Retirement Planning: Beware These Six Costs that can Devour Your Savings

Are you embarking on retirement planning and need some guidance? We’ve outlined the top expenses that that take away from your retirement savings. It’s important to be aware of these expenses so that you can plan accordingly. According to the Bureau of Labor Statistics, the average older household spends an average of $3,800 a month, or $45,756 per year.

  1. Healthcare costs. Healthcare costs as you age can add up to more than you expect. Staying healthy by eating well and including exercise in your daily routine can keep health costs at bay. Also, make sure to choose the right Medicare plan for you. You can save money by doing research on which plan would fit your lifestyle best.
  2. Debt. Do you have credit card debt with high interest rates? Make sure to look at the rate of interest on your credit cards, and try to pay these off as quickly as possible.
  3. Fees. Hidden fees? Your stocks, bank, brokerage, credit card, and even services like Amazon Prime and Netflix fees can add up. Look at the fine print and see how fees can add up, especially annual fees on investments.
  4. Taxes. We all have to pay them, but they can really add up. Even your Social Security benefits can be taxed. Delay collecting Social Security of you can in order to increase your benefits in the long run.
  5. Children. In retirement, you can end up spending twice as much on your children as you do on retirement savings. Help your kids learn financial skills early on so that they can be financially sound as they age. Let them in on your processes for making financial decisions, and let them start investing early on if possible.
  6. Mortgage and House Expenses. This one is inevitable, but you can make it easier by aiming to pay off your mortgage before retirement and not purchasing a house that’s out of your financial range. On top of mortgage expenses, you’ll also be paying property taxes, insurance, maintenance, and repairs on your home.

These are the six main expenses that can hit you hard in retirement, but it’s also wise to be prepared for the unexpected by having six to 12 months’ living expenses saved up. Have a plan in place for retirement, and be willing to change it should life changes occur. 

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