Did you know that according to statistics, the rate of inflation is different for retiree households than it is for all other households? This is because there are different rates of inflation on various consumables. Retirees spending patterns are also different. They are likely to spend proportionately more on travel, reading materials, utilities and cable subscriptions; and less on alcohol, entertainment and clothing as compared to all other households.
Based on recent studies, most retirees need only 60% of their pre-retirement level of income to adequately maintain their existing lifestyle. Exception would be for low income retirees who will need a higher % of their pre-retirement level income to get by. But most retirees can realistically adjust their % based on their individual circumstances.
If your retirement plan includes additional activities that will cost money, like an expensive hobby or travel, make sure you budget for them ahead of time. However, you need to keep in mind that these items are not considered essentials and they can be realistically scaled back or eliminated altogether for a year or two if retirement finances are off.
Lastly, keep yourself up-to-date on changes concerning retirement and investment incomes taxation. Remember the recently adopted income split for seniors and revisions to CPP contributions rules? They may be of benefit to you and knowing the rules will help you save your tax dollars for your future retirement years.
Finances After 55