Planning for Retirement? Don’t Forget These 5 Commonly Overlooked Expenses
When you’re packing for a trip, you nearly always manage to leave something important behind at home—no matter how well prepared you are. The same can be said for retirement planning, but the consequences are much more severe. Don’t fret, though. We’re here to help with a list of commonly overlooked expenses, so you don’t miss the boat.
1. Medical costs. It would be great if Medicare covered everything, but it won’t cover all health care costs. You’ll still need to allot funds for expenses like dental and vision care, as well as prescription medications and long-term care. Your supplemental insurance may help with these, but do some investigating to find out what will likely be covered and what won’t. This will help you prepare for any out-of-pocket costs that arise.
2. Helping family members—young and old. Even if your parents were smart savers and meticulous planners, they may still have worries about their own retirement needs—especially if a serious injury or illness occurs. In such a case, they may look to you for help covering health care costs. And if having them (eventually) move into your home is a real possibility, you’ll need to plan for the expenses required for home modifications like ramps and railings. Likewise, your adult children and/or grandchildren may also need financial assistance for expected expenses like college tuition, as well as unforeseen financial bumps in the road such as a job loss, divorce or illness.
3. Unexpected tax expenses. It doesn’t matter if you’ve been filing taxes for your entire adult life: Taxes in retirement can be a whole different ballgame. Since there’s no way to know what code changes may be coming down the pike, keeping your retirement funds diversified (with both pretax and post-tax retirement accounts in the mix) can help. And bear in mind that your Social Security benefits can be taxable, as are pre-tax 401(k)s and traditional IRAs once you begin withdrawing from them.
4. New hobbies. When you’re buried in work, it’s hard to imagine a future in which you’ll have all the leisure time you can handle. But it will come, and it likely won’t come cheap. Even if you don’t plan on becoming a world traveler, other hobbies can add up too. Golf, scuba diving, wine tasting, fishing—they all have their associated costs. Even small lifestyle changes like going to the movies and eating out more can put a dent in your retirement savings, which means they need to be figured into your plan.
5. Home and auto expenses. Nothing lasts forever, and your retirement won’t go far either if you haven’t accounted for “hidden” repair costs. Sure, you may already know that your car can likely make it another 100,000 miles and that your home’s roof will need to be replaced in a few years. But the smaller repairs and replacements—everything from the hot-water heater or your car’s AC to auto license and tag renewal fees—can nickel-and-dime you into trouble if you don’t plan for them. And think about what services you might need as you get older that you don’t necessarily need now, such as lawn care, snow removal or help with housekeeping. Factor those into your retirement planning as well.
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Sources: http://www.nasdaq.com/article/commonly-overlooked-retirement-expenses-cm445960http://www.investopedia.com/articles/personal-finance/031716/dont-let-these-overlooked-costs-ruin-your-retirement.asphttp://money.usnews.com/money/blogs/on-retirement/2012/09/19/5-retirement-expenses-many-people-forgethttps://www.yahoo.com/news/real-retirement-costs-130336342.html?ref=gshttps://www.northwesternmutual.com/financial-guidance/insights-and-ideas/articles/2015/06/6-unexpected-retirement-expenses-youll-want-to-plan-forhttps://www.retirementwatch.com/the-overlooked-retirement-time-bomb/
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