Leading a peaceful and fulfilling retired life is impossible without planning and preparing for it for most of one’s productive life. While you can never anticipate everything, there are quite a few expenses you can prepare for by planning and including them in your retirement budget. Some unexpected expenses most people tend to ignore, but you need to plan for include:
Home Maintenance and Repairs
It can be hard to keep your house in good condition without dipping into your retirement savings when you are on a fixed income after retiring. Certain expenses like a roof replacement or adapting your home for easy wheelchair access may be significant enough to strain your budget.
One way of minimizing home repairs is to undertake all repairs and improvements before retiring. It can help to get a thorough home inspection done to identify potential issues you need to address. Also, consider moving into a smaller home, which will require less maintenance, and you will spend much less on utilities. According to ARP, downsizing or renting can leave you with more money in the bank.
The cost of healthcare can be of considerable worry after retirement because it can mount in this phase of your life. One way of minimizing your healthcare costs is by living healthily when you are young. You can stave off many age-related diseases and keep yourself in top condition by eating healthy food, exercising regularly, sleeping well, and keeping yourself free from stress. Purchasing health insurance plans of the right kind will also help you to avoid putting your budget under stress. The premiums may be higher, but you can plan for them since the amount is fixed. You can consider a solo 401k if you are self-employed to save up for retirement.
Many people relocate after retiring to live in a place with better weather or be near their loved ones. You can avoid financial stress if you plan or even delay the move to save more; however, the situation is different if you need to relocate unexpectedly and at short notice due to medical reasons, divorce, foreclosure, job loss, etc.
The ideal way of minimizing the financial impact of an unplanned and sudden relocation is to build an emergency fund for unexpected expenses that will prevent you from using up your savings or taking on debt. Financial planning experts recommend having an emergency fund of three to six months of living expenses, including rent.
You will also need to deal with the emotional and financial aspects of something nobody likes to think about or plan – the death of your spouse. If you rely on your spouse’s income, your finances may come under stress if your spouse dies. You will also need to deal with the considerable expense of a funeral. You can help avert a crisis by purchasing life insurance or adding a living benefit rider to an annuity so you will continue to receive monthly payments even when your spouse dies. As is evident, planning is the key to a retired life free of financial worries.