It’s no secret that budgeting for retirement can be challenging. Without a crystal ball, you don’t know exactly what your everyday spending and expenses will look like once you’re retired. Still, it’s important to at least estimate the kinds of expenses you’ll be facing once you retire so that you can plan accordingly and live the lifestyle you desire.
So, what are some of the most common (and commonly overlooked) retirement expenses? We’ll explore these—as well as some tips for offsetting these costs—below.
Basic housing and living expenses account for the majority of the average retired American’s ongoing costs. Specifically, these expenses may include:
- property taxes
- renters/home insurance
- HOA fees
- cable and utilities
The costs you’ll pay for housing will depend on where you decide to live once you retire, as housing costs can vary dramatically across the country. On the other hand, if your current home is already paid off, you may choose to remain in your home after you retire and cut back significantly on your housing costs. Some seniors choose to go this route, whereas others prefer to relocate.
Prescriptions, medical services, and health insurance are three major types of healthcare costs that retiring seniors must plan for. Even if you plan on enrolling in a Medicare plan once you become eligible (or are already enrolled in one), you may still need to purchase supplemental coverage. Meanwhile, Medicare and other insurance plans won’t cover everything 100%—so retirees are encouraged to set aside additional funds for medical services, supplies, and medication.
Those with ongoing health conditions may need to budget for even higher healthcare costs in retirement. For example, if you have a history of heart disease or have risk factors for other medical conditions, then you’ll want to plan accordingly for your retirement years. Many seniors may also go on to need in-home care or long term care, so this should be accounted for as well.
Depending on how much travel you plan on doing in retirement, transportation costs can quickly add up to become a major expense. In fact, this is probably one of the most overlooked types of expenses for retired seniors. Transportation may become especially costly if you’ll be doing a lot of traveling to different parts of the country to visit family and loved ones, or if you have a lot of sightseeing you’d like to do during retirement.
In addition to major traveling, you’ll also need to plan for how you’ll get around locally. The costs of owning a vehicle (car payments, insurance, fuel, etc.) can add up quickly; some retirees save money by ditching their personal vehicles and using public transportation to get around, but this will only work if you live in an area with a robust public transportation system already in place.
Offset Expenses With a Life Settlement
These are just some of the most significant retirement expenses seniors need to plan for; with proper planning and budgeting, you can put your retirement funds to work and live the lifestyle you want. Meanwhile, many seniors don’t realize that they may be able to offset some retirement expenses with an option known as a life settlement.
Specifically, life settlements allow you to sell your current life insurance policy for cash that you can use to make the most of your retirement. If you’re interested in learning more about how life settlements work, contact our team at Q Capital today; we also offer a free, easy-to-use life settlement calculator to help you get an instant estimate on the value of your current policy.
Remember: Never abandon a life insurance policy without looking at the life settlement option first!