1. Start by enlisting all your current expenses.
2. Out of them, note those that you are likely to incur during retirement, as all may not be replicated.
3. While some are likely to become lower or end by that time, others may become higher or even begin during retirement.
4. Estimate the likely amount to be spent on them during retirement, by calculating the years remaining for
retirement and the inflation rate.
5. Living expenses can be expected to increase at the average rate of inflation.
6. However, medical expenses, travel and leisure expenses are likely to increase at a higher rate.
7. Calculate the retirement cost for each head by using the formula:- (Current expense) x ((1+
rate of inflation)/(years to retirement)).
8. Don't underestimate or overestimate your retirement expenses.
9. Underestimating the expenses, inflation rate or years to
retirement will make expenses appear less than they are likely to be.
10. Overestimation will lead to a situation where the expenses
appear to be more than they are, which will put pressure on your current
savings plan.