Many of us think of our retirement as an extended vacation: a time to travel, relax, and spend time with the ones we love. However, it takes a lot of time and foresight to plan a retirement like that. Budgeting expenses during our working years and putting money away in an account is just the minimum which most of us have to do to “get by” after retirement. If you really want to enjoy yourself and “live it up”, it’s essential that you plan not only for the good times, like for a river cruise down the Seine, but also for the bad times, like when your furnace and car break down in the same week.
In order to live your retirement dream, you have to financially plan for a retirement nightmare in which many “what-ifs” come to life.
Here is a list of unexpected costs which retirees have trouble dealing with if not thought of in advance:
- Taxes
You have been paying your taxes for all these years, and now you finally get the chance to benefit from them, right? Sort-of. Though you will get a check every month if you had been paying into the government’s retirement fund, and an income based on what you have saved, that total gets taxed as well! That’s right, the money you get from tax-payers gets taxed again. So, if you have squirrelled enough away to have a comfortable living during your retirement years, remember that it will be taxed and you might end up with less than you initially thought.
- Supported Living
No one plans to have a stroke or to develop a condition in which they can no longer live at home. Many people plan to live in their homes or apartments for the rest of their lives, ignoring the fact that there is a large probability that there will come a point in time when they will have to move to a facility in which they can have more support. Unfortunately, these places are often quite expensive, so if you don’t want to burden your family with your life costs, save enough that if the need arises, you can pay your own “rent”.
- Transportation
Right before you retired, you bought a new, good-quality car which will last you ’til the end of your days. That’s just wishful thinking. On top of maintenance and fuel costs, which are constantly on the rise, there will come a time when there will be nothing to salvage of your vehicle. Did you financially plan for that? Or for the possibility that you won’t be able to drive and will come to rely on taxis or public transportation to get places?
- Funeral Planning
Nobody wants to think about death, but it’s as much of a part of life as birth is. Funerals are expensive and having to cover the cost of your spouses and/or your own final arrangements can be overwhelming at a time when you aren’t making a real income. Chose a funeral home that helps families commemorate the lives of their loved ones, respecting their wishes, faith, and budget, and research their options regarding pre-arrangements. This might be something you invest in while still working so that you can lock in the price as early as possible.
- Child Support
How can you say no to your child, especially when this child is having a hard time with life and has just found itself at its mercy? Many adult children run into financial situations in which they turn to their retired parents for assistance, mostly in the form of a payout or a loan. No one plans for these things to happen, but as you are setting aside money for retirement, it’s something that you should expect at some point or another.
- Uninsured Health Costs
If you purchased or have the benefits of having health insurance, you are one of the lucky ones. But even you can fall prey to issues which are not covered by your policy, whether that is dental work, or a fitting for a prosthesis. These uninsured health costs can mount quite quickly, so if possible, put some money aside monthly for this kind of situation.
- Rise in Cost of Living
Many of those putting money away for their retirement are planning for the future based on today’s economy and today’s costs. Unfortunately, we can tell by looking at the experiences of our elders that cost of living goes up, and there’s no way around it. Many financial advisors agree that saving for today’s conditions instead of future ones is a major mistake that many of their senior clients make.
Retirement can be everything that you wanted it to be, but first you need to plan for it to be devoid of huge and unexpected costs you forgot to plan for.
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