Identify your situation in order to talk about the cash you’ll need in retirement. How much retirement money do you really need? Are you already retired and deciphering how you’re going to live on what you have? Or, better yet, are you looking at retirement down the road and want to plan ahead? These are real but very different ball games. We begin with the individual who is looking ahead to retirement.
There are all kinds of recommendations floating around about how much you’ll need to retire at your standard of living. Only you can put a good figure on that problem. Some people will automatically say, “You need $1-million in your retirement fund when you stop working.” For some people that may be about right, but seriously, not everyone is the same. So, you need to do the math based on these simple facts:
- How much money will you spend after retirement? A good starting point for you to start this figure is how much you’re spending now. From that current spending figure, deduct everything you won’t be spending after retirement. Consider things like payroll and withholding taxes you won’t be paying then and deduct that amount. Will there be changes in your lifestyle like moving into more economical housing or an area where the cost of living is lower? Deduct the difference. How will retirement reduce your commuting expenses, clothing budget, or your grocery buying? Figure that all up and deduct from your baseline number. Finally, deduct the amount you’ve been saving each month out of your paycheck. Obviously, you won’t be doing that any longer.
- All of the above deductions should bring your annual expenses down anywhere from 30% to 50%. Then turn to your retirement income. From what you estimate will be coming in, subtract your expected monthly expenses. Probably you will see a gap in the difference. It is that gap you need to prepare for as you talk to your financial adviser.
For those who are already retired, the situation is quite different. It is long past the time for setting up a retirement account, so the situation must be looked at from a whole new point of view. It is not impossible, nor is it luxurious. We deal here with reality.
Checkout possibilities for making money after retirement. Many over-50s tell us that retirement to a rocking chair is not their cup of tea. Furthermore, there is a finite amount of “honey do” work to be done around the house. Your health is good, so you start looking for part-time work that will bring in extra money over your social security check and any pension you may have qualified for. Together with your age and work experience, you have an advantage when looking for part-time jobs—namely, you have available free time that an employer can utilize without running into conflicting schedules. Furthermore, you have some income each month, so you don’t need to demand high salaries. So, what might you be looking for in the way of extra income work? Here are a few suggestions to consider:
- Tutor. Many families are looking for help with their school-age children who may be struggling with math or language arts. If you fit that bill, go for it.
- Bookkeeper. If you have a background in bookkeeping or accounting, there are many small businesses who could use your expertise. These may not be advertised jobs. Try dropping in to offer your services.
- Temp work. Typing, computer programs, reception, and the like may be good opportunities for your part-time work when regular employees go on vacation or have sick leave.
- Big box store greeter. You’ve seen them at places like Wal-Mart and noticed those people are in your age bracket or higher.
The above is only the tip of the iceberg when it comes to part-time jobs. Go online and see what’s available in your area. Remember that making a little extra money must also be accompanied by finding ways at home to reduce your expenses. That’s fodder for another story.