Here are 7 big retirement expenses we really need to account for and plan ahead for. Doing so will just make sure you’re fully prepared for this next stage.
Dave Zoller, CFP®
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00:00 Planning ahead for these expenses
00:51 Your ideas are valuable
01:10 If under age 65
02:43 This doesn’t always go down in retirement
04:50 Overlooked expense
05:28 Your bucket list during the “go-go” years
06:54 Family & Education
07:20 You must have expense
08:10 New enterainment
08:43 Two categorize to bucket expenses into
ARTICLES MENTIONED:
How does medical inflation compare to inflation in the rest of the economy? – Peterson-KFF Health System Tracker
How much does retirement health care cost? | Vanguard
How do federal income tax rates work? | Tax Policy Center
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As retirees enter into their golden years, they often find themselves faced with a new set of expenses and financial considerations. While some costs may decrease, such as expenses related to work attire and commuting, others can increase significantly. In fact, retirees tend to spend the most on certain key things as they transition into retirement. By being aware of these expenses and planning accordingly, retirees can better prepare themselves for their future financial needs.
Healthcare expenses are typically the biggest concern for retirees, as healthcare costs tend to increase as individuals age. From insurance premiums to out-of-pocket expenses for medications and treatments, retirees often find themselves spending a significant portion of their income on healthcare. It’s important for retirees to carefully assess their healthcare needs and budget accordingly to ensure they have adequate coverage.
Housing costs also tend to be a major expense for retirees. Many retirees find themselves downsizing or relocating to a more affordable area in order to reduce their housing expenses. However, costs such as property taxes, homeowners association fees, and maintenance and repairs can still add up quickly. Retirees should carefully consider their housing options and budget for these expenses accordingly.
Travel is another area where retirees tend to spend a significant amount of money. Many retirees dream of traveling and seeing the world in their retirement years. From cruises to international adventures, travel expenses can quickly add up. Retirees should budget for travel expenses and plan their trips wisely to ensure they can truly enjoy their retirement travels.
Entertainment and leisure activities are important expenses for retirees to consider as well. Retirees often have more free time to pursue hobbies and interests, but these activities can come with a cost. Whether it’s golfing, dining out, or attending events and concerts, retirees should budget for these expenses in order to maintain a fulfilling retirement lifestyle.
Gifts and charitable donations are also a common expense for retirees. Many retirees want to give back to their loved ones and support causes they care about. Whether it’s helping their children financially or donating to their favorite charities, retirees should factor these expenses into their budget.
Insurance costs, such as life insurance, long-term care insurance, and other types of coverage, are also important expenses for retirees to consider. These insurance policies can provide financial security and peace of mind for retirees and their loved ones, but they often come with a price tag. Retirees should carefully assess their insurance needs and budget accordingly to ensure they have the right coverage in place.
Finally, taxes are an important consideration for retirees as well. While retirement income may be lower than during their working years, retirees can still face tax obligations on their savings, investments, and retirement benefits. Retirees should consult with a tax professional to understand their tax liabilities and plan accordingly to minimize their tax burden.
In conclusion, retirees tend to spend the most on certain key things in their retirement years. By being aware of these expenses and planning accordingly, retirees can ensure they have the financial resources they need to enjoy a fulfilling and comfortable retirement. It’s important for retirees to carefully assess their financial situation, budget for their expenses, and seek professional advice when necessary in order to plan for a secure financial future in retirement.
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great video
Being 64 with a chronic disease ailment, I am lucky to have a disability income and with disablity ss income. Knowing that my disability insurance income will end at 65, I have saved money in the market and high yield banking. But, the market is dropping, and soon to be in a recession, so I will live off of my savings until the market will bounce back. (HOPEFULLY!!). I doubt most people don't think of this, but I have. Great video!!!!!!
Fixing the house a stress? Go rent. JFC
Downsizing your home and/or moving to a less expensive location are ways to lower expenses going into retirement. Eliminating a mortgage and lowering property taxes and homeowners insurance premiums can make for a more comfortable retirement.
I'm so happy I made productive decisions about my finances that changed my life forever. Regardless of how bad it gets on the economy, I still make over $22,000 every single week.
I’m really intrigued but your thoughts and ideas because, I’ve done a whole lot when it comes to making money and smart use of my money to make significant returns and to be honest till today I would say that nothing beats professional advice.
I was doing deep search for an advisor on the Merrill lynch website when I found mine and he had such a good record, with over 10 years of experience. So I reached out to him.
I've been working with him as my financial advisor for the past few years, and I couldn't be happier with the results.
I always appreciate your informative videos Dave. Home maintenance budgeting is a really good point. We just recently received a cancellation letter from our insurance company because our home has Polybutylene water pipes that was banned for new construction in the 2000s. To keep our insurance coverage, we had to hire a company to repipe our home in Florida. Estimates ranged from $6,100 to over $10,000. Watch for that type of tubing if you are looking at a home in the sunbelt built before mid 2000s. The water tubing is grey and labeled PB2110.
Plan ahead for property taxes
I know the premise of converting to ROTH. But every tax calculator I use has me paying $400,000 in state and federal tax to save $7,000/year not converting. Even if that triples over time I would have to have a 22-25 year retirement to break even. Living to 90+ doesn't seem like a good bet.
Make a Plan then you go to Retired !
#Retired4You
For most retired expenses and taxes will be considerably lower in retirement, I contribute over 20% to retirement while working, won’t have a mortgage, no school expenses, I’d say 70% of pre-retirement expenses is a good estimate
Health care is the big moving target for sure. It turns out in our case that we will be getting more affordable care before medicare. Once we turn on medicare, we will be paying more for it strangely enough. So planning on turning on SS at 65 to cover that and provide a relief valve for additional income for our investments to give them a break.
Great video
1. I will definitely pay more for healthcare in retirement
2. Taxes, I plan so I'll definitely pay less especially when you consider Social Security tax
3. Kids and grandkids kids are not a priority in retirement for most people's money. Yes I would help in an emergency but you would have to be pretty wealthy to pay for there college
I can tell you as a 16 year retiree, for all the items you mentioned and more, your living costs will definitely not go down in retirement.
For us with RMDs, income taxes are very significant.
And don't forget one time capital expenses like a new car .
No kidding. Life goes on and unless you want to be a hermit, it takes money to live .
Once again Dave, good presentation.
This is a great video, I learn a lot watching your videos and it has been helpful to me. Building a steady income is quite difficult for newbies.. Thanks to Mrs. Debra Hindman for improving my portfolio. keep up with the good videos.
Medical care is always an expense, but once on Medicare at least more predictable.
We downsized, so that cut maintenance quite a bit.
Although travel is front loaded, it is a lot cheaper due to discounts for off peak travel, and flexible schedules, putting trips interspersed with visits to family and the like.
We have so much more time to save money and find bargains. Dollars just go further now.
Nice tips! I’ve been pretty frugal for years, but as I’m retiring, I’ve planned for quite a bit of home expenses and travel in the next ten years. I’m hoping the home repairs are less, but I’m hoping I fully spend my travel budget!
I feel grateful that when I reach 65 I will get retiree group healthcare for free. I still have to have Medicare (and it’s premiums), but the group plan will have much lower copays for life and no monthly premium for both me and my husband. Until then, we live on his pension and social security plus cash from savings. The cash is not taxable so our taxable income is low and therefore I qualify for insurance under the Affordable Care Act.
So many women who outlive their spouses don’t realize with the loss of their partners their income decreases and their need for home maintenance increases.
My brother and his wife went from 2 cars to 1. Saves on gas, insurance, and maintenance. They own a golf cart and live on a golf course. He was a member but figured out it was not making it worth it. He does better pay as you go on the golf. He just had trees and bushes remove because he getting at a point he can’t keep up the maintenance. Just is going to have someone mow his lawn.