Planning For Old Age

 

This morning I talked on the phone  with my friend about our financial plans for retirement.  We discussed how much income we will have, where we will live, what housing and living expenses will cost, and other subjects.

It is so important not to let retirement sneak up on you!  I can't tell you how many of my dancer friends have had to have unexpected surgeries at around the age of fifty.  None of us had purchased disability insurance.  (which is very expensive.)  When you are self employed, if you can't work, you don't get paid.  No one thinks that they are going to be the one on the operating table, but it is highly common.

I never imagined that I would be having my hips replaced at age fifty.  Fortunately, I had six months of living expenses in my savings account.  I also had a large stockpile of food, a productive garden and orchard, and a paid off home.  Many others aren't so lucky.  

It's wise to rehearse for your retirement.  Practice living on the amount of money that you anticipate receiving.   Factor in for inflation.  That surprises many people.  How long will your car last?  Will you need to replace it?  Can you walk or bicycle places so that you aren't wasting trips?   Keeping your mileage low really saves money.  Older cars are much cheaper to insure and register.

Will your home need a new roof?  How about your appliances?  How old is you water heater?  Do you have mature trees that need trimming?  All of these costs can sink a budget, if you haven't planned for them in advance.

I personally think an older person should have five years worth of living expenses in savings.  If there's a downturn in the market, you can pull on that cash and not lose a huge percentage of your principal.  

It's helpful to keep track of your net worth.  You can check your home's value on Zillow or Realtor.com.  If you add up the totals on what you have, you can get a visual picture of whether or not you are headed in the right direction.  Planning is everything.  Just getting started is the main thing.  

How does your future look?  Do you feel confident and optimistic about the old lady or man that you will become?  Will that person be secure and comfortable?

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