How Much Money Should You Save for Retirement?
By Sarah Butrymowicz, USA TODAY
Consider tracking expenses with spreadsheet
Overland Park, Kan.
Family: Divorced, two children
Job before retirement: Manager at DuPont
In order to see if the 70%-to-80% rule applies, I put together a spreadsheet with all of my preretirement monthly expenses vs. income and then did a second one with my expected retirement monthly expenses vs. expected income (pension, Social Security, investments) and compared the two. My spreadsheet indicated that I could make it on 80% of my preretirement income.
I spent a lot of time planning for my retirement, looking closely at my expected expenses and income. I had a financial adviser run the numbers for me to see if my own planning system was on the mark, and I was glad to see it was.
In retirement, I found I was spending less on business items like clothes, parking, tolls, etc., and spending more on eating out, travel and paying a larger percentage of my medical and dental insurance than before.
I diligently update my retirement spreadsheet to see where I am vs. where I thought I would be. So far, no big surprises.
There are several major things a person needs to take into account when planning to retire, including what type of mortgage they have, if they will be receiving a pension or Social Security, and if they will still work part time.
Err on the side of being too conservative and on the frugal side.
If a person makes a bad mistake when they retire, there’s little chance you can go back and “earn” your way out of trouble.