According to The Global Wealth Report (2021), there are approximately 21 million millionaires in the United States. If you are a member of this group, congratulations! If not, practicing strategic saving and investing behaviors might help you get there by the time you retire.
One of the questions that is easy to forget when planning for retirement is, what does it cost to be you? Having an estimate of your monthly bills in your mind is different than doing the math based on facts. When you are not in the habit of tracking expenses, it is easy to forget spending on gifts, vacations, travel, and home décor while planning for retirement.
Several areas should be taken into consideration before the transition from paid to unpaid work:
· Lifespan – The longer you live, the more money you will need. Depending on your family history and current health status, it is possible that you might make it to 80 years old or beyond. National Center for Health Statistics
· Geography – Where you live has a major influence on how long your retirement nest egg will last. A million dollars in New York City or Los Angeles will not go as far as it will in Huntsville, AL. Cheap Places to Live
· Retirement Income – Social Security might not be able to buy the life you hope to have in retirement. However, whatever amount you receive could slow how quickly funds are depleted from your retirement accounts. Retirement Income Calculator
· Health – Health costs tend to rise as you age. Much of how you live your life in your 40s and 50s, in addition to genetics, will impact your quality of retired life. Consistent exercise and healthy eating actually increase total health care costs due to a longer lifespan. That’s a good thing! Health Care Costs in Retirement
· Lifestyle – If being a free-spirited spender during your working years is a habit, that behavior is even more unsustainable during retirement. Most people do not realize their income drops dramatically when supporting themselves from savings accumulated during their working years.
· Inflation - One million dollars usually has less buying power in the future, in contrast to today, due to a gradual increase in prices which decreases the purchasing value of money.
There is not a one size fits all for retirement planning. Hopefully, focusing on these six categories should prepare you for the life you want as you ride off into the sunset. One million could be enough for some, but not for others. The choice is yours!
