We won’t sugarcoat this one: Retirement planning can be difficult and daunting.
How much money do you need? How long will your savings last? And how do you factor in things like inflation, medical care and other uncertainties?
Fortunately, there are a lot of experts here at CommonWealth One who can help you build a retirement plan that puts a security blanket around all those unknowns.
Before you make an appointment to talk to a retirement planning specialist, here are 5 expenses in your golden years that you’ll need to keep in mind when you’re creating a retirement budget, including a few you might not have thought about already!
Healthcare and Medical Expenses
This can be one of your biggest expenses in retirement, and it's also one of the biggest unknowns. You may be lucky and live a long, healthy life and need minimal healthcare, or you may be sick for years and need long-term care. Are you planning to age in place, or will you move into a retirement home? An expert can talk to you about long-term care insurance and other options that can help you keep your costs down as you age.
Housing and Utilities
Where you choose to live as you age will have a big impact on your financial strategy. If your current home will be paid off when you retire, you may want to stay put! But if you want to move closer to family, somewhere warmer or have plans to downsize, those are things you'll need to consider. This can include the cost of physically moving, capital gains taxes on properties if applicable and other moving-related expenses. Plus, where you move might make a difference in how much you spend on utilities and property taxes.
Home and Car Insurance
Your home and car insurance premiums will likely continue to increase as you get older, until you move to a rental or care facility and until you stop driving. Fortunately, you may be able to work with a financial adviser to run some models to give you estimates of how much this will cost over time. In addition, you may want to talk to an insurance broker — one who works with multiple insurance companies — to see where and how you can get better rates now and in the future.
Kids and Grandkids
From birthdays to special occasions, you’ll need to factor in the cost of gifts, celebrations and related travel and transportation. If you're close to your loved ones, that’s easier, but if you’re far away, you’ll need to look at including airfare and lodging in your annual budget.
Taxes
You may not have your regular salary after you retire, but there are big tax implications to drawing down your retirement funds. But, if you're collecting Social Security, taking money from your retirement accounts or getting income from a pension plan, it’s important to make sure you understand what taxes you’ll owe. Make sure your budget accounts for this, by working with a financial professional. You’ll want to be strategic about how you spend to minimize how much you pay.
Be sure to check out the replay of our webinar, "The Three Transitions to Retirement", for more information about this important phase of your life! And don’t forget that we have a variety of financial professionals at CommonWealth One who can help you with retirement plans whether you're 30 years old or turning 65 next year. We’re here for you, for life.
