After a lifetime of work and many years looking for retirement, when that moment arrives the questions do not stop. At the moment of retirement, the retiree must know what resources they have to have in order to pass this stage smoothly and comfortably. Although you can also ask yourself this question when you are still a worker and think about how to guarantee those resources that you will need in the future.
The blog ‘Finanzas para todos’ of the Bank of Spain and the National Securities Market Commission (CNMV) explains what is the most recommended amount with which retirees would have to face the post-work stage. The reference that is taken is to have between 70 and 90% of the income that was had before retirement .
To make this calculation, we start from the premise that in the retirement stage there are fewer expenses because it is likely that the house is already paid for and that, in parallel, less is spent on other aspects such as clothing, travel and taxes, in addition of not having to face other costs related to work (such as transport, for example).
Applying this theory, it would mean that, if you have a monthly income of 1,500 euros, in retirement you have to have between 1,050 and 1,350 euros per month. Once this calculation is made, the worker has to project what the amount of his retirement pension will be and check if it comes with it or, on the contrary, it will be insufficient.
However, there are cases in which this theory “is not necessarily valid”, since the “total expenses do not vary much and may even go up”. In either case, if the retiree is not going to have enough with what he receives from his pension, he will have to think about how to compensate for this deficit.
The most common option is to use part of the savings buffer accumulated over years, but the worker can anticipate before retirement and try to earn extra resources with time deposits or other similar financial tools.
What do I need to cover in my retirement?
When it comes to being clear about the expenses that we will have in retirement, it is necessary to ask ourselves a series of questions that will help us to know how much money we will need every month:
-What will you do in retirement?
-Where will you live in retirement? Will you move from home? Will you need a new home?
-What is your health coverage? Will you need money if you are sick or have family to help you? Do you have health insurance?
Based on the answers he gives himself, he will have to set a spending cap and adapt, as far as possible, to that cap amount. A task of planning and anticipation that is key to a smooth retirement.