When it comes to retirement planning, having realistic ideas about retirement is important. And with the end of the year rapidly approaching, we’ve had many calls about this area.
In my article about savings plans for 2021, I talked a bit about retirement savings as an important part of your budget and annual savings plan.
Retirement Planning & Being Realistic
Planning and saving for retirement are important for a number of reasons. One of the reasons is that many of us don’t realize our living expenses may actually cost MORE once we retire. Here are a few examples of this:
- Travel – It might seem like travel as a retiree should cost less than it did when you had to carry the whole family. But the reality is, retirees often take longer trips with a higher expectation of luxury. Two weeks instead of one. First-class instead of coach. You can factor in some additional expenses when you think about travel to see the grandkids or a trip to see old friends.
- Downsizing – This one is a surprise to a lot of new retirees who have sold the family home and expect to pocket a substantial amount of that equity. In reality, you’re more likely to make a lateral move when it comes to your retirement home. Whether that’s because you’ve built a dream home or you’ve moved into a higher-end condo with full amenities. In either case, be prepared to spend as much or even more than you used to. Additionally, you’ll also have to factor in the simple fact that at some point, you may not be physically able to cut the grass or shovel the snow.
- Your Daily Expenses – Things cost more year over year, simple as that. Many times, it’s difficult to project what the costs of any given item might be in two decades. Imagine saving for retirement in the late nineties for today. Who could imagine the “extra” expenses of digital networks, online streaming services, and even cell phones? Be open-minded about the fact there will be new expenses you may not be able to foresee.
- Healthcare – It’s easy to think, as a senior, that your health expenses will be covered by the government. But there are so many “gotchas” in the various plans and you may have to expect to pay more than you might ever think. It’s also worth remembering that the simple act of staying healthy is going to cost more, too. Gym memberships, preventative care, proper nutrition, and even a good pair of sneakers are all going to add up. So, understanding that and determining how to plan for it is a smart idea now, while you’re still generating income.
Thinking Seriously About Retirement
I can think of many more examples. But these should be enough to start you thinking seriously about retirement planning that looks at saving towards the “real” costs of retiring.
Here’s another article on retirement that you may find interesting: Retirement Income: Setting Up For The ‘New’ Retirement
Questions about retirement planning? My team and I are available to sit down with you and discuss your current tax strategy to see if you’re on track for the retirement you want,. Not one you won’t enjoy.
Give us a call or send us a message through our contact form and let’s get you on the right track!
