Budgeting For Your Future Needs at Home
Let’s start with the basics. Money comes in and money goes out. The first step in any budgeting plan is to figure out how much income you will have to work with in retirement. This will be the sum of:
- Your Social Security benefit
- The age you choose to claim your Social Security benefits
- Any pensions due to you
- Divestments from IRA or 401K savings accounts
- Investment income
- Any benefits from short term or long term care insurance
- Expected or anticipated support from friends and family
This last one is important and leads into the next part of things – your expenses. According to Fidelity Investments®, you can expect to spend anywhere between 55% – 80% of your monthly income in retirement depending on your income, lifestyle and health care costs. If the first six items above do not meet this range, then your family may need to fill in the gap.
Alternative solutions like reverse mortgages and reverse life insurance policies may be available but should be carefully researched before engaging.
Here are some additional resources that may help with your understanding of this topic:
- Fidelity Investments – Budgeting and retirement, overview article
- Social Security Administration – Estimation tool for your monthly benefits in retirement
- AARP – What to know about reverse mortgages