only annually but also your entire retirement.