Major Retirement Expenses To Include In Your Budget
Make your Retirement as Stress-Free as Possible
When creating a game plan for retirement, the last thing you want to do is forget a major expense. Some costs during retirement may not necessarily be those you noticed every day while working a 9-5. This is new territory and you want to prepare in the best way possible to avoid bumps later down the road.
Here are 10 major retirement expenses that are a must to include in your budget.
If you are renting or your home is still not paid off before retirement, housing can eat up most of your budget. It is important to remember that house payments don’t disappear after retirement. To lessen the burden of housing costs, many retirees choose to:
- Pay off their house before retiring
- Downsize their living arrangement
- Take on a tenant
Taxes can truly take a toll on retirees, so it is best to be prepared. You will have to pay income taxes on withdrawals from your 401k and IRAs. If your retirement income meets a certain minimum, your social security can also be taxed. However, it is possible to reduce your tax bill as a retiree. Meeting with a financial advisor to develop a strategic plan is your best bet.
Higher medical costs or paying for supplemental insurance care- neither is ideal. The truth is that it is necessary. Growing older may mean more doctor visits to keep you in tip-top shape.
Many types of health services may not be covered by insurance or medicare, such as glasses or hearing aids. This is why it is necessary to factor health care costs into your retirement budget.
Unfortunately, emergencies will happen even in retirement. This is why it is great to have money set aside in your budget for emergencies big and small.
Retirement will give you much more time to cook at home, but it may also give you much more time to go out to eat. Cooking at home will save you the most money. No matter where you eat, don’t forget to add the cost of food into your retirement budget. Bonus points if you save money on your food budget by asking for the senior discount!
Traveling begins at retirement. With more free time, you are most likely going to want to visit more places. Take this into account when creating your retirement budget. Consider gas prices, hotel prices, ticket prices, and more to make your budget as accurate as possible.
One thing that you were probably not as concerned about before retirement was a legacy plan to ensure your family is taken care of. Meeting with a financial planner can help you determine the details of your legacy and what it should be costing you.
Birthdays and parties don’t stop in retirement. In fact, they may happen more often as you may have grandkids to spoil! Ensure that you include plenty of money for gifts in your retirement budget.
The entertainment doesn’t have to end in your golden years! You deserve to treat yourself. Make room in your wallet for attending the occasional concert or movie.
While clothing isn’t something you may be buying weekly or even monthly, it will most likely be a big expense. If it is a cost you want to lower in your budget, consider buying second-hand or buying lasting quality pieces when shopping.
Retirement should be some of the greatest years of your life. We are determined to help you make it as stress-free as possible. If you are looking to create your retirement plan with the help of financial experts, call West Financial Group today.