Daily Money - The Retirement Numbers Game

But there’s another way to think about retirement numbers. How much will you spend, and over what period of time?

Write down your regular expenses for a better idea of how much retirement can cost. Keep in mind that spending changes in retirement. You’ll spend less on work-related costs, such as commuting, clothes and contributions to a 401(k). In your working years, you’re also more likely to spend on things that make life easier — housecleaning, meals out — that you won’t have to pay for in retirement.

On the other hand, vacations might become more expensive in retirement, because you’ll be able to travel for longer. Also, you can expect your health care costs to rise as retirement goes on, according to Vanguard. Medicare data shows that medical expenses more than double between the ages of 70 and 90. That’s just a fact of the cost of aging in the United States.

With all this in mind, come up with a realistic list of monthly expenses. Multiply the amount by 12, and then by how many years you might be reasonably expected to live. Check out some actuarial life tables, which use statistical data to estimate mortality, for help. You can find other health calculators online or take a quiz offered by an annuity provider. These can’t pinpoint exactly how long your retirement will last, but they can give you a sense of how many years you’ll want to plan for.

For more on the costs of retirement, read Money reporter Adam Hardy’s story.

— Jill Cornfield, deputy editor

How long do 65-year-olds live, on average? If your answer is a shrug, longevity literacy is not your strong suit, says the TIAA Institute. Just 12% of U.S. adults understand longevity and how it impacts retirement planning.

Why does this matter? The fact is, the more you understand about the average life span, the more thorough you’ll be about planning for your post-work years. Of those who demonstrate a higher level of longevity literacy:

• 50% have calculated how much they need to save
• 72% regularly save for retirement

Of those with weaker literacy:

• 32% have calculated how much they need to save
• 58% regularly save for retirement

• A retirement planner shares the 18 biggest retirement mistakes.
• These tips can help single women, who often face greater financial challenges in retirement than men.
• Retirement planning is getting more complex. The last thing you want to do is delay crunching the numbers.

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