Can you give up the average retirement income?

In this article, we will discuss the topic of forgoing average retirement income and address the following points:

Average Retirement Income

The actual amount you will need depends on your cost of living and life goals, and whether you are still paying off debts. The amount that aligns with the American average may be sufficient, or you may need to work and save more to achieve your life goals.

Living Expenses during Retirement

Living expenses during retirement include the average annual spending of a household led by a person aged 65 or older, which is $50,220. However, spending tends to be lower for older retirees. Retirees should allocate about 15% of their pre-tax income to medical expenses.

How to Budget for Retirement

The actual amount you will need depends on your cost of living, your wealth, and your comfort level. You can estimate your expenses using a retirement planning table.

How to Avoid Income Shortfalls

It is best to take advantage of a 401(k) contribution if your company offers it and you are still years away from retirement. Try to benefit from traditional or Roth IRA contributions if you do not have access to an employer-sponsored retirement account or if you have extra funds to invest. You can also take advantage of IRS tax-deferred contributions if you are nearing retirement and are at least 50 years old.

Planning for Your Future

Investing in your future early always pays off because you will benefit from compound interest and feel financially secure from an early age. But there are ways to generate more retirement income even if you start late. Tax-deferred contributions and delaying Social Security benefits, along with part-time work, can be good options to boost your retirement income above average.

Source: https://www.thebalancemoney.com/can-you-get-by-on-the-average-retirement-income-5094382