Retirement isn’t about riding silently into the sunset. You have lived a full life but understand that retirement also has a price. You think that you are yet young and far from retirement. You possibly feel you need not concern yourself with retirement woes yet. But early preparations can make a big difference. Before preparing your retirement schedule, an ultimate list of retirement costs to start saving now, is advisable. Upon retirement, income sources reduce, so initiate retirement savings as early as possible. Knowing what to save for, enables wiser budgets. As per U.S. Census Bureau, average retirement length is 18 years. Within this period, certain expenses must be planned for:
- Fixed and Essential Expenses
Housing
Your retirement savings will be absorbed for housing. If you fail to pay off mortgages before your retirement, you pay rent or monthly mortgage fees. According to the Bureau of Labor Statistics, average housing costs upon retirement is $1322 for property taxes, maintenance, minor repairs, and other home-related expenses. This cost varies depending on housing choices.
Health Care
After retirement, health declines as we age and health costs rise. Your future health status and probable illness are unpredictable; so retirement health care is not budgeted. Some health care providers cover health care costs after retirement. Do secure fully-paid health care plan insurance before retirement. During retirement, average monthly health care insurance premium is $499. Basic Medicare has a low fee of $135.50 as it fails to cover several medical needs.
Long-term Care
Apart from estimating costs for maintaining your health during retirement, add the cost of long-term care such as a nursing home care. The Department of Health and Human Services says that on an average, a semi-private room can cost about $6,800 a month.
Food
As per the BLS or Bureau of Labor Statistics, the average retiree’s food costs could range from $6,300 to $6,800. The annual food costs for the retirees are lesser than for working people as older people generally observe strict diets and prepare their meals. Costs vary, depending on shopping and grocery lists.
Utilities
Having a house ensures utility bills. Retirees downsize by moving to smaller homes, owning few appliances, etc. Costs vary depending on the lifestyle planned after retiring and depend on the standard of living.
Transportation
As retirees need not drive to work and with lesser social responsibilities, transportation costs are around $6,000 annually, inclusive of fuel, insurance, and maintenance.
Clothing
You cannot skip clothing expenses if planning to stay warm during winter and remain cool during summer. Allot $1,000 annually for clothing to attend important events such as the weddings or grand high school homecoming.
Retirement Taxes
You cannot escape taxes even after retirement and depends on post-retirement income. List down all properties and pension incomes after retirement, before computing your retirement income tax. If not pre-determined, you could be shocked at how high retirement taxes could go.
- Other Expenses
Entertainment
Retirement doesn’t mean you place yourself to just like out the rest of one’s life inside a cave. Fun remains part of your day to day activities. While planning the retirement budget, do allocate funds for a cable television subscription, club membership fees, mobile plan, and also concert and movie shows.
Leisure
Everyone dreams of visiting new places and great adventures post-retirement. List down all travel plans and budget adequate savings to fund those holidays.
