Retirement Savings Reality Check: Will My Retirement Last

How much does it cost to get by in retirement?  

...Pretty much the same as before retirement... 

HOW DO YOU COMPARE?

The average retiree spends $4,818 on monthly expenses; 75% on 4 items.  How do you compare?

1. Housing ($1,734)

2. Transportation ($681)

3. Health Care ($628)

4. Food ($608)

Inflation: a concern for retirees

In 2020, inflation was 1.2%. In 2021, overall inflation surged to 4.7%, reaching a peak of 9.1% in June 2022. (Source: Investopedia).  To compensate, consumers "look for bargains" and reduce "discretionary spending". 

"After spending more than two decades below 3%, the consumer price index (CPI)—a key measure of U.S. inflation—nearly tripled from 2020 to 2021, rising from 1.4% to 7.0%. Inflation fell a bit, to 6.5%, in 2022.  Inflation occurs when changes throughout the economy drive prices broadly higher, reducing consumer purchasing power. This means that each dollar you earn buys fewer goods and services.  Inflation can impact the price of everything you need for daily living." (Source: Forbes Advisor)


Impact of inflation on consumer price

"To match the purchasing power of every $10,000 you have in savings today, you’ll need $16,400 in 20 years if annual inflation runs at 2.5%."  (Source: CNN Business) If inflation continued at 7%, for every $10,000, you'll need $38,700 in 20 years. 

Social Security Cost-of-living-adjustment (COLA) is a relatively small adjustment to help offset inflation.  In 2023, COLA was a historic 8.7%.  It is anticipated that 2024 COLA will be 50% smaller. 

Inflation and Cost-of-Living Calculator

How does your retirement expense compare with 2022 Federal Data on Consumer Spending?  An excellent calculator for understanding how inflation and our cost of living is impacted refer to the following:

How does inflation affect my standard of living? | CNN Business


CALL TO ACTION: Reducing the impact of consumer price increase  

- Housing: 

Is your home larger than you need?   

- Transportation: 

"Used" vs. "New"?  1 car or 2?  Use public transportation?  

You can save almost $10,000 a year by taking public transportation and living with one less car, according to the American Public Transportation Association.  (Source: msn.com)  Do your own basic maintenance (oil change, etc.)?  

- Health Care:  

Avoid "out-of-network medical procedures" not covered by your insurance.  

- Food:  

Have a meal plan and shopping list.  Buy grocery sales.  

- Entertainment:  

Subscribe to low-cost streaming services (Amazon, etc.)

- Travel: 

Travel during "off season".  Exchange home maintenance or child care services with your children when staying with them. 

- High Interest Rate Loans - 

Avoid taking on debt, including credit card. 


RESOURCES THAT MIGHT BE HELPFUL..

"How Inflation Affects Your Cost of Living".  Forbes Advisor.  Coryanne Hicks and Benjamin Curry.  How Inflation Affects Your Cost Of Living – Forbes Advisor

"2022 Federal Data on Consumer Spending", Money Talk News. 

"How Inflation Affects Your Cost of Living".  Investopedia.  Michelle Ullman.  How Inflation Affects Your Cost of Living (investopedia.com)

"How Does Inflation Affect My Standard of Living - Calculator".  CNN Business.  How does inflation affect my standard of living? | CNN Business

Nervously Nearing Retirement? Four Do’s, Four Don’ts and One Never.  Thomas Diorio.  MSN.com.  Nervously Nearing Retirement? Four Do’s, Four Don’ts and One Never (msn.com)

The average retiree spends $4,818 on monthly expenses — and burns 75% of that on these 4 things. How does your own spending stack up?  Dori Zinn.  msn.com  The average retiree spends $4,818 on monthly expenses — and burns 75% of that on these 4 things. How does your own spending stack up? (msn.com)


SO...What'd we miss??

We welcome your comments: What are you doing to assure that "retirement funds last"?

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