You’ve worked hard, and retirement is the time to enjoy the fruits of your labours. Predicting how much money you need for retirement may seem difficult, but knowing the top five areas that retirees spend money on can give you a place to start planning.
In descending order, they are:
Home Sweet Home
Even after retirement, housing is still the single largest monthly household expense. There are annual costs to consider, even if the mortgage is fully paid. Monthly expenditure includes property taxes, insurance, utilities, repairs and maintenance and household supplies. According to Statistics Canada, 25%1 of Canadians aged 60-69 still have a mortgage and half of Canadian homeowners age 50 to 59 still have mortgage debt based on Statistics Canada information. At about 40%2 of total expenses, housing decisions will need to be a key part of your retirement savings plan.
Food for thought
The second largest monthly expense for retirees is food, although as a percentage of overall household expenditure, this amount drops3. This reduction in costs may be the result of having more time to spend at home preparing meals, looking for sales and senior discounts.
Drive, Uber or Lyft
Transportation costs stay steady at approximately 19%4 of household spending throughout adulthood and into retirement. Healthier seniors may be able to keep their vehicles on the road for longer, but it is important to consider alternative methods of transportation and their respective costs in the event that driving is no longer an option into retirement.
Sail Away
Retirement likely triggers thoughts of long holidays on the Italian Riviera or cruising to Alaska. You will want to ensure that you’ve saved enough to escape the cold winter months or take the holiday you’ve always dreamed of.
An apple a day
Another area of spending that nearly doubles in retirement is health care. As longevity increases, seniors will need to budget more money for health care expenses into retirement, including medical costs only partially covered, or not covered at all, by government plans.
It takes some planning to ensure you have enough retirement savings to spend on the essential items for day to day living, but also to enjoy retirement activities.
Let’s work to build out a retirement plan to meet your retirement lifestyle goals.
2 http://www.statcan.gc.ca/pub/75-001-x/2011002/charts-graphiques/11417/cg00a-eng.htm
3 http://www.statcan.gc.ca/pub/75-001-x/2011002/charts-graphiques/11417/cg00a-eng.htm
4 http://www.statcan.gc.ca/pub/75-001-x/2011002/charts-graphiques/11417/cg00a-eng.htm