The retirement savings conversation today focuses on whether you
are saving enough, considering that people are living longer and
corporate pension plans with defined benefits are becoming scarce.
People don’t feel secure about Social Security, either.
However, some people actually might be saving too much for
retirement, after taking into account factors specific to each
individual. If you’ve been saving 10 percent of your income during
your entire career, you may be doing better than you think. Take
this quiz to see which factors may affect your future retirement.
And be sure to talk to your financial planner to get a better feel
for your specific retirement planning needs.
If you have children, you likely will not
be responsible for their expenses after you are retired. Hopefully,
they will be done with school and making their own living. However,
if your adult children are still calling on you in financial
emergencies, then you need to cut the cord or take that into
account when doing your retirement planning. You might even need to
look to them in an emergency!
In any case, you will continue to be responsible for Fido in
retirement. And considering that pet care costs have been on the
rise, you might actually need to save more to account for this
Dine out a lot?
Prefer home cooking?
Studies say that people tend to dine out
less in retirement and have more time to shop for groceries and
cook at home. So you will likely be cutting down on dining-out
expenses in retirement.
If you already prefer cooking at home over eating out, you are not
likely to see your expenses go down in retirement on this
Stocks and bonds?
Prudent financial investments outside of
your 401(k) and other formal retirement savings plans could provide
additional income for you in your golden years. This means that you
may be overdoing it when it comes to savings in formal retirement
If you prefer to spend your money on decorating your home, you are
not likely to get a lot back from that sort of investment.
Furniture fashions change and you can't count on raising a lot of
money from furniture sales.
Social Security and Medicare taxes
If you are spending a considerable part of
your income on Social Security and Medicare taxes, you could be
saving too much for retirement. After you quit your job to retire,
you will no longer have to account for this expense.
If you are spending a lot on medical expenses, you are not going to
get a break in retirement. The average person's medical expenses
are likely to go up over time.
Working for a corporation?
Employees of large companies typically
spend more than the self-employed on maintaining their careers.
Expenses such as clothes, commuting, dining out and child care all
add up. After retirement, you won't have to spend a lot of money on
If you're self-employed, on the other hand, you are not likely
spending a lot on these expenses to begin with. So your retirement
spending is not going to benefit a lot from the absence of these
expenses. Not only that, you have to fork over funds for your own
retirement savings as well, and you don't get a company