Preparing for retirement is crucial, and as you go through years of hard work in your career, it may seem a long ways away. Many professionals plan to save for retirement throughout their career using retirement funds such as a 401K. However, although these efforts to save for retirement seem like a simple way to set yourself up financially during your golden years, it’s not uncommon for retiree’s to struggle financially once they’re not working anymore. Here are a few reasons why retirement may cost more than you initially planned for.
Owning a home is a significant expense for anyone. Mortgage payments, property taxes, maintenance and repairs; the cost of these can add up quickly. For many individuals entering retirement, mortgages may already be paid off; but this doesn’t mean the cost of owning a home ends there. Keep in mind that when you retire, even if your mortgage is paid off, there are other costs to continuing to own your home. Depending on your location, things like property taxes can vary substantially, and they often tend to rise as the years go on. Be sure to consider your property taxes and any potential maintenance work that may come up in the future.
Taxes are a large part of your retirement, and understanding them is crucial. Any income like Social Security or a pension is likely to be subject to taxes. Being on a fixed income can make paying these taxes a little tricky if you didn’t budget for them appropriately. Be sure that you assess any sources of income you have coming in after you retire and budget accordingly for any taxes that you’ll have to pay.
Healthcare is essential to have, especially in your later years. While it’s an essential cost, it’s also one of the most substantial expenses that retirees have. Before you retire, it’s a wise idea to do some necessary research and get a few estimates of how much healthcare will eventually cost you. Once you have an idea, you can work your healthcare costs into your budget.
Retirement should be an exciting and rewarding time. To ensure you don’t face financial trouble, be sure to do the right research and budget accordingly.
Christopher Jacob is a Registered Representative with Saxony Securities, Inc.. Securities offered through Saxony Securities Inc. (SSI). Member FINRA, SIPC. Non-security products and services or tax services are not offered through SSI. Cadeau is not affiliated with SSI.