The average retirement income according to standard retirement planning assumptions, could possibly be calculated on about 75-80% of your working salary. This should be sufficient to see you through a comfortable retirement as you would be downscaling expenses and costs during retirement. Although this is the average, each person’s financial needs will depend on their desired lifestyle. Some will need a higher income if they choose to lead a lavish retirement.

Decreasing costs could include lower transport costs as you won’t be commuting into work every day, downscaling to only one vehicle or to a smaller home, lower car insurance premiums with pensioner discounts and life insurance.

But no matter what your desired income would be, there are certain expenses that are going to increase when you retire.

• Health insurance – let’s face it, no one likes getting old, but as we get older our health issues increase and we need more medical care. You will have to increase your health insurance to cover these costs unless you are fortunate enough to get free state care.
• Care costs – you might have to pay for care such as a full-time carer or specialised care equipment like stair lifts or wheelchairs etc.
• Travel expenses – although your daily travel costs will decrease, your leisure travel costs will increase e.g. more flights abroad for vacations, more trips to visit family, more vacations locally. Add on things like air travel and train travel costs.
• Property taxes – an odd thing to consider. As your property grows in value, so does your property taxes. Your home will continue to increase in value as you enter retirement.
• Entertainment expenses – now that you have all this free time, you will engage in more leisure activities like eating out, going to the cinema, going to more theatre shows and attending more activities with the grand kids.
• Relocation costs – many people in retirement downscale their homes. This means moving furniture or relocating abroad. You might not be as able handed as you used to be and would have to pay for professional movers to pack up your belongings and move them for you.
• Family costs – remember that being a pensioner brings along with it grand kids. You will find that they will increase in number as time goes by. The costs of presents and birthday parties and spoiling them will increase. *

Retirement is meant to be a relaxing time free of financial worries. Unfortunately the cost of living does not disappear.

Make sure to include unforeseen expenses into your retirement budget. Your financial adviser can help map a complete retirement budget for you. [email protected]

* https://www.rd.com/
Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere adviser for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.