Many people who want to retire ask a lot of questions, and one of them is, “how long will my money last in retirement.”
The question is understandable since most retirees will not be working to earn, so they want to know how long their money will last them until they die. And probably leave something for their family.
Well, the question has no general answer. However, it depends on certain factors. Below are some factors to consider that will determine how long your money will last in retirement.
Soon-to-be retirees wrongly assume that Medicare will cover their health care bills. However, they don’t realize they will still have to pay for Medigap insurance and their prescription drug.
Retirees who require at-home care or have to be in nursing homes will have their money run out faster. The average cost to stay in an assisted living facility is $3,500/month, and many can stay for months or even years.
Where You Live
Living in a state like California or New York means that your money will run out faster compared to retirees in the South or Midwest. For instance, $1 Million in Alabama is likely to last up to 26 years or more, but only about eleven years in Hawaii.
Taxes, both local and state, also have a huge impact on your retirement savings. If you live in an area with high property taxes, you will have to pay more in taxes every year than your peers in a state with lower property taxes.
Housing and Other Expenses
How long your money will last in retirement will depend on your living expenses, the biggest of which is housing. High housing expenses will cause you to run out of money faster than expected.
During retirement, unless you want to live a boring life, you might want to have some fun; take cruises with your spouse, go golfing every week, or enjoy a good meal in a local restaurant from time to time. All of which require money.
Getting a Reverse Mortgage Will Help
Getting a reverse mortgage will help your money last for a very long time while having fun-filled retirement. You can live your life on your reverse mortgage proceeds while you allow other retirement assets to grow in value.