The funny thing about the retirement age is that it’s something of a myth. There is, in fact, no pre-established retirement age. However when asked when they plan to retire, most Americans will either say 62 or 65 years of age. Some people think of it as 62 because that’s the earliest you can claim your social security retirement benefits, but if you choose an early retirement, you’ll only receive 80% of your retirement benefits. Others believe its 65 because that used to be the age when you could full retirement benefits; however, it’s now moved up to 66 years.
So, if you were to retire when you were eligible to receive your full benefits, what will your basic expenses for food, shelter, and transportation be? According to the Bureau of Labor Statistics, these big costs from 65 to 74 will be about $6,303 for food, about $15,838 for housing, about $8,338 for transportation, and about $5, 956 for health care.
However, another expense you may not have considered is funeral costs. Since this can average about $12,000, one way to take care of it ahead of time would be to research how burial insurance works.
Here are some tips on what you can do now to be in a better position to meet food, shelter, transportation, and burial expenses:
If your current food and beverage cost are high and you’re wondering how you’ll manage to pay for it all when you’re not earning as much as you do now, you may be spending more than necessary. You may be overspending by buying too many snacks and comfort foods, buying foods that simply pile up in your pantry, or buying fresh foods that spoil by the time you’re in the mood to eat them.
Now would be a good time to start tracking how much you spend on your grocery bills and dining out. You can use the money you save to contribute to your retirement savings account. Cutting down on surplus expenditures will also make it easier to budget your food expenses when you retire.
Use a free online expense tracking system to figure out how much you’re currently spending on food and dining out, take a packed lunch to work, and consider eating out as a treat rather than a necessity.
If you own your own home, plan to completely pay off your mortgage shortly before you retire. Another option is to refinance your mortgage to a fixed loan to make your payments predictable.
Also, now would be a good time to take care of your major home repair expenses, from leaking refrigerators to worn roof tiles, while you still have a regular paycheck. .
Now would also be a good time to think of ways that you can reduce your current transportation costs. You could, for example, reduce the frequency you buy a new car, maintain your car more regularly, replace your gas guzzler with an energy efficient car, or take less road trips. Put the money you save into your retirement savings account. Additionally, when you retire, live in a city with good public transportation. Many cities provide citizens with free or low cost public transportation.
Research the cost of funeral home services, cremation, cemetery burials, headstones, and so on. Funeral expenses can range from $7,000 to $12,000. If you decide on insurance, speak to a licensed pre-need specialist about a funeral plan.
These four tips on how to start saving money now on food, shelter, and transportation will allow you to have more money when you retire to travel and spend quality time with your grandchildren. You’ll also spare your family any financial hardships by researching how to go about covering your funeral costs.