Approximately 10,000 people are eligible for retirement every day in the United States and this is expected to be the case over the next 18 to 20 years. Many of them will need to meet their living expenses solely on the retirement plans and savings they have accumulated over the years. As these persons grow older, their needs for electricity become greater especially for lighting and heat. In the meantime, there are factors such as new EPA regulations and the fluctuation of oil and natural gas supply and prices that are likely to have an effect on electric rates in the years to come.
If you are planning your retirement or have already taken the leap, here is a look at what effects electric rates might have on the quality of your retirement.
Shortfalls in income
Currently, it is estimated that many of those who are retiring, at about age 65 years, only have about $25,000 to $100,000 in 401(k) plans on which to retire. This poses a problem for everyday expenses since it is again estimated that retirees will need about 85 percent of the pre-retirement annual income in the first year with a yearly increase of about 2.3 percent in order to comfortably afford living and health care costs plus the costs of food and fuel.
This leaves an approximately 49 percent of persons who are unprepared financially for retirement and who might expect to have to find ways to meet the shortfall in order to afford the basics. Electricity and natural gas bills are expected to increase by about 35 percent annually which could possibly leave many retirees out in the cold.
Changes and regulations
With an estimated 60 percent of current household bills already dedicated to paying for electricity, retiring on a fixed income makes it likely that there might be a real struggle between paying electric bills and affording other necessities such as food and health care costs. The new EPA regulations to reduce CO2 emissions are expected to have incremental costs that might be passed on to consumers and thereby further increase costs.
In addition to that consideration, there are power companies which are unable to afford the changes needed for compliance to these regulations and are destined for closure which is likely to create a 9 percent shortfall in electricity supply that would have to be met by the remaining electric power generators. This too is expected to influence the cost of electricity which will further affect your fixed income budget.
Share4 June 2015
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