When many individuals are preparing their retirement plans, they usually assume that their overall cost of living will go down once they retire. It’s true that many categories of expenses are likely to decrease or even disappear in retirement, since your children will have moved out, you may have paid your mortgage, and you no longer have to commute each day or incur any work-related expenses.
But other types of expenses may first appear upon retirement, or perhaps increase from their pre-retirement levels. Even if you aren’t able to accurately forecast whether you might face these expenses, the possibility of incurring them demonstrates how important it is to maximize your retirement savings.
Here is some retirement planning advice on what additional expenses you could potentially encounter once you are retired.
Health Care. Not surprisingly, your health care costs may end up being one of the biggest expense categories you’re faced with once you retire. According to a recent study, the average 65-year-old couple will spend roughly $400,000 of their own money on health care costs – and this figure does not include any long-term care fees. While Medicare covers some hospital-based benefits, that coverage won’t nearly be adequate for most retirees. Furthermore, Medicare Part D coverage and other supplemental policies require you to pay premiums.
Travel Expenses. Your travel expenses may increase once you retire. Keep in mind that travel expenses don’t just mean luxurious vacations or the trip around Europe that you and your spouse have always dreamed of. Many retirees incur significant travel expenses simply visiting family members who may have moved to different parts of the country. New births, holidays, weddings and graduations for siblings, children and grandchildren can add up to a lot of traveling.
New Hobbies. Before retirement you likely spent at least 40 hours a week – and probably more – at your job. Now you have that time to yourself, but you don’t want to spend it sitting at home watching television all day. You’ll pick up new hobbies in retirement, or start spending more time on your existing ones, and there will likely be associated costs.
Elder Parent Care. With increased longevity, it’s more likely than ever that once we enter retirement, at least one of our parents is still likely to be alive. If your parents were not able to save enough for their own retirement years, then they may need your financial help. Even if you forgo retirement home care, and instead bring them into your household, there will be additional expenses that you’ll need to cover.
Ongoing Child Expenses. On the other side of the coin, if your adult child graduates college without being able to find a job, or is facing some other financial hardship, you may have them move back home with you. Even if they can contribute time and/or money to the upkeep of the household, you’re certain to incur additional expenses.
Since it’s impossible to predict exactly what types of expenses you may be faced with in retirement, you may wish to plan for some contingencies by saving as much as you’re able to.
Tags: retirement advice, retirement costs, retirement planning
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on Tuesday, September 4th, 2012 at 2:30 pm and is filed under Planning.
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When many individuals are preparing their retirement plans, they usually assume that their overall cost of living will go down once they retire. It’s true that many categories of expenses are likely to decrease or even disappear in retirement, since your children will have moved out, you may have paid your mortgage, and you no longer have to commute each day or incur any work-related expenses.
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