It’s frustrating to consider: after years of diligent saving and planning, a bump in the road comes along in your retirement. Plan for the unexpected, and you’ll be ready when the inevitable occurs.
Like so many stages in life, retirement rarely follows a straight line. There are always bumps in the road, no matter how well you’ve planned. To improve your odds of a successful retirement, consider these four surprises that typically catch retirees off guard, as reported by Forbes in “Four Retirement Expenses That May Catch You By Surprise.”
1: Medical Co-Pays and Long-Term Care Expenses. The co-pays for doctors and treatment surprise many folks. They don’t realize that insurance premiums and even co-pays can change over time, and they typically don’t plan for those changes. Some people, in years where they have a large income, will often be victims of the “donut hole” of Medicare insurance premiums. These can increase to $200 per month. Anticipate that these costs will increase and budget additional savings to cover the changes. As far as long-term care, it’s a major issue. You should speak with an elder or estate planning attorney about the best way to cover long-term care expenses. Keep this in mind when planning for the future and save extra money for this expense.
2: Financial Support for Children and Grandchildren. This is more and more common. Grandparents don’t feel like their kids had it like they did when jobs were easier to find. Often grandparents want to take an active role in contributing. But if you do this, be sure that you’re not sacrificing your own lifestyle and retirement savings for their benefit. Helping out with family is terrific, but you don’t want to make a mistake that could end up costing you big time in the long run.
3: Inflation and Increases in Basic Costs of Living. The price of just about everything is rising, and we’re living longer on average. You need to think in terms of giving yourself “raises” and understand that retirement may cost double or triple what it does when you start to retire.
4: Home Expenses. We’re not talking about a new addition or a heated pool. Expenses could include the roof, the driveway, the furnace or the AC. All of these basics deteriorate over time and require money to repair or replace. One option may be to sell the home and move to a spot with less upkeep. If you decide to stay put, you need to save for basic house maintenance as the home ages.
Recognizing that there will be unexpected costs in retirement and planning for them—whatever they may be—will increase your ability to have the kind of retirement that you want. This will give you more flexibility and more options—not to mention the peace of mind that comes from knowing that you will be able to manage whatever comes your way!
Reference: Forbes (September 1, 2016) “Four Retirement Expenses That May Catch You By Surprise”