Take stock of what you’ve got
As you near retirement, it becomes easier to predict the kinds of large but unusual expenses that can undermine a budget. If you’re about to retire and you just bought a new car, for example, maintenance expenses should remain pretty low for the next few years. However, it may be smart to include more costly repairs in your budgeting down the road. The same is certainly true if you own a house. How many years has it been since you’ve replaced your roof, furnace, hot water heater, and other items that require significant replacement costs? If it’s been a while, earmark some of your savings for these repairs. If you have an aging roof and older major appliances, you’ll want to set aside more each year than if they are all relatively new.
Factor in health care costs
According to a Fidelity Benefits Consulting survey, a 65-year-old couple retiring now can expect an average of $220,000 in health care costs in retirement, not including any nursing home care. Many Americans expect to rely on Medicare to cover their expenses, but quite a few are not aware that it’s not free or do not realize what percentage is covered for doctor’s visits, hospitalization, vision and hearing, or long-term care, according to a study of middle-income baby boomers by the Bankers Life Center for a Secure Retirement. A total of 77 percent of study respondents had bought additional insurance to cover out-of-pocket costs that Medicare doesn’t encompass.
Keep family in mind
Consider a parent whose health is declining and who may need help paying for home health care or other expenses. Or a child who loses his or her job and turns to you for help making ends meet. Or a grandchild is on the way and you want to help the young parents with expenses. There are many happy and sad reasons that retirees can find themselves digging deep to help out a family member financially. That’s why you should include unforeseen requests from loved ones into your retirement budgeting.
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