muses of the moment

January 4, 2011

What will be my retirement expenses?

Filed under: Dollar Crisis, Economic Crisis, Odds 'n ends, Peak Energy, The Financial Crisis — totallygroovygirlfriday @ 1:05 am

In part three in the current series, The Paradigm Shift, we will look at three different living conditions for the early retirement years: owning your own home, renting a home or apartment, or renting a unit at a retirement living center.

I have created a simple spreadsheet that examines the potential expenses of each scenario as well as other expenses that you might want to think about. Please feel free to customize. You will have to fill in the blanks. Start with your current living expenses, back out work-related expenses, back out child-related expenses, add health care expenses, and research the assisted living costs in your area (or the area you will retire).

Side musing: groovygirl is very concerned with the media’s conclusion that if you are unemployed or retired, your actual living expenses decrease because all the work-related expenses are taken out. That is true, but health insurance premiums or if you can’t afford that, out-of-pocket health care costs, quickly make up the difference. Especially when we are talking about retirement years (not short-term unemployment). Retirement that will be 10-30 years at least. It is foolish to think that your retirement living expenses will be significantly lower over all than your current living expenses (excluding child expenses) unless you drastically lower your current standard of living.

I think this spreadsheet will also open some eyes regarding how much you will need to retire. If energy costs go up and medicare assistance goes down, which groovygirl believes will occur, many retirees will be in deep trouble on a fixed income.

As discussed in earlier posts, the inflation percentages are based on what groovygirl sees coming down the pipe between Ben’s dollar debasement, the global debt collapse,¬† and peak oil. If you do not believe that all of them will effect your retirement, please take into consideration at least one.

Inflation in everyday living costs is the number one problem facing retirees today and in the future. If you do not have a retirement savings/investment that gives real inflation-adjusted returns (and no, social security doesn’t meet that mark), you will be broke at some point during your retirement. Once broke at age 75 or 80, you have little or no ability to make further income. It is very important that you plan well now.

Retirement Costs comparison

Assumptions:

You are able live without major medical assistance during this period.

If you have a mortgage, it is at a fixed rate.

You do not have a “reverse” mortgage.

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