Cost of Living before Retirement

Most people have a general idea of what it costs them to live, or at least they know whether or not they have anything left over after the bills are paid each month. The thing most people do not know is HOW they spend their money - how much they spend for such important items in everyday living as food, clothing, shelter, health, income tax, recreation, and transportation.

Some people say: “What difference does it make to know how you spend your money if it takes all you make to pay the bills anyway?” It does make a difference because how you spend your money now indicates how you are likely to spend your money after you retire and, if necessary, how you might be able to reduce expenses. Generally speaking, the money people spend each month goes for the following items:

1. Food and beverages
2. Housing
-Rent
-Taxes, mortgage, house insurance
-Fuel
-Utilities
-Household operations (soap, stationery, repairs, laundry, tele¬phone, etc.)
-Household furnishings and equipment (towels, sheets, kitchen utensils, refrigerator)
3. Clothing and accessories
4. Medical and dental care (Health insurance, medicine, glasses, hearing aid, nurses’ services)
5. Automotive expenses (automobile, bus fare, taxis)
6. Other expenses
-Personal care (haircuts, toilet articles, cosmetics)
-Recreation and reading (movies, newspaper, magazines)
-Tobacco and liquid refreshments
-Gifts and contributions (church, community chest, club)
-Dues
-Income and Social Security taxes

One study of household expenditures showed that out of every $ 1.00 Americans spent on the average:
.29 for food and beverages
.28 for home operation, improvement, furnishings and equip¬ment
.12 for clothing and accessories .05 for medical and personal care
.14 for automotive expenses .05 for recreation
.07 for other goods and services
Total$1.00

When you investigate your own situation you may discover like many other Americans that you spend more for food and shelter than for anything else.