When you think of retirement, you probably think about leisure and relaxation. However, without proper planning, it’s not all Easy Street. In this article, we’ll discuss some retirement expenses you may never have thought of—so you can start planning for them.
If your children have moved out, you may not need a house as large as you once did. Even if your mortgage has been paid off, your home becomes more expensive to maintain as it ages, and property taxes regularly increase. You could save on your housing expenses by moving to a smaller home in a more affordable neighborhood—or even a new city or state. However, it’s wise to also plan for the increased costs of assisted living. The likelihood of someone requiring daily assistance increases with age, and can happen suddenly.
Of course you will want to spoil your grandchildren! Whether it’s a new bike or part of a college fund, be sure you’ve planned for these expenses. You may also find that a close relative needs some financial help for whatever reason. Be sure you’ve worked these expenses into your retirement planning—after all, no one can predict the future.
If you often eat at restaurants, you might want to consider how to replace many of those meals with groceries. Food costs are highly susceptible to inflation—your food budget in five or ten years is likely to look very different than the money you spend today. When you do go out, take advantage of all the discounts you can find.
Now that you don’t need to continue updating your business wardrobe, you may find yourself with more professional attire than you need. You’ll need clothing regularly, although you may not need to shop as often. You can likely lower your clothing budget figures, but don’t eliminate the category altogether.
What will you do with all your free time? Take a cooking class to help reduce your food expenses? Ballroom dancing? Cake decorating? Gardening? No matter what your interests are, you’ll want to continue budgeting for entertainment. You’ll have more free hours to fill, so you might find that you increase your entertainment budget after you retire.
If you have a car, it probably won’t last forever. Will you be able to afford a new(er) one after you retire? Will your family downsize from two cars to one? Are you near public transportation, and, if so, how often will you need it? Transportation is another area in which you should consider inflation. You’ll be able to get less and less car for the same budget every year, and public transportation costs increase over time, as well.
Regular healthcare costs are reasonably simple to predict. But it’s the ones you can’t predict that may wreak havoc on your budget. Hospitalization, surgery, and nursing home care are expensive. Even if you have Medicare, Medicaid, or health insurance, you’ll want to be sure you have budgeted and planned for these kinds of unexpected expenses.
It’s wise to consider both planned and unplanned travel expenses. For example, you might want to help your son and daughter-in-law with their new baby—and, if you didn’t budget for that kind of unexpected travel expense, you could be in a bind. Don’t just save for your trip to Paris or Caribbean cruise; save for weekend getaways, family reunions, and other events.
This is a huge subject that requires more in-depth information than this article can provide, and can include everything from your investment portfolio to taxes to your income stream, and much more. Most people want to shift to lower-risk investments over time, so be sure to meet with your financial advisor regularly. He or she should also be able to help you plan for how to budget and save for all of these retirement expenses.