on April 10, 2018
If you’re like most Americans, you don’t spend a ton of time thinking about retirement. It will take care of itself, right? You’re not planning to buy a condo in Fiji or sail around the world, so how expensive could it actually be?
As it turns out, pretty darn expensive.
Just living during retirement is a huge expense. Even something as simple as three daily meals will add up to a staggering amount of money. Let’s do the math:
If you and your significant other spend just $10 per meal and eat three meals each day, that means you’ll be spending $60 every day.
Today, people are living longer than ever, so it’s not unusual to be retired for thirty years or more. However, to err on the conservative side of this calculation, let’s say you’ll be retired for 25 years.
That means: $60 x 365 days/year x 25 years
…for a grand total of $547,500!
Yes, you read that correctly. You and your significant other could easily spend half a million dollars on food during your retirement.
When you add that to mortgage/rent, transportation, clothing, insurance, and any of the fun activities you’d like to do while retired, that amounts to several million dollars.
Feeling nervous yet?
Good! I hope this blog post will give you the spark you need to get serious about investing. As a financial advisor, I’ve talked with far too many people who are lackluster about investing in their retirement. They fail to see the harm of tapping into their retirement account to buy a new boat or to make a down payment on a summer cabin.
Leave that retirement account alone! In fact, start devoting a larger portion of your paycheck to it. Believe me, you’ll thank yourself in the long run.
Though some people are nervous about investing and get jumpy when the stock market dips, a diversified retirement fund is a safe bet. Ever since the stock market opened, it has been on an upward trajectory (often outpacing inflation and definitely outpacing the interest you earn in a standard savings or checking account).
Work with a trusted financial advisor to develop a retirement savings plan and then stick to that plan. The last thing you want to do during your “carefree” retirement years is to have to resort to eating ramen noodle and tuna, like a college student!
As always, please get in touch if you have any questions about saving for retirement (or any other financial queries). I’m here to help.