"When you retire, you may end up needing less income than what you need during your working years. The reason is because a number of your expenses may be lower. If you bought your home in your 30s and retire in your 60s, you may no longer have a mortgage by the time your career comes to an end. Not having to make those monthly payments could free up a lot of room in your budget."
"Similarly, if you're used to spending $200 a month to commute to a job, once you're retired, you won't have to bear that expense. And you may find that you're able to downsize from a two-vehicle household to a single vehicle if you and your spouse no longer have jobs to go to, saving yourselves money as retirees."
"Still, there's only so much of a pay cut you can afford in retirement, as many of the expenses you face during your working years will still be in play. You'll still need to buy food, pay for utility services, and cover the cost of healthcare. That's why planning to rely heavily on Social Security in retirement may not be such a smart move. While it's okay to incorporate those benefits into your retirement income plans, depending on them as a major source of income could come back to bite you."
Retirement can lower many expenses such as mortgage payments, commuting costs, and the need for multiple vehicles, reducing overall income requirements. Essential costs like food, utilities, and healthcare remain, limiting how much income can be cut. Social Security can be part of retirement income but typically replaces only about 40% of pre-retirement earnings, which may leave a gap. A notable share of workers expect Social Security to be a major income source, so planning additional savings, investments, or income streams is important to avoid relying too heavily on Social Security alone.
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]