By Yusuf Osman, MBA
Many women preparing for retirement find themselves asking the question: “Will I have enough money to maintain my lifestyle?” Unfortunately, there’s no one-size-fits-all answer.
There are many factors at play. You need to figure out how much money you spend now and how much you expect to spend in the future. You also need to project the retirement income you anticipate receiving and make adjustments as needed. It’s a complicated equation with many variables, but with some planning, you can proceed confidently.
Your specific situation and needs will determine whether you have enough to maintain your current lifestyle in retirement, but here are the top considerations when looking to the future.
Examine Your Monthly Expenses
It’s often said that in retirement your expenses will be lower than in your working years. The rule of thumb usually quoted is that you will need 80% of your pre-retirement income to maintain your lifestyle. (1)
Now, this is still highly dependent on your specific life circumstances. Typically, expenses that are directly linked to work, like transportation costs, parking, and Social Security taxes, will decrease. Since you are retired, you obviously won’t be setting aside money for retirement—so that’s another monthly expense that will disappear. If you’re a homeowner, you’ll also need to consider whether your mortgage will be paid off or if you will continue to make monthly payments into retirement.
Consider What Monthly Expenses Will Increase
However, other costs, such as medical care and leisure expenses, are likely to increase. Medical costs are one of the most overlooked expenses when planning for retirement. Another cost that is often underestimated is travel. The average retiree in Canada spends over $28,000 a year on travel. (2) You may find that lifestyle funding must increase as you have more free time.
And according to a BMO Financial Group study, other common expenditures among Canadians in retirement have included purchasing a new car and major home renovations. The study also found that a quarter of respondents felt their savings were not sufficient. (3) This means that it’s essential to factor in all the ways your costs may increase in retirement, and what additional expenses you may have.
Anticipate Any Changes in Life
Major life changes may continue into retirement. One unanticipated change could be relocation. Because cost of living is highly dependent on where you live, a retirement fund in one location may be more than enough to cover all your expenses, while the same amount may not be enough to maintain your current lifestyle.
Think carefully about where you expect to retire and if you ever plan to move. I always advise my clients that it’s better to be safe than sorry. Anticipate any potential life changes, like moving to a city with a higher cost of living, and you’ll be glad you incorporated it into your plan.
Put a Plan Together
No one can predict exactly what returns your portfolio will generate. However, an investment advisor can guide you as you develop your personal investment strategy. An advisor is there to help you not only plan, but monitor and adjust your strategy as needed to help reach your goals.
That’s why my Life by Design Plan is specifically tailored to your life vision. And not only do I work with you to create a plan that aligns with your lifestyle, but I am your partner in financial education. I believe that the more you increase your financial knowledge, the more confident you will be in your investment strategy; in turn, you will likely see greater financial success.
A Trusted Advisor Can Make the Difference
Consulting with an advisor has the potential to provide you peace of mind that you’ve prepared for all possible scenarios, including ones you couldn’t have anticipated when thinking about your future retirement on your own.
Figuring out whether you will be able to afford your lifestyle in retirement is a daunting task. But you don’t need to do it alone. Contact me at (613) 230-5895 or firstname.lastname@example.org and we’ll discuss how you can set yourself up for the life you envision for today and in the future.
Yusuf Osman is a Senior Investment Advisor at Argosy Securities Inc., an independent full-service financial advisory firm dedicated to helping clients create financial freedom, security, and peace of mind. With over 30 years of experience in the finance industry, Yusuf is committed to educating, engaging, and inspiring as many people as possible to take control of their finances. He spends his days developing a thorough understanding of his clients’ lives, concerns, and dreams to help them build a financial plan that keeps pace with changes in both the markets and their lives. Yusuf graduated from the University of Ottawa with a bachelor’s degree in Science and earned an MBA in Finance from Queen’s University. To learn more about Yusuf and his Dynamic Wealth Program for Women, go to https://www.argosy-osman.com/women or connect with him on LinkedIn.
The views expressed do not necessarily reflect the opinion of Argosy Securities Inc. Neither Argosy nor its affiliates accepts any liability whatsoever for any loss arising from any use of this report or its contents. This does not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. Please consult a professional before making an investment decision.