Are you prepared for all the costs that come with retirement? While some may believe they have it all figured out, many Americans are overlooking crucial expenses that could impact their financial security in retirement. The Employee Benefit Research Institute (EBRI) found that less than half have planned for emergency expenses or health costs in retirement. The Society of Actuaries also discovered that a significant percentage of pre-retirees do not feel fully prepared for their financial future.
Here is a rundown of the top 10 overlooked retirement costs and how you can plan for them:
- The Fun Stuff: Often, retirees forget to budget for enjoyable activities like travel, hobbies, and gifts. These costs can add up quickly and should not be neglected in your retirement plan.
- Inflation: Factor in inflation when projecting your finances as it can impact purchasing power in retirement. Use realistic inflation rates to ensure accurate calculations for future expenses.
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Future Maintenance Costs: Owning a home or a car means ongoing maintenance expenses. Prepare for these costs by creating a detailed budget that includes one-time and recurring expenses.
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Emergency and Unforeseen Costs: While you can’t predict the future, you can prepare for unexpected expenses by maintaining an emergency fund, having adequate insurance, and building flexibility into your retirement plan.
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Taxes: Plan for taxes in retirement by utilizing tools like the Boldin Retirement Planner, which factors in federal and state income taxes, deductions, and potential tax-saving strategies.
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Healthcare: Don’t rely solely on Medicare for your medical expenses. Use tools like the Boldin Retirement Planner to estimate out-of-pocket healthcare costs based on your unique circumstances.
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Long Term Care: Long term care costs can be high and are often not covered by Medicare. Plan for these expenses by exploring various options and utilizing tools to estimate lifetime costs.
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Early Retirement: If you are forced to retire earlier than expected, ensure your retirement resources can cover the additional years. Consider potential scenarios and adjustments to make your finances last.
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Longevity: Plan for a longer life by ensuring your retirement savings can sustain you well beyond average life expectancies. Use tools to estimate your life expectancy and adjust your financial plan accordingly.
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Sandwich Generation Costs: If you are supporting both elderly parents and adult children, factor these costs into your retirement plan. Create a detailed budget using tools like the Boldin Retirement Planner to account for all family-related expenses.
By acknowledging and planning for these often overlooked retirement costs, you can ensure a more secure financial future and enjoy your retirement to the fullest. Take control of your retirement planning today.
