The Common and Not-So-Common Retirement Expenses You Need to Budget For

Retirement marks the time when most people hang up their career hats and focus on health and happiness for the rest of their lives. Family and health become the focus during the golden years as we age, but if you don’t plan on working during this period, you will need to save up for it.

Retirement requires a hefty amount of savings through retirement funds, assets, and investments. Many people end up using too much of their retirement funds early on due to a lack of careful planning. Knowing the most common expenses and unexpected financial emergencies that occur during retirement can help you use your funds and savings wisely.

Rent or Mortgage

Whether you rent or own a home, you will need to pay for the roof over your head. While many retired homeowners have paid off their mortgage by this time, larger loans or downsizing can require mortgage payments well into retirement.

Don’t fail to factor rent or mortgage costs into your retirement plans. You never know when you may need to move or buy a new home; being mortgage-free isn’t a guarantee. If you plan on living in a senior community, these come with monthly costs as well.

Bills and Utilities

Along with your rent or mortgage, you will typically need to pay for bills and utilities to live in that home. Water, sewage, trash, internet, cell phones, electricity, natural gas, and streaming services are common monthly expenses that retirees need to factor into their savings plans.

There are affordable, senior-friendly phone plans and streaming services, but you’ll still need to pay monthly. 

Senior Living Communities

If you plan on departing from single-family living in favor of a senior community, you will need to factor these expenses into your retirement. Those who don’t account for the increase in living costs may end up tapping into too much savings too quickly.

While communities like nursing homes or senior apartments cost more than living alone, they often include many additional expenses in their monthly rates, like utilities, healthcare, home maintenance, and food. This all-inclusive cost may end up saving retirees money in the long run. Proper budgeting and planning can help you manage the cost of senior communities easily.

Legal Expenses

When you reach retirement age, you’re going to want to make sure your affairs are in order if you haven’t already. Your assets will need to go somewhere at the end of your life, whether it be to family members, charity, or friends. Estate planning requires paying several fees to generate and file legally binding documents.

Many people obtain an estate lawyer to make the process quick and simple, but they come with fees as well. Budgeting for these expenses can help you create a legacy. You may also want to designate medical directives, living wills, or a power of attorney; a lawyer can help with these, too. If you ever are a victim of financial scams, senior abuse, or nursing home abuse, you’ll want to account for medical expenses and legal fees to take care of these concerns as well.

You’ll likely want a legal team, like the Nursing Home Law Center, to represent you in emergencies like this. It never hurts to budget for these legal matters.

Healthcare and Medication

In general, seniors need more healthcare than younger populations. They require frequent screening and testing for common health concerns like cancer or dementia. They may need more appointments to manage chronic conditions or pain.

Retirees usually require more frequent physicals, dental work, and prescriptions on average as well. It’s important to properly account for these additional expenses, as Medicare or other health insurance won’t cover everything, especially when it comes to certain prescriptions or surgeries. Save for more than health insurance premiums during retirement. 

Insurance

Medicare isn’t the only insurance that retirees need to worry about. Many retirees will pay for life insurance, home or renter’s insurance, auto insurance, and many more premiums to cover emergency expenses or family care when you pass away.

While some insurance policies aren’t required, they’re smart investment choices.

Travel

Retirement age is the prime time to travel, as you likely won’t have to worry about working or taking care of young children any longer.

Traveling is expensive, however; transportation tickets, lodging, meals, souvenirs, and entry prices can easily add up to thousands of dollars per trip. If you aim to travel in retirement, make sure you factor that into your savings plan, in addition to all other living costs.

Family Support

While retirees may no longer have kids in the nest, families still need support at times. You may need to help pay for your children’s or grandchildren’s college funds. A family member may be behind on rent. Grandparents are a common source for mortgage down payment gifts.

While you don’t have to afford all of these expenses, you’ll want some reserve for family emergencies at the very least. Holiday and birthday gifts alone can add up over your golden years!

Conclusion

If you’re overwhelmed by the many expenses during retirement, don’t stress too much. A solid retirement funding plan can help many retirees enjoy stress-free and healthy golden years.

Planning for emergencies, saving early, and budgeting wisely can eliminate most financial concerns at the end of your career. Consider working with a financial advisor to help you manage your retirement funds better.