Many Americans are blissfully unaware of just how fast their hard earned money can actually fly out of their wallet, leaving them scratching their heads. Between the costs of living, housing and health maintenance, are you truly aware of how much you potentially have to work with within your budget?
According to the most recent official information, the average monthly expenses for people 65 and older, including rent, groceries, and healthcare, are roughly $4,345. Americans in their retirement years might afford to spend $3,564 less each year in 2016. However, financial experts warn that older Americans may soon need to get ready to tighten their spending habits even more when making future plans because inflation has only recently started to decline from its nearly 40-year peak this summer.
Harvard’s Joint Center for Housing Studies states that about half of retirees today have a mortgage, compared to only approximately one in four in 1990. Housing tends to be the most considerable expense for older households in terms of both the average dollar amount and the percentage of the household budget.
That is a challenge for retirees on a limited budget for one key reason: high housing costs. Paying off your mortgage will not liberate you from all housing bills (you will still need insurance, taxes, and other things), but it will help reduce the most significant portion of those costs.
While being a homeowner would unquestionably bring down your monthly living expenditures by making every effort to finish paying off the mortgage. The ability to Pay off your mortgage as quickly as possible could make it challenging to put money away for your retirement or other long-term goals.
Think about relocating to a state with reduced taxes and costs.
Moving to a location that is friendlier to one’s budget, such as to a state with fewer taxes and a lower cost of living, is one of the most successful techniques to counteract the trend. Because of this, the amount of money you’ll need for retirement will entirely depend on the kind of lifestyle you lead and the amount of money you spend each month on living expenses.
According to a Bankrate poll, states like Alabama and Louisiana have median property values of $209,000 and $217,296 and average state tax rates of 0.41% and 0.55%, respectively. On the opposite end of the scale, states with monthly levies that might swiftly deplete a single retiree’s cash flow include New Jersey, which has an average tax rate of 2.49% and a property price of $484,393.
It is challenging for persons living alone in regions of the country with high tax rates. When compared to a couple, for example, who might live in a one-bedroom apartment, a single person is more likely to utilize the space of a studio apartment comfortably. First things first: retirees and those getting close to reaching that career milestone should sit down and compile an itemized budget of all of their total monthly expenditures before deciding to relocate.