4 Retirement Truth Bombs You Need to Hear | Personal Finance | #retirement | #elderly | #seniors
Many people think of retirement as a breezy, carefree period of life. And if you play your cards right, it can be. But make no mistake about it — to enjoy retirement, you’ll need to plan carefully. Here are a few nuggets of knowledge you’ll need to keep in mind to avoid a financial crunch down the line.
1. Your living costs may not go down all that much
A lot of people think that once they retire, they’ll magically start spending a lot less money. But why? What about retirement is going to change your expenses other than not having to drive or take the train to work? You’ll still need a home, food, medication, and so forth. In fact, since you’ll be left with added free time on your hands, you may end up spending more money in retirement just to stay busy.
2. You can’t live on Social Security alone
You may be planning to mostly rely on your Social Security benefits to stay afloat in retirement. But those benefits will only replace about 40% of your paycheck if you’re an average earner, and as we just discussed, your living costs may not drop all that drastically once you leave the workforce behind. In fact, Social Security pays the average senior today $1,543 a month. If that doesn’t sound like enough to live on, then you’d better plan to ramp up your 401(k) or IRA contributions.