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Planning Retirement Online

Lifting the Lid off Retirement

 by Jeanne Davis

Jeanne Davis.jpg (7321 bytes) Jeanne Davis is the author of “How to Plan Your Successful Retirement” and was a director of AARP (The American Association of Retired Persons) a membership organisation with 33 million members that represents the interests of people 50 and over.

Part 2  -  How Much Money Will You Need?

Having an adequate income is essential whatever your plans for retirement.  Many people think their state benefits and occupational pension (if they have one) will provide all the retirement income they need. All too often, there is a rude awakening.

  Take the time to fill out the two worksheets below.  You’ll get a clearer picture of whether or not you will be able to afford what you hope to do in retirement.  The first worksheet helps you compare your current income and estimated income in retirement.  The second worksheet totals current expenses and estimates retirement expenses. 

  The bottom line could show a happy surplus or a miserable gap  -- a wake up call to start now to boost your income or adjust your plans.

Income Comparisons

Income (annual)       Now                  In Retirement

Salary (after taxes & other payroll deductions)……………… 

___________ ___________
Savings (interest)  ___________ ___________
Investments (interest/dividends)   ___________ ___________
Property investment ___________ ___________
Profit from own business ___________ ___________
State Pension ___________ ___________
Occupational Pension  ___________ ___________
Personal Pension  ___________ ___________
Annuities ___________ ___________
Insurance Income ___________ ___________
Other sources  ___________ ___________
Total Annual Income    ___________ ___________

Expenses now and in retirement

Step 1 Step 2
Current Expenses   Est. Retirement Expenses
Annual  Annual 
Food         ___________ ___________
Rent/mortgage ___________ ___________
Transportation  ___________ ___________
Clothing  ___________ ___________
Utilities  ___________ ___________
Medical ___________ ___________
Savings and Investments ___________ ___________

Insurance: life, health, auto, home    

___________ ___________
Education:  ___________ ___________
Pension  ___________ ___________
Taxes ___________ ___________

Other: entertainment,

holidays, contributions    

___________ ___________
Total  Expenses      ___________ ___________

The Bottom Line

Annual Income  ___________ ___________
minus Annual Expenses ___________ ___________

equals Annual Surplus, or gap 

___________ ___________

A few useful reminders

In retirement, some of your current expenses will either shrink or disappear. Eliminating work-related expenses could decrease your outgoings by about 30%. Warning:  assume some increase in expenses because of inflation, currently at 2.6%.

        Costs of commuting

        Lunch, snacks

        Work-suitable clothes

        Mortgage possibly paid off

        Children hopefully self-supporting

        Life insurance converted to paid-up policies, eliminating premium payments

        There should be a welcome reduction in taxes

        Medical savings: free NHS prescriptions for over 60s, free eye tests. 

        In some areas, free transport or reductions for pensioners

        Concessions for pensioners in some cinemas, exhibitions

Best book:  Good (non) Retirement Guide 2000, by Rosemary Brown, Enterprise Dynamics Ltd.



In the next edition of  this column:   ways to boost your retirement income whether or not retirement is years ahead or imminent.



To view previous articles in this series - see the laterlife-interest index page  


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