Law Offices of
Hehr & Myers Co., L.P.A.
440-449-3266
4401 Rockside Road Ste 200
Independence, OH 44131
Costs of the Future
4/10/08
From Penny Candy to $1 Snicker Bars: Time Costs Money
By Lindsay C. Jones, Associate Attorney of Hehr & Myers Co., L.P.A.
Saving up for your future retirement will cost you a pretty penny, even if you're using today's expense rates to price it. However, time costs money- today's expenses will only rise in price as the years go by. Even if your savings will amply pay for your current expenses, there's no guarantee that they'll cover those same expenses in 2015.
With this in mind, it is important to look ahead while saving up a retirement nest egg. Always remember that today's penny candy is going to cost much more in the future- saving to buy things at today's costs won't get you very far. How you actually spend your retirement nest egg is also affected by this, especially since retirement 'life spans' are on the rise. In fact, your retirement could last 20 years or more, and will likely involve higher health costs and food expenses as well. Spending your savings too quickly will leave you struggling. Yet spending your savings too slowly will prevent you from taking full advantage of your retirement. You need to be able to keep up with inflation rates, emergency expenditures, and the costs of your actual post-retirement lifestyle.
The number one strategy is to remain flexible with your ability to spend money- continue to partially invest your savings for growth, rather than simply preserving principal and using up your current income. Also consider: 1) The life expectancy, retirement age, and overall health of you and your dependants; 2) A realistic estimate of your expenses for day-to-day living, travel, emergencies, and gifting; 3) Taxes and inflation rates.
By planning for your future expenses now, you will be in a better position to recover from financial setbacks, consistently take advantage of new investment opportunities, and achieve higher savings at a lower annual cost. A penny saved is a penny earned- only tomorrow, it will cost you a dollar.
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