|
Generally, you will need 70 percent to 90 of your preretirement
income to live comfortably in
retirement. The assumption is that
by retirement most debts will be
paid in full, your children will
be independent, federal income
taxes will be lower and certain
work-related expenses will
become unnecessary. But your
situation may be quite different.
Many individuals are waiting
until their 30s to have children,
meaning college tuition costs
may come just as they prepare
to retire. Others may foresee a
need to provide financial help
to aging parents. Some expenses,
such as medical care and travel,
often increase after retirement.
Financial planning professionals
suggest that all your basic
expenses, such as housing,
food and insurance, come from
guaranteed sources such as
Social Security and pensions.
Projecting a budget gives you
an idea of how well your
resources match current and
anticipated expenses. Complete the
Projected Retirement Budget Work Sheet
to determine if your anticipated
resources are likely to meet your
future income needs.
The
USAA Educational Foundation
publication, Financial Planning And Goal Setting,
provides more information.
Use the chart below to determine the effect
inflation may have on your projected retirement
expenses. Select the number of years until
your projected retirement. Then multiply your
Annual Total Expenses (from the Projected Retirement Budget Work Sheet)
by the selected rate of inflation factor.
Example: If your current annual total expenses
are $40,000 and you plan to retire in 10 years,
your projected retirement expenses will be
$59,208 at a 4 percent rate of inflation.
|
Rate Of Inflation
|
|
Year |
3% |
4% |
5% |
6% |
| 1 |
1.0300 |
1.0400 |
1.0500 |
1.0600 |
| 2 |
1.0609 |
1.0816 |
1.1025 |
1.1236 |
| 3 |
1.0927 |
1.1249 |
1.1576 |
1.1910 |
| 4 |
1.1255 |
1.1699 |
1.2155 |
1.2625 |
| 5 |
1.1593 |
1.2167 |
1.2763 |
1.3382 |
| 6 |
1.1941 |
1.2653 |
1.3401 |
1.4185 |
| 7 |
1.2299 |
1.3159 |
1.4071 |
1.5036 |
| 8 |
1.2668 |
1.3686 |
1.4775 |
1.5938 |
| 9 |
1.3048 |
1.4233 |
1.5513 |
1.6895 |
| 10 |
1.3439 |
1.4802 |
1.6289 |
1.7908 |
| 12 |
1.4258 |
1.6010 |
1.7959 |
2.0122 |
| 14 |
1.5126 |
1.7317 |
1.9799 |
2.2609 |
| 15 |
1.5580 |
1.8009 |
2.0789 |
2.3966 |
| 16 |
1.6047 |
1.8730 |
2.1829 |
2.5404 |
| 18 |
1.7024 |
2.0258 |
2.4066 |
2.8543 |
| 20 |
1.8061 |
2.1911 |
2.6533 |
3.2071 |
| 25 |
2.0938 |
2.6658 |
3.3864 |
4.2919 |
| 30 |
2.4273 |
3.2434 |
4.3219 |
5.7435 |
|
Basic Money Management
Basic Money Management
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