"The biggest question anyone looking to transition from full-time or even part-time work to retirement asks is, "How much income will I need to maintain my desired lifestyle?" This question is undoubtedly on the minds of baby boomers, but it's also something millennials should start thinking about. First and foremost, baby boomers must look at their pre-retirement income and decide how much of those monthly expenses will stick around."
"First and foremost, baby boomers must look at their pre-retirement income and decide how much of those monthly expenses will stick around. This includes groceries, travel, hobbies, dining out, entertainment, insurance, and even cell phone bills. All of these things add up, and it will be essential to look at these items one-by-one to see if and where you might be able to cut down on some of your expenses, which in turn helps answer how much income is necessary long-term."
Baby boomers must estimate retirement income by reviewing pre-retirement expenses and deciding which costs will continue. Essential expenses include groceries, travel, hobbies, dining out, entertainment, insurance, and cell phone bills. Careful line-by-line budgeting can reveal opportunities to cut spending and determine long-term income needs. The common rule of thumb is needing 70–80% of full-time pre-retirement income, while Social Security may replace up to about 40% depending on lifetime earnings. Retirement can trigger lifestyle changes such as relocating, downsizing, or reallocating money toward hobbies and travel, requiring proactive financial adjustments.
Read at 24/7 Wall St.
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