When approaching retirement, the biggest concern tends to be, “Did I save enough?” And while that is certainly a valid question, many people make the mistake of being so consumed with savings they forget about the money they may wind up spending in retirement.
Here are just a few common and easily-overlooked expenses worth considering before exiting the workforce.
Long-term care and other healthcare
We all want to believe we will enjoy good health indefinitely, but the reality is, many retirees need long-term care at some point—whether that means paying an in-home care provider or eventual relocation to a retirement community.
Even those who are more fortunate have routine health care costs to consider. Medicare typically only covers temporary hospital stays, diagnostic doctor visits, and prescriptions—not things like dental and vision, which runs the average retiree $5,503 in out-of-pocket expenses, according to a 2018 study published by the Kaiser Family Foundation. For that reason, it is important to plan for the worst and hope for the best with regard to healthcare coverage.
Home and lifestyle
In the first year of retirement, many retirees come to realize they are paying way too much for the 3,000-square-foot home and multiple automobiles that suited them so well during their working life. Others begin finding expensive hobbies to fill up their suddenly ample free time. And then, of course, there are the one-off expenses—the $1,000 appliance failure and the $2,000 tree removal. Even if you have planned meticulously for retirement, your life doesn’t stop moving just because you stop working. Staying pragmatic and flexible in your style and standard of living will make it that much easier to roll with the punches as they come.
Changing family needs
More and more retirees find themselves sandwiched between so-called boomerang kids and elderly parents—both groups that may require financial assistance once your regular monthly paychecks have stopped. As always, the best course of action for tackling family financial concerns is to engage in early, open dialog. Set boundaries with your children and help plan for a post-college life that doesn’t involve their financial dependency on you. If your parents will need your help with care as they age, talk to your advisor about what Medicaid will cover, as well as programs that may be available in your state to help cover the extra cost.
Divorce and death are two more unfortunate—and, of course, largely unforeseen—family circumstances that can plague families in retirement. Each spouse needs to be prepared to manage money independently in case the unthinkable happens.
These are just some of the most common “stealth expenses” facing retirees. As your plans evolve, your Bartlett advisor can walk you through many possible scenarios and individual options, preparing you to face whatever comes your way calmly, confidently, and successfully.