Retirement may not be Easy Street

Unless you are or will be the recipient of a large inheritance, you will need to plan for retirement. Remember that balanced budgets don’t just happen – they require planning.

Often, people do not begin their retirements when they plan to. Layoffs in particular, can upend the best laid plans. So the key to a successful retirement is to start early and save aggressively. This is particularly the case in a US economy that is facing stiffer challenges and a big question mark hanging over Social Security and healthcare.

Here is a list of the typical spending categories and how they change in retirement.
• Housing (lower)
• Commuting (much lower)
• Work clothes (much lower)
• Healthcare (higher)
• Leisure Travel (higher)
• Food (same/higher)
• Non-work Clothing (higher)
• Life Insurance (lower)
• Utilities (higher)
• Dependent Care (lower, variable)
• Giving (lower)
• Education (lower)

Many people underestimate the amount they will need in retirement and consequently do not save enough. Today especially, people are living a lot longer and the last thing you want is for an insufficient nest egg to be gone before you are.

Remember that the power of compounding is your friend here. It helps if you start saving early using a mix of instruments. The bulk of your savings should be in tax deferred accounts – a 401K or a 403B plan perhaps.

If you are a small business owner (SBO), you will want to research an SBO-401K, a tax-deferred, government-registered retirement savings plan specially designed for you.