Failing To Plan For These 4 Expenses Could Cost You In Retirement

By on November 5, 2019

Good retirement planning takes many factors into account, but with so many costs to consider it can be overwhelming. For women over 50 planning for retirement, don’t forget to budget these retirement expenses. These expenses may be less visible now or downplay others that they think will be unlikely or infrequent. 

But the retirement expenses you miss, dismiss, or underestimate in your planning could prove costly. Even for those who prepare thoroughly for retirement, they can’t predict with complete accuracy across the board how much they’ll spend. The retirement expenses you forget to plan for or ignore could seriously cost you and help sabotage the kind of retirement you were otherwise planning to have.

Here are some key retirement expenses that often fly under the radar years in advance of retirement but nonetheless should be planned for:
  • Long-term care. This can be one of the most expensive costs during retirement. Many people don’t plan adequately for it because they’ve been healthy throughout their life. But the statistics point out the importance of planning for long-term care. The U.S. Department of Health and Human Services lists the average cost of a semi-private nursing home room at $6,844 per month. 70 percent of retirees will need long-term care at some point. Medicare won’t cover long-term care, and if one doesn’t qualify for Medicaid, the patient is responsible for the bill. It is easy to ignore the thought of needing long-term care when you have many years of work left and are healthy and strong. Long-term care is a reality for many of us in the last years. One way to prepare is building the expenses into your retirement fund by using a Health Savings Account. Or you can buy long-term care insurance before you retire in order to get better rates.
  • Caring for family members. Retirement ideally is a time to relax and enjoy one’s newfound freedom and free time, but nearly one-third of seniors say they serve as a caregiver. This will place a strain on the budget, so it’s important before you retire to think about how much you’re able to help family members and budget that amount annually.

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  • Home repairs and renovations. These aren’t the everyday costs you plan for when creating a retirement budget, but they’re inevitable and could take a large bite out of your budget. The U.S. Bureau of Labor Statistics reports that the average person 65 and older spends about $2,300 per year on home repairs and maintenance. As an older woman, you may not be able to handle some of the DIY projects as before in your younger years. A major expense such as a new roof is a big hit. Building an emergency fund is essential. based on the averages, it’s prudent to put aside two or three thousand dollars a year in your retirement budget for home repair and maintenance costs.
  • Transportation. Retirement planners say this is a sneaky expense that is easy for retirees to underestimate. Transportation costs represent 16% of expenditures for adults 65 and over according to the Bureau of Labor Statistics. The transportation costs go beyond buying a car and include gas, maintenance, insurance, repairs, and public transportation. Even if a retiree no longer has a car payment, your financial advisor and you need to factor in these types of costs.
It is difficult to cover every future scenario into your plans, however, be aware of the costs that retirees are paying. Then adhere to your carefully laid out plan well before the older years.
Clayton Alexander is an investment adviser and founder of Teton Wealth Group. A graduate of Dixie State University with a B.A. in administration, Alexander also worked at Northwestern Mutual and Goldman Sachs. He is licensed for life and health insurance in the state of Utah and has passed the Series 65 securities exam. Alexander focuses on building holistic retirement plans, and with the launch of Teton Wealth, he developed the four-step Ascent Plan – a system to help clients gain clarity and perspective on creating a financial plan for safe, secure and tax-efficient retirement income and estate transition.

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Failing To Plan For These 4 Expenses Could Cost You In Retirement