Let's pause for a moment and consider what your biggest future expense might be.
Will it be healthcare? Well, you'll likely pay a lot for medical expenses. Estimates vary, but it's safe to anticipate that a 65-year-old couple retiring now will spend somewhere between $285,000 and $385,000 during their retirement. That's a lot of money, but its not going to be your biggest expense.
What about travel? Maybe if you're lucky, and if that's your answer I salute your optimism and hope you're correct.
Housing could be a big expense, depending on whether you anticipate carrying a mortgage or paying rent for the majority of your retirement.
But for many people, the answer to the question of what their biggest future expense will be lies in the title to this chapter. That's right, taxes. The taxman always cometh, and over the course of your retirement taxes are quite likely to be your largest expense. This is also generally true when working, but as you'll soon see you probably have more control over the taxes you pay in retirement than during your working years.
Now, I don't know you personally so I'm not sure what your precise financial goals are. But at the end of the day, money can only go four places. When you have money, you can:
- Spend it on yourself
- Give it to your family
- Give it to a charity
- Give it to the government (taxes)
As I said earlier, I don't know what your goals are. Almost everyone wants to make sure they don't run out ...