The truth about retirement is that you’ll often spend more than you think you will. In many cases, how you lived your life before your retirement will be the base point for all your expenses. You may even spend more, considering that you have a retirement fund which you can use for various things.
Looking at the national averages for retirees will enable you to make informed decisions about you spend your money, whether you are currently in retirement or you’re just looking ahead.
Average Spending and the Biggest Expenses
Based on the information given by the Bureau of Labor Statistics, retirees spend around $3,800 a month or $45,756 a year. That number does not even include taxes. This means that a person who saved $200,000 for their retirement may not have enough to sustain them for four years. Even with passive income sources, $60,000 a year is no easy feat. It requires having a portfolio of over a million and at least 5% in returns annually.
It takes careful planning, and people should prepare for their retirement early. Aside from that, wealth preservation should also be at the forefront of a person’s endeavors. While you’ll likely get financial aid through friends or family, they’re not consistent and reliable. Most of the spending goes into the following categories:
Usually, a house is the most expensive cost a retiree has to pay. Based on data, many of those who retire haven’t even finished paying their mortgage. If there was no mortgage, they would still need to pay taxes, utilities, and maintenance. A person with a mortgage pays over $1,300 a month on home expenses, while a person without only pays $300.
The average retiree spends an average of $500 a month on food. It’s an acceptable rate that you can reach unless you start binging. One way to reduce costs is to seek out discounts and sales. Another way is to reduce the amount you go out each week for food.
Despite all the discounts surrounding seniors traveling, their average spending nears $600 a month. While it may seem like a lot, the average household spends $9,000 a year on transportation in comparison. One of the most expensive costs is a person’s car. Overpaying for a model may end up costing you in terms of maintenance.
One should seek out discounts and freebies offered in their area. They should also pursue more affordable rides if they are available.
It’s easy to begin spending more money if you have more free time. Most retirees use a chunk of their savings to go on a luxury vacation or travel to dream destinations. While these are fine, you should be wary about how much you spend when you’re out.
The average retiree spends around $197 a month on entertainment. Controlling this expense is all about managing your extra spending. If you need some fun, seek out inexpensive (or even free) entertainment alternatives in your area or online.
The average person in retirement spends around $500 on healthcare per month. While this is lower than some of the other expenses, you also need to consider any conditions you have or will have that may require specialized treatments.
The best way to save on healthcare costs in retirement is to make a commitment to take care of your health. It also pays to have protection like insurance which can cover your savings when the unexpected occurs.
While the categories above make up the most of a retiree’s spending, there are also other expenses to consider such as:
You’ll have to think about how much you spend on them so you live within your means.
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