Retirement is expensive. Here’s what to do about it

MarketWatch ^ | 03/17/2018 | Mitch Tuchman

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You probably think of your own home as your largest expense in life. Perhaps your kids, if you think of them as expenses.

A recent study, in fact, estimated that buying a house and raising a child cost about the same — $245,300 for the house and $278,300 to raise a child from birth to age 18.

How does that compare to the cost of retirement?

Quitting work costs three times more, believe it or not. The average retirement in the United States runs $738,400.

That feels like a made-up number, as precise as it might appear. Naturally, what you will personally need is anybody’s guess, but let’s go with that rough figure.

The presumption behind this number is that you will receive some support from Social Security. That won’t be enough to live comfortably, so the difference must be made up in pensions and private savings.

Simple math here: $750,000 earning 4% creates an annual income of $30,000. Add the average Social Security income of $16,000 and you get $46,000 a year to live on.

The Bureau of Labor Statistics puts the cost of living in the United States at $20,000 per person. For a couple, the $46,000 figure minus taxes turns out to be just about right.

There is a veritable truckload of caveats here, such as what happens to people who live in high-cost areas (they move) and those who encounter unexpected health care costs.

But let’s not put the cart before the horse. If you have $738,000 saved up right now, your retirement is in reach, broadly speaking.

Most people don’t. And that’s where your investment decisions today can really make a difference. To help, here are some truths about investing to keep top of mind.

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Ugly.