You Won't Believe What Little Income Retirees Are Living On
According to The Motley Fool, you'll often hear that retirement is a less expensive period of life than your working years, and there may be some truth to that. Once you retire, you won't have to pay to commute to a job, and you may even be able to get rid of a car if you don't have to travel to an office daily. Also, many seniors manage to pay off their homes before they retire, so that's one less expense to contend with.
However, just because your living expenses may decline in retirement doesn't mean they'll drop all that drastically. You'll still need to pay to maintain your home, put food on the table, and cover the cost of utilities. You'll also have to spend money on healthcare, which may not be as affordable as you'd think under Medicare. That's why it's important to enter retirement with a healthy level of savings. While you can expect some income from Social Security, those benefits generally won't be enough to cover your living expenses in full. But unfortunately, many of today's seniors are relying heavily on Social Security, and as a result, they're living on very little.
The median annual household income among retirees today is just $29,000. Given that the average individual Social Security benefit today is only about $1,500 a month, or $18,000 a year, that's not shocking. But it also means that a lot of seniors are no doubt struggling financially, and if you'd rather not land in a similar boat, you'll need to be prepared to save aggressively.
What do you want your retirement to look like?
It's quite possible to live frugally in retirement. Maybe you'll downsize your home, do all of your own cooking, and spend your days gardening and spending time with your grandchildren rather than traveling. But you'll still need money to cover your expenses comfortably without having to penny-pinch on a daily basis, and to that end, Social Security generally won't be enough. In fact, if you want to retire with an annual income that's more generous than $29,000, you'll need to be prepared to build a solid nest egg of your own.
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