You know how important it is to plan for your retirement, but where do you begin? One of your first steps should be to estimate how much income you’ll need to fund your retirement. That’s not as easy as it sounds, because retirement planning is not an exact science. Your specific needs depend on your goals and many other factors. Many financial professionals suggest that you’ll need about 70 percent of your current annual income to fund your retirement. This can be a good starting point, but will that figure work for you? It depends on how close you are to retiring.To hire best Montecito estate planning attorney gothrough http://www.lawbh.com/montecito-estate-planning-attorney.
If you’re young and retirement is still many years away, that figure probably won’t be a reliable estimate of your income needs. That’s because a lot may change between now and the time you retire. As you near retirement, the gap between your present needs and your future needs may narrow. But remember, use your current income only as a general guideline, even if retirement is right around the corner.
To accurately estimate your retirement income needs, you’ll have to take some additional steps. Your annual income during retirement should be enough (or more than enough) to meet your retirement expenses. To help you get started, here are some common retirement expenses:
Food and clothing
Housing: Rent or mortgage payments, property taxes, homeowners insurance, property upkeep and repairs.
Utilities: Gas, electric, water, telephone, cable TV.
Transportation: Car payments, auto insurance, gas, maintenance and repairs, public transportation.
Insurance: Medical, dental, life, disability, long-term care.
Health-care costs not covered by insurance: Deductibles, co-payments, prescription drugs.