Analyzing the Cost of Retirement
Are you approaching retirement age and wondering if you have enough set aside to live comfortably in your golden years? Or, is retirement still far down the road but you’re curious to see how much you’ll really need to get by? We’ve compiled a list of tools to help you figure out how much money you have and how much you may need to retire without stressing about your living expenses. Use the information below to evaluate your financial standing and plan the most effective saving and investment strategy.
Tools for Seniors to Budget for Retirement
1. Vanguard Retirement Income Calculator
Vanguard has a free-to-use online retirement income calculator that can help you get a clearer idea of how much money you’ll need to retire. Simply input the necessary information and it will give you a visual aid in the form of a graph to compare how much money you’ll have vs how much money you’ll likely need in retirement.
2. AARP Retirement Calculator
A well-known advocacy and educational group for senior citizens, AARP offers a free online retirement calculator as well. With this one, you answer a short series of questions about you and your partner’s finances and gives you a chart showing how financially prepared you are for retirement. Where the Vanguard calculator breaks down how much monthly income you’ll need in retirement, AARP shows your yearly income needed vs what you’re likely to have. It also offers you a chance to see how the figures may change if you decrease your lifestyle spending or increase your retirement age.
3. Use a Budget Calculator
In addition to retirement income calculators, try using a budget calculator to see exactly how much of your money goes toward certain things. For example, this budget calculator from YouCanDealWithIt.com helps you break down your expenses by food, clothing, transportation and other lifestyle expenses.
If you notice that you’re spending a lot more on unnecessary expenses, then you can begin to start making changes to spend more wisely. This can help you put more money toward your retirement and help you develop healthier spending habits. Even those who aren’t nearing retirement can benefit from analyzing their budget.
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4. Consult a Financial Advisor
If you’re having trouble dealing with your finances, don’t hesitate to seek help from a professional. Most financial advisors will offer free consultations, so it can’t hurt to simply meet with them to begin discussing your options.
5. Consider Your Reverse Mortgage
If you’ve taken out a reverse mortgage or if you are considering a reverse mortgage, be sure to include your anticipated proceeds when calculating your income in retirement. With a reverse mortgage, the borrower (who must be 62 or older and have substantial equity in their home) receives payments against their home’s equity from their lender. These payments can be used for anything, including supplemental retirement income.
There are a few inherent risks involved in reverse mortgages; however, new regulations and higher lending standards in the industry have made reverse mortgages a much safer lending product and can be a very valuable financial tool for senior homeowners. Talk to us today or explore our Learning Center to get more information on our reverse mortgage options.