The rising cost of living means you need to plan on an annual retirement income that could be substantially higher than what you spend now. You may have higher expenses in some areas, such as medical care, but lower expenses in others. You can estimate your "personal inflation rate" by looking at your expected living costs in retirement. You may need between 60% and 80% of your final working years' salary.
Retirement income may be made up of pension benefits, Social Security benefits, personal savings and investments, and income from part-time work. Your financial advisor can help you develop an estimate of your needs and a plan to help you accumulate a retirement fund to provide income you'll need.
Several factors influence the amount of retirement income that you'll need, including your housing cost, the length of your retirement, whether you have earned income, your retirement lifestyle, health care and insurance costs, and the rate of inflation.
Review your household budget to find ways you can spend less and set aside more for the future. Contribute as much as possible to your retirement accounts particularly if your employer makes "matching" contributions. Recalculate your retirement savings goals several times, using different assumptions about the future each time, to gain insights about your potential financial outlook. Rebalance and diversify your investment assets if necessary.
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