Most people don’t spend a lot of time planning for retirement. I’ve heard it said several times (so it must be true) that the average person spends more time planning a vacation than they do planning for retirement.
Maybe it’s true, even if it’s an exaggeration, it does seem that people don’t really spend enough time planning for retirement. Maybe they feel that they will have lots of time for planning after they retire. Unfortunately, it doesn’t really work that way. Often times, people retire without a plan and they end up wasting the rest of their lives, not really sure what they should be doing.
Some people look at their finances before they retire. Many people in pension plans assume the pension plan will be sufficient. They can be very unpleasantly surprised.
In any event, you need to know how you’re going to spend your time before you can decide how much money you will need. And, if you’re like most people, you will realize you don’t have enough to do everything you need so you have to adjust your wish list.
In any event, one thing people forget to include in their plans is surprises. By this, I mean foreseeable surprises. For example, you’re going to have to replace your car every once in awhile. Most people think of that. However, what about the furnace in your house? The shingles? Appliances? If you’re going to be retired for 15 to 20 years or more, which is the average life expectancy these days, you’re going to have to replace some or all of these things, at least once.
In addition, there are probably going to be unforeseen health related expenditures at some point during your retirement years.
So, when you’re figuring out how much money you need to retire, leave room for surprises.