A good retirement plan is about more than saving. While saving is important, retirement planning also includes preparing for the unexpected and managing risks. Very often, retirees are surprised to learn that their assumptions about retirement were incorrect or that they failed to plan for potential risks.
While it’s impossible to predict the future, you can do your best to prepare. Below are some things you may want to think through to better protect yourself from unpleasant surprises in retirement:
Unexpected expenses can be devastating, especially in retirement. Things like home repairs, medical bills or long-term care can have a big impact on your savings. While Medicare will cover much of your medical costs in retirement, it won’t cover everything.
In fact, according to Fidelity, the average retired couple can expect to spend $260,000 on out-of-pocket medical expenses.1 Additionally, the average 65-year-old has a 70 percent chance of needing long-term care.2
One way to prepare for these costs is to build up an emergency medical expense fund, perhaps in a tax-advantaged health savings account (HSA). Another option to consider is long-term care insurance. These plans can help offset the cost of long-term care so you won’t have to tap into your savings.
You may think that after you retire you’ll spend less money. That’s a pretty common assumption. However, the truth is that many retirees don’t see a decrease in spending after they stop working. In fact, some retirees actually ramp up their spending.
When you retire, you may have more free time and money than you’ve ever had in your life. That can be a dangerous combination. You may find yourself filling that time by eating out, traveling, shopping or pursuing expensive hobbies. You may want to consider creating a budget to help guide your expenditures. You can also use your imagination and find ways to spend your time that won’t hurt your pocketbook.
While some people fall into the retirement lifestyle with ease, for others it’s not so easy. Having worked for so long, you may find that you crave some sort of challenge or purpose. You might want to spend time thinking about whether having more free time is something you’ll enjoy.
If you think you’ll get bored quickly, then you could consider easing into retirement on a phased schedule. You might even want to transition into a part-time position. Using your skills to help a charity you like is something else you might do to fill the hours. Think about your retirement, values and priorities, and then develop a plan for how you’ll spend not only your money but also your time.
Need help developing a retirement plan? Let’s talk about it. Contact us at Trinity Financial. We can help you evaluate your objectives and needs, and then develop a strategy. Let’s connect soon and start the conversation.
Advisory Services offered through Change Path, LLC an Investment Advisor.
Trinity Financial Group and Change Path, LLC are not affiliated.
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
16391 – 2017/1/30