These 4 expenses could hurt your retirement goals. Here’s how to plan them.

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The average senior spends about $ 2,300 per year on home repairs and maintenance, according to the Bureau of Labor Statistics. Many do not factor these expenses into their retirement budgeting.

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One of the benefits of being retired is that your expenses usually go down, but that doesn’t mean seniors are immune to financial setbacks. Health crises, household emergencies, and all manner of unexpected expenses can arise during retirement and derail even the best-designed spending plans.

Clayton Alexander, investment advisor and founder of Teton Wealth Group, says there are four key expenses, from long-term care to transportation, that many retirees and older workers don’t plan properly, which could put their goals at risk. of retirement.

Incorporating these wild cards into planning can strengthen long-term savers’ plans, he adds. “We look at different types of life scenarios that can arise and make sure your planning makes them easier,” he says.

Long term care: About 70% of retirees will need long-term care at some point, and the average cost of a semi-private nursing room is $ 6,800 per month, Alexander said, citing US Department statistics of Health and Social Services. Medicare won’t cover long-term care, and retirees who don’t qualify for Medicaid must foot the bill, he says.

Yet healthy workers often don’t imagine themselves needing long-term care, so they delay buying insurance or plan to pay for the care using the equity in their home, Alexander says.

He says workers should consider purchasing long-term care insurance before retiring because premiums are cheaper. Additionally, most workers enrolled in high-deductible health care plans are eligible to open a health savings account, which can be used to pay for long-term care.

There are also alternative strategies. Some annuities will increase annual benefits paid to retirees who need long-term care, and some life insurance policies allow retirees to access a portion of their death benefit to pay for long-term care, said Alexander.

Caring for family members: Seniors and workers nearing retirement sometimes end up raising grandchildren, fostering adult children, or caring for their elderly parents or spouses, and the financial and physical demands of caregiving can overwhelm them, Alexander said.

Whenever possible, he says, workers should increase their savings rates to prepare for this scenario and have conversations with family members and financial advisers before caregiving becomes an issue. While there is no way to avoid the expense of caregiving, “the sooner you start looking at it and finding solutions, the better,” adds Alexander.

Home repairs and renovations: Seniors who have paid for their homes sometimes don’t realize they will still have housing expenses, says Alexander, including a new roof, which can cost $ 10,000 or more, and other repairs. The average senior spends about $ 2,300 per year on repairs and maintenance of their home, he says, citing statistics from the United States Bureau of Labor Statistics.

Alexander says reality should encourage seniors to continue saving for retirement, putting several thousand dollars a year into an emergency fund. “We want to be sure that when we make plans, they have that flexibility in there,” he says.

Transport: Retirees may no longer face the daily morning commutes and many have reimbursed their cars, but they should still budget and save for transportation costs, including gasoline, auto repairs, maintenance, replacement and insurance, as well as public transport. Transportation costs account for 16% of spending for seniors, Alexander says, citing data from the Bureau of Labor Statistics.

“It’s one of the less planned things in retirement, but the costs can really eat into you,” says Alexander. “We don’t want something like needing to buy a new car to completely ruin someone’s financial plan, so it’s something that has to be taken into account.”

Write to retirement@barrons.com


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