Are you retiring soon and working on your post-salary budget? You might think you’ve covered all the bases: housing, healthcare, dining and transportation expenses. After all, these are among the most expensive costs for those 65 years and older, who spend an average of $48,000 annually. However, it’s important to make room in your savings for the unexpected. Here are seven hidden retirement expenses to plan for.
1. Increased Leisure Activities
You’re newly retired and ready to enjoy everything you said you’d do when you were no longer working. The trouble: Your retirement budget may be based on a fixed yearly income. Be sure to factor in plenty of room in your budget for these expenses so that you end up with both the time and the money to enjoy these activities.
Before you retire, sit down with a financial professional and discuss how your financial situation may change in the coming years and what that means for your tax liability. You’ll also want to go over how you can diversify your retirement income sources and how to access the money in your investment accounts. With these new sources of income, your taxes could look very different in retirement than they do now. Make sure you’re aware of what you can do to decrease your tax liability and how much you’ll owe each year.
3. Boomerang Kids
Between staying in school longer and delaying marriage, today’s young adults find themselves living with mom and dad longer than ever before. If you want to assist your children financially while in retirement, you should consider this as part of your future expenses.
4. Elderly Parents
It isn’t just adult children who are moving in with retirees. Some retirees find themselves caring for their elderly parents. You might be able to anticipate whether your parents will need this support based on their financial or health situation. However, if they’re not open to sharing their fiscal information with you, investigate in advance what options might be available and how much you are able to help.
It’s possible you’ve long earmarked a portion of your retirement savings for travel. When creating your budget, account for both planned and unplanned travel. Perhaps you have new grandchildren or great-grandchildren you’ll wish to travel and see frequently — or a sick relative you’ll need to fly out to care for. Try to prepare for these scheduled and surprise trips the best you can, as travel is one of the expenses that increases during retirement and can easily create some of the biggest retirement living expenses.
6. Home and Car Maintenance
Ongoing maintenance on your home and car might not necessarily be the biggest cost, but it easily adds up when it’s $100 here and $1,000 there. Budget for these unexpected and sometimes annual maintenance expenses.
7. Home Safety and Security
For many seniors, with age comes concern over safety. If you plan to stay in your current home, you may need to update your home to ensure it’s safe while you age. That might mean installing a wheelchair ramp or additional handrails in the shower. These modifications can make your senior years safer and injury-free.
We Can Help You Plan for Retirement
The best way to prepare for hidden retirement expenses and reduce risk? It’s all about planning long before your golden years arrive. Retirement is new territory, and you’re bound to encounter some unexpected events. It’s impossible to know how much of an impact these and other hidden expenses will have on your savings portfolio. Connect with your Farm Bureau agent and create a plan to achieve your goals.