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Wouldn’t it be disappointing to dream about a comfortable retirement and then find yourself unable to enjoy your leisure years because of limited financial resources? Unfortunately, this is a possibility for people who underestimate planning for retirement expenses and the rising cost of living.

Evaluate Spending and Costs In Retirement

Although your expenses may change when you retire, reductions in some areas (such as clothing and transportation to and from work) could be offset by higher costs in others. For example, your home energy expenses may be higher if you spend more time at home, and health-related costs typically increase as you grow older.1

Some expenses, such as food and housing, may stay about the same. Home-related expenses represent at least 42% of spending for Americans aged 50 and older, regardless of whether they are retired.2 One study found that even though three out of five workers expect to spend less in retirement, half of retirees said their spending in the early years of retirement was about the same or higher than it was when they were working.3

Where you live could play a significant role in your overall expenses. If you’re living on a limited income, your money might go further in some cities and states than it could in others (see the cost-of-living chart). You’ll need to consider not only the cost of housing, food, and utilities but also taxes. States have varying rules for taxing pension and Social Security income, and property and sales taxes may vary not only by state but by county.

Sources:
1–2) Employee Benefit Research Institute, 2012
3) Employee Benefit Research Institute, 2010
4) AARP, 2011
5) Journal of Financial Planning, August 2011

Call The Host of Radio Show Let me help you find the best planning for retirement strategies that will keep your money safe. Contact me at (866) 471-7233 for a free consultation.