Saving for retirement can be a challenging process. Not only is it difficult to leave enough room in your budget to set aside money each month, but it is also challenging to simply calculate how much you need to save to reach your goals.
There are plenty of things to consider when estimating your retirement expenses, including:
- How early you plan on retiring.
- What kind of activities you plan on doing.
- Where you want to live.
- What you want to leave behind for your children.
These are common considerations people think about before saving for retirement, but there are some other expenses that you may be forgetting about that would be a mistake to overlook.
Three mistakes to avoid when estimating retirement expenses
- Forgetting your housing costs — Sure, you probably thought about the cost of your home and the mortgage payment, but have you considered other housing costs? A study by the Society of Actuaries found that unexpected home repairs are the most common financial surprise for retirees.
You may want to have your home inspected by a professional before you retire, so they can identify areas that may become headaches in the future. You should also consider saving a little more to make sure you are covered for potential unexpected repairs.
- Forgetting health care — Many retirees qualify for some level of Medicare, but it does not cover everything. Dental, hearing, vision care, medication and copays may only be covered through supplemental plans.
Make sure you understand clearly what kind of Medicare plan you may qualify for, so you can identify what is missing. Filling these gaps will require money out of your pocket, but it is better to prepare for a health emergency by paying for insurance than eating the full costs out of your retirement budget.
- Not planning for the loss of your spouse — It is difficult to think of losing a loved one, but this is a reality all married retirees must face. You and your spouse need to have a plan in place to help the other one avoid financial hardship when one of you goes.
Consider buying a life insurance plan as part of your retirement strategy. You also need to make sure that your spouse is set up as a beneficiary on everything you possibly can pass on, including:
- Pension benefits
- Social Security benefits
- Investment assets
Working with a financial planner to set up an estate plan can help make sure that your spouse, children and other beneficiaries are taken care of according to your wishes in the event of your passing or incapacitation.
Talk to a ProVise CFP® professional about estimating retirement expenses
At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about estimating retirement expenses? Contact ProVise today to schedule a complimentary consultation.