- You will still have expenses in retirement, no matter how much money you’ve saved.
- Plan ahead for expenses like healthcare and home maintenance.
- Future expenses may be hard to predict, but planning and estimating now may save you from surprises.
Retirement is a topic on everyone’s minds. How do you choose the right financial tools and investments, and how much do you need to retire comfortably?
Many financial experts say you need $1.2 million or more to retire comfortably and for your retirement savings to last. But does that number include your home and home maintenance, insurance, dental work, and potential unexpected expenses? Bills and expenses do not stop, so they have to be factored into that retirement number.
Future expenses may be hard to predict, but here are 3 steps you can take to avoid surprises when you plan to retire:
1. Plan for healthcare and medical expenses.
If you need medical care, medicine or surgery, these expenses can add up pretty quickly. If your health insurance doesn’t cover it all, there will be out-of-pocket expenses. Your health can look very different from 45 to 75, so think of what additional money you might need to have saved if you need long-term health care.
And don’t forget about dental work. For example, it may cost $5,000 to repair a chipped tooth. Dental work can be really expensive and dental insurance doesn’t cover nearly enough. Think about the possibility of crowns, dental implants and even dentures as you grow older.
2. Think about what you want your retirement to look like.
Being active in retirement is helpful to us physically and emotionally, but it will also require more retirement savings.
Retirement 20 years from now will look very different from our parents’ retirement. If you anticipate big travel, major renovations to your home, a new car, or opening up that wine shop that you have always dreamed about, then you will need to factor that into your retirement plan and the amount that you will need to save.
3. Plan for home maintenance.
Think about what your housing situation will be during retirement. It is advisable to have home expenses taken care of heading into retirement, which for many means paying off the mortgage. But take it a step further and plan for home maintenance as well.
Home maintenance is often the biggest expense of homeownership, and that will not change during retirement. For some, retirement may mean downsizing and moving into a retirement community. Research and plan for that adjustment and those expenses ahead of time.
This article was written by Jennifer Streaks from Business Insider and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.
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