The Cost of Retirement and How You Can Start Saving Now


Were your expenses in your 20s the same as your budget today? Probably not. Similarly, your retirement spending will contrast with how you currently spend your money. So, what should you budget for in retirement? How can you start saving today? These questions and much more will be answered below.

How Much Does Retirement Cost?

This is a tough question to answer since it varies depending on where you live, your health status, and several other factors. Plus, we don’t know what the future holds. Currently, the inflation rate is a little over three percent per year, but that could change. According to a 2016 report from the Bureau of Labor Statistics, this is what the average senior 65 years or age or older spends per month:

· Housing – $1,294

· Transportation – $571

· Healthcare – $480

· Food – $459

· Entertainment – $205

· Personal Insurance – $228

· Cash Contributions – $191

· Other – $294

This adds up to a total of about $3,700 per month or almost $45K per year. Plus, this number is likely to be even higher if you need to enter an assisted living facility at some point. On average, assisted living costs $3,628 per month.

How to Save for Retirement

First, the earlier you start saving for retirement the better. The most reliable way to save for retirement is to put part of every paycheck in a 401(k), IRA, and invest in mutual funds with a strong, long-term track record (earning between 8% and 12% annually). All of these options allow your money to grow over time, so the more time you have until retirement, the more your money will grow. If your company provides a match for your 401(k) contributions, then this is your best option. Next, you should fully fund your Roth IRA. Just remember it is never too early or too late to start saving.

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