Retirement Needs Planning
You would get a rough idea as to how you can calculate your retirement needs by studying the bank statements.
First off you will need to consider your basic necessities, which include, food, clothing and common medical expenditure, gymnasium and library fee, household expenses such as water, telephone and electricity bills. Based upon your current expenditure, you can calculate these expenses on an annual basis. You would also need to add the current inflation rate while calculating the basic necessities. These are inevitable expenses and have to be fulfilled.
Old age means more health related problems. Therefore, you should also calculate the costs to medical checkups and procedures related to ailments that you suffer from. Consider the costs of tests, average doctors’ fees, and also the premium of a long-term health insurance policy that would extend for several years into your retirement. Now, all your medical expenditures can be fulfilled with the help of provisions specifically dedicated for the purpose. For instance, a medical insurance policy, an annuity dedicated for all medical expenditures. You can also have Medicare, TRICARE and even Social Security, to cater to your medical expenditures. However, these provisions have to be foolproof and you should be able to rely on them without hesitation.
Expenditure for Recreation
Taking a vacation twice a year, subscribing for recreational facilities in clubs, etc. can be considered. For this purpose, you can draw an estimate for one time vacations from tour packages. A retirement needs analysis that is carried out carefully allows you to plan properly for recreation purposes also.
Few of us might prefer availing the benefits of living in retirement homes. This is probably the best way to live life after retirement. The retirement homes are meant for housing medical professionals who in turn would be looking after you. In addition, you would also have other senior friends living with you. These senior homes specify a comprehensive annual figure of fees for the services they offer. You can consider the figure of expenditures specified by them while calculating the retirement fees.
Your Hobby and Passion
There are many of us who love music. You may think of pursuing your hobby after retirement. For this, you can make a proper provision by estimating the approximate needs or requirements to pursue the hobby. It is important to learn how to calculate retirement income if you want to make provisions for a hobby, recreation or other similar needs.
Taxes and Premiums
Even after retirement, you will have to pay taxes for the income you obtain through mutual funds, pensions, retirement funds, interest in savings, and insurance benefits altogether. All the money that one benefits from through these funds go into the bracket of taxable income. You will have to make a total of all these incomes and benefits and calculate the limit beyond which tax is levied on these income sources. If the answer is yes, include the total tax into your annual retirement needs. Apart from that, you will also need to consider property tax and inheritance tax or for that matter any other state level tax.
On the whole, financial experts often state that a person should enjoy benefits of at least 70% of the pre-retirement income from all the provisions he/she has made. Calculating your annual expenses should also give you an idea of your retirement needs. Exclude your credit card bill, mortgage, loan and premium payments. Add 25% more into it and that will be your retirement need. There are few important points which need to be considered so that your life post-retirement remains tension free: get rid of all debt, cancel the credit cards and do not borrow under any circumstance. Secondly, make concrete provisions for your medical expenditures. Thirdly, do not depend on just one source of income or money, make multiple provisions. Hope you have got all your answers on how to plan for your retirement.