Determining Your Monthly Needs Once You Retire

Finance by  Mashum Mollah 07 January 2020

Retirement

Many factors affect your retirement plans and how much you need for them. You need to determine the kind of lifestyle you plan to have once retired. Do you want to travel? Do you want to take up a new hobby? Do you plan to work on the sides? Are you going to start a business? You also need to decide when you are going to retire and for how long you think you’ll be retired.

You can get many benefits as a retiree. You can avail of Verizon pension benefits if you’re already part of the company’s employee program. You’ll get discounts and freebies as a pensioner. Other companies offer a similar program.

How Much Do You Need a Month?

pension plan

Generally speaking, financial experts advise that you should have at least 70% to 85% of your annual salary. So if you’re raking in $100,000 a year, you should have at least $70,000 a year once you are retired. That’s how much money you need for basic necessities such as food and utilities, as well as savings.

That’s assuming you have paid off your credit card debts, car and home mortgage, and life and health insurance. What if you have pending loans? You need to downsize your lifestyle then. If you love eating out, you have to stay more at home and make meals yourself. If you shop nonstop, you’ve got to curb your appetite for shopping.

Another thing that you should worry about is the inflation rate. Your pension plan will increase when the standard of living increases, but it will only be a fraction of the inflation rate. If the inflation rate is at 4%, the best you can get is a 1% increase in pension. This means that your pension will soon be not enough to afford necessities and a few luxuries. Are you okay with this?

What Can You Do to Earn While Retired?

By now, you should have investments that will bring dividends in the future. Stocks, for example, have higher returns than bonds. Cash and fixed deposits are good and safe, too, though they have low returns. You have to be smart where you put your money. Starting early is always a great plan.

Should you start your own business? Can you be a freelancer? Yes, why not? You can stand as a consultant for the same firm you’ve been with in the past decade. You can teach. You can write. You can get into a hobby and sell your outputs. There are literally hundreds of jobs you can do on the side to increase your earning potential.

What Is the Best Plan of Action?

The best plan to get ready for retirement is to save and invest. You need to invest as much as you can in your pension plan. You need to save for medical expenses. You have to make sure that you are eligible for the government’s health insurance plan. If not, you need a private health insurance policy.

It is not uncommon to hear the term “half-retiring.” It happens because some people cannot afford to retire fully or they want to keep themselves busy. But whatever you plan to do, the best advice is to focus on your expenses and not on your income. Cutting down on your expenses and paying off your debts before retiring is the best course of action.

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Mashum Mollah

Mashum Mollah is an entrepreneur, founder and CEO at Viacon, a digital marketing agency that drive visibility, engagement, and proven results. He blogs at thedailynotes.com/.

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