When it comes to making big decisions about your financial future, it’s always best to seek out professional financial advice. The idea of retirement itself can be downright overwhelming, never mind planning for it.
This is probably why many people wait until they are much older before even thinking about the subject. However, it’s important to start preparing for it as soon as you are able to. Every bit adds up, eventually transforming your future for the better. Regardless of your situation or age, below are a few key expenses to consider before retiring.
Housing and relocation
Although you won’t be spending all your time at home, you will most likely be seeing plenty more of it during your golden years. More than ever, you’ll want to make sure that your home suits you and your needs going forward. This means finding one which is affordable, comfortable and practical – true both now and in the distant future.
For some, this might mean scaling down into a home that’s smaller, has one floor and requires less maintenance. Or, it could mean making some changes to your current home, like adding ramps or stairlifts. Others may even wish to change cities or get out of the city altogether.
Although you’ll no longer be spending your time commuting to and from work, chances are that you will still need some form of transport – reliable transport at that. Vehicle maintenance or breakdowns can cost you a lot more in the long-run than a seemingly large upfront expense.
Yes, it might be comforting to think of you and your trusty steed, riding off into the sunset together, retiring side by side, in a timely fashion. However, you need to know when to invest in something new or solid over something old or familiar. This way, you can rest easy knowing you’ve invested in something that won’t let you down for the foreseeable future.
You might also wish to consider investing in a vehicle which can help you get from point A to B within your home, like a mobility scooter. These may cost a lot upfront, but much like stairlifts or ramps, they may help you to avoid costly accidents or injuries in the future.
Family deaths or emergencies
It’s important to note straight off the bat that you should never feel obliged to spend your retirement funds on your loved ones, especially if you can’t afford to. Your retirement fund is exactly that – yours. However, in the case that you can afford to factor in your loved ones, you may want to do exactly that, especially if you’re still fully or even partially responsible for them.
For example, you may want to keep some of your funds aside should they need your help in the case of an emergency. It may be grim to think about, but the reality is that if one of your loved ones becomes chronically ill, or even passes away, someone will have to pay for their funeral and medical costs. Should they not be able to, you may wish to put some money aside for them.
When it comes to your own health, it’s important to select the right medical plan to support you during your retirement. Obviously, this also means you should put funds aside to be able to pay for it. What’s not always so obvious, though, is that medical plans tend to inflate at a rate which is much higher than standard inflation costs. To make sure you’ll still be able to afford your medical scheme well into the future, you should factor in these inflations.
We won’t dive too deeply into this one, but it might also be worth selling any additional assets you may have which no longer directly serve you. Not only will this take some weight off your shoulders, but you might be able to find a better use for money you receive for them.
One example may be to invest the money into an account which generates you some extra income on the side, through any interest gained. Another might be to pour the additional funds into another area of your retirement plan to make it more comfortable.
Much like anything that costs money or holds monetary worth, the price of a loaf of bread today will not be the same a year or two from today. Because eating is a basic living requirement, you should set a healthy amount of your retirement expenses towards food, factoring in more or less what the items may cost as the years go by.
This doesn’t mean splash out or go beyond your means because it’s a human right. It means try to be more conscious of your spending habits, possibly even finding better ways to eat healthy food for less. Set a budget which suits and supports you and stick to it.