Planning for retirement is a smart idea at any age. Yes, having enough in savings and investments to cover the basics is important. But there are some other expenses you may not have considered. Here’s a quick look at some of those expenditures to help you plan ahead for retirement.
Healthcare
This is one of the biggest costs facing retirees. On average, you can expect to spend nearly $165,000 on healthcare during your retirement. That includes out-of-pocket expenses not covered by insurance and up to $1,000 per month for some coverage, according to Kiplinger. Want to save money on healthcare? The longer you wait to retire, the more time you can spend enjoying your employer’s retirement plan. Additionally, Medicare, which can help cut medical costs, may be available for those 65 and older.
Assisted or Independent Living
As people age, it becomes difficult to perform daily tasks. That’s when some people move into assisted or independent living facilities. These can cost $4,000 per month or more, depending on the region and the services offered, according to SeniorLiving.org.
Long-Term Care (LTC)
Nursing home care or in-home assistance isn’t cheap. Hiring a full-time or part-time nurse or aid can cost anywhere from $75,000 to $116,800 per year, according to a study by Genworth. If you have LTC insurance, that can dramatically cut those costs.
Inflation
According to the U.S. Department of Labor, a modest 3% inflation rate doubles the cost of living every 24 years. Essentially, the money you’ve saved for retirement will not buy you as much year over year.
Transportation
The average retiree will spend $9,000 per year on transportation. Many retirees plan to consolidate down to just one vehicle in retirement. However, there is a hidden cost of transportation. Someday, you might not be able to drive due to poor eyesight, slow reflexes, or illness.
Food
Sure, you need to eat. And while many retirees eat less as they age, food is still an important economic consideration. Especially as food prices continue to go up with inflation. To help you plan ahead, consider that the average retiree will spend nearly $6,000 per year on food.
Taxes
There is almost no way to pin down the average tax liability for retirement income. That’s why it’s important to talk to your tax consultant and investment professional about the tax implications associated with all of your sources of retirement income.
Boost Your Financial Wellness
More Financial Wellness Matters blogs on topics ranging from financial self-care to protecting your financial health are coming soon. Twice a month, we’ll dig a bit deeper into the relationship between financial health and overall well-being, shedding light on the behaviors and beliefs that drive money relationships. With simple tips and proven insights, we hope to enhance your financial well-being and help you live a healthier, happier life.