One needs to factor in many parameters while undertaking retirement planning. We show you what all you need to plan for...
Rule: Your living expenses come down considerably after you retire.
Exception: The living expenses come down, but only if the person enjoys good health. If you and your spouse suffer from poor health, the cost of medical care, travel, insurance and household help tends to shoot up as one grows older.
70-80 per cent of your living cost in the last working month is what you will require after retirement under normal circumstances.
60-70 per cent higher premium is paid for medical insurance at the age of 70 compared to what it costs when an individual is 60 years old.
You should not underestimate the expenses in the golden years, especially if you have not been keeping good health. While food and clothing costs may come down slightly, the monthly budget could come under strain from the rise under other heads.
|Changing with age|
The amount an individual would spend under different heads at age 60 and 70:
|Parameters ||At 60 years||At 70 years|
|Living (food, clothing, rent)||80% ||60.2% |
|Medical ||2.5% ||8.6% |
|Travel ||5% ||15.1% |
|Health insurance ||5% ||7.5% |
|Household help ||7.5% ||8.6% |
|Figures denote the costs under different heads as a percentage of the total monthly expenditure in a hypothetical example|
The medical and travel costs as a percentage of the total expenditure have risen dramatically in the above example. A person suffering from poor health will need a driver or will have to hire a vehicle for travelling. Also, he will shell out more on household help and health insurance. One needs to factor in all these in retirement planning.