The stereotype for retirement is people spending their time fishing, gardening, horseback riding or playing golf — and not doing much else.
The classic idea of retirement is a life of uninterrupted leisure is evolving. With people living longer, they’re more active in the early years of retirement, and many choose to focus this energy on a retirement lifestyle that’s much different than the stereotype. In this kind of retirement, people may do volunteer work, start a new business (preferably one that doesn’t require a lot of capital), take care of their grandkids during the day or work part-time to stay busy.
Of course, many retirees work part-time to reduce the strain on their savings. So how much do you need to retire?
In 2006, Lee Eisenberg published a book on the subject titled “The Number,” which has prompted many to ponder how much they’ll need. Today, financial services companies run advertisements saying you should know what this number is. While this may be a bit oversimplified, it has some validity.
The resources needed for retirement vary widely with individuals and their circumstances, but there are some established ways of estimating how much you’ll need and how much you can spend:
You can take control of these variables by setting a retirement budget that’s based on realistic goals, and steadfastly sticking to it. Remember that if you’re counting the value of your pre-retirement home toward the total wealth you can spend during retirement, you can’t gear your budget to allow more spending just because you sell it and move into a less-expensive home (like a condo in Florida).