An average person in their 20\u2019s or early 30\u2019s barely thinks about retirement planning or saving up for it \u2013 but procrastinating with retirement savings plan only results in problems later on.\u00a0This is one issue millennials do not address at the right time. One that later results in haphazard planning to diversify income streams and reduce overspending habits.<\/p>\n
Here are questions every young person needs to ask<\/p>\n
Linking life expectancy with retirement planning might come across as a little awkward at first, but it affects more aspects of retirement than you think.<\/p>\n
The standard retirement age was set at 65 when the average US life expectancy was 61.2 \u2013 a stark difference to what it is today, 76 for males and 84 for females<\/a>. There is a lot more that goes when planning for two decades after retirement.<\/p>\n With ongoing medical breakthroughs further prolonging life and various factors such as family history and lifestyles influencing life expectancy \u2013 young workers may need to save for up to 40 years of post-retirement life.<\/p>\n Traditional pension plans are quickly crumbling under the pressure of a rising workforce; the onus of saving for your retirement lies on your shoulders.<\/p>\n How much should you save each year for your retirement? This is dependent on several factors \u2013 the duration of your retirement, how much do you plan to spend in retirement and how many years do you have before retirement.<\/p>\n A 30-year-old who begins saving $10,000 a year at a general 6% annual return rate will accumulate $1.2 million by the age of 65. If that person begins saving at 40, the annual savings double to $20,000 to achieve that same amount. Timing is a very significant factor when thinking about retirement planning.<\/p>\n Health care costs have risen exponentially over the years, and it is one of the few items that are most likely to increase over your lifespan at a higher rate than inflation.<\/p>\n Post-retirement health care costs comprise of various components which include Medicare Part B, Medigap Plan F, as well as several other vision, dental, hearing, and nursing care costs which can put considerable strain on your finances.<\/p>\n It is estimated that a couple may spend anywhere from $250,000<\/a> to $280,000 on healthcare after retirement. For couples that need additional healthcare due to some condition, a larger reserve is required.<\/p>\n Do you want to retire to Orange County<\/a> or a more affordable state like Florida<\/a>?\u00a0 Your present impacts your future \u2013 and that\u2019s particularly relevant for post-retirement savings.<\/p>\n The way you spend and save now impacts how much you get to spend post-retirement. It is important to draft a retirement budget which identifies your sources and uses of cash.<\/p>\n Not only does it help ascertain the different sources of cash, but also how much you need to cut back on your current lifestyle expenses to sustain an adequate level of living after you\u2019ve hanged your boots.<\/p>\nHow Much Do I Need To Save?<\/h2>\n
How Much Health Care Will Need?<\/h2>\n
What Kind Of Lifestyle Do I Want?<\/h2>\n