Everyone wants to be prepared for retirement when the time comes. Saving when you’re younger can help put you on the path to independence once your working days have ended. Learning how to prepare for retirement can be difficult, though. There are many retirement expenses that pop up that many people may overlook, or may not even know about. The 5 retirement expenses listed below are some of the most common ones that people do not account for when they’re saving. This list is courtesy of David Ning, a financial planner and owner of MoneyNing.
Even Retirees Have Bills
- Account for Inflation - Inevitably, inflation will affect some of your purchasing power, as things become more expensive. It is important to remember, though, that not everything inflates at the same rate. Keep an eye on how prices change so that you are not worrying over inflation that won’t happen.
- Some Expenses Are Temporary - Especially when discussing things like mortgages, these are debts that will eventually disappear. Make sure you have enough to cover these costs, but remember that you won’t be paying them forever.
- Taxes Still Exist – Even after retiring, taxes will still be a part of your life. Things like Social Security, IRA & 401(k) withdrawals, and pensions are all taxable at different rates. This is probably the most important expense to remember, as these taxes can be some of the largest expenses you’ll incur.
- Expect the Unexpected - Miscellaneous expenses won’t go away just because you’ve paid off your house or your car. Being able to cover maintenance or repair costs is extremely important, especially after you retire. For seniors, also, comes the risk of medical conditions and medication. Having some money stashed away for emergencies can be a tremendous relief for you and your family.
- Paying for That New Hobby - With more free time on your hands, you may find yourself wanting to pick up a new hobby, or activity to occupy that time. Depending on what it is, it may require new equipment or tools that need to be accounted for in your savings. Covering the costs of these new items will allow you to enjoy your new lifestyle even more.
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