News & Insights

TOP TIPS – Tailoring your Saving to your Spending

So, how much will your retirement cost? Unfortunately, there is no easy answer to this question, however, by sitting down with an international financial adviser and asking the following questions you can at least begin to get a rough idea of how much money you will need in retirement:

    • When will you will retire?
    • How long will you and any dependents need your retirement funds to last?
    • How much money do you have in your retirement accounts?
    • How much money do you have in savings?
    • How much do you currently spend each month on essentials?
    • How much do you currently spend each month on non-essentials?
    • How much are you going to set aside for medical and care expenses?

A word on inflation

Inflation will undoubtedly have an impact on how much money you’ll need to be able to fund your retirement. This is because, over time, inflation can reduce your purchasing power. For example, the International Monetary Fund forecasts that U.S. inflation will rise by an annual average of 2.25 percent until 2024.* This means that something you buy today for $100 will cost roughly 102.25 next year, more than $120 in ten years and close to $200 in twenty years – underestimate the effect of inflation at your peril.

And yet, some advisers can overstate the importance of inflation – it is not the be all and end all of your retirement planning because, for a start, you may find that some aspects of your spending will change.

It is likely that your spending will fall?

The EBRI report, “How Do Retirees’ Spending Patterns Change Over Time?”** considers the issue of how an individual’s spending falls as they age and concludes that the older people get the less they spend. For example, average household expenditure by age group is as follows:

    • 50-64 year-olds: $55,000.
    • 65-74 year-olds: $50,000.
    • 70 years-old and older: $39,000.**

Your health care spend will rise

According to a piece of research carried out by HealthView Services in 2019, a 65-year-old couple in good health should plan to spend an average of $387,644 for healthcare costs for the rest of their retirement***.

This figure includes premiums for Medicare Part B, prescription drug coverage and dental insurance. Rather than being alarmed by the size of these figures, it is better to plan in advance and to speak with a professional about ensuring you have the right medical care retirement plan in place to prevent you from being out of pocket.

You will spend less on food (or will you?)

The general consensus is that the older people get, the less they tend to spend on food. However, it is not the same for everyone; you may want to spend your retirement giving dinner parties, sampling haute cuisine and sourcing all your food locally and organically. Whatever the case, you will need to consider the question of your food spend and how it might influence your retirement planning.

Plan for your retirement with Blacktower in the US

You can explore and analyse every retirement planning and retirement spending formula out there and they might give you some idea of how much you need to save, but they cannot act as a useful substitute for personalised retirement financial advice from an expert.

Blacktower (US) LLC has the experience, expertise, qualifications and regulation you require when embarking on one of life’s most important questions: how to successfully plan for your retirement.

Contact us today for more information about how we may be able to help you.

* Accessed 30-03-20

** Accessed 30-03-20

*** Accessed 30-03-20

Related News

Your Children and Your Retirement Planning

The future of retirement planning in the United States is at a kind of crossroads: traditional employer pension plans no longer offer the gold-plated guarantees they used to and it is more incumbent than ever before that individuals devise their own strategies for their long-term financial futures. However, this has come at just a time when retirement investors face an additional pressure: as parents they are increasingly obligated to offer monetary help to their children.

This picture is supported by a recent survey by* in which half of American parents reported placing their adult children’s financial needs above their own retirement plans.

More than a decade of slow wage growth coupled with a cocktail of spiralling living costs – for example, housing, health insurance and vehicle insurance – mean that younger generations are facing unique financial challenges. Add into this mix the cost and increased popularity of higher level degrees, and it is easy to see why parents might want to help out.

Read More

NEWS WRAP – Third Federal Reserve Interest Rate Cut of 2019 – The Outlook for Retirement Savers.

The Federal Reserve has made its third interest rate cut of 2019, leaving the Federal Funds rate at between 1.5% and 1.75%. What, if anything, might this mean for your wealth and retirement plans.

Federal Reserve Chair Jerome Powell told FOX4 that the move is designed “to help keep the U.S. economy strong in the face of global developments, and to provide some insurance against on-going risks”.*

Read More

Select your country

Please select your country of residence so we can provide you with the most relevant information: