When you retire, you should rest, relax, and have fun. You should have worked hard for decades and saved enough money to be financially secure for the rest of your life.
As of 2022, the Federal Reserve says that 54.4% of families have retirement funds. The average amount of money a family in the U.S. has saved for retirement is $333,940.
This amount may seem like a good amount, but you could have some unexpected costs in your golden years that could really hurt your retirement savings.
Charles Schwab lists five important costs that you can’t plan for in retirement and how you can get ready for them.
Taking Care of an Adult Child Who Is in Trouble
You may have raised your kids and now they’re ready to start the next part of their lives as adults. But there are times when adult children may not have enough money for a variety of reasons. It might happen because of losing a job, getting divorced, or being sick for a long time, for example.
Even if the child is an adult now, a parent may still feel compelled to help them. Regardless of the reason, helping your adult children with money could put your retirement savings at risk. You might want to limit the amount of money you give or the amount of time you can help.
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Fixing Up Your House and Other Housing Costs
You should be proud that you’re retired and your home is paid off. There are, however, long-term costs that come with owning a home that don’t go away when you quit. Property taxes that go up, care fees, the cost of utilities, and repairs that come up out of the blue can all eat away at your retirement savings. Before your golden years, make sure you have extra money saved up for home repairs that come up out of the blue.
Unknown Health Care Costs
If you are over 65, you can get money from Medicare. Medicare does in fact pay for some medical costs, but not all of them. Premiums are higher for extra insurance like Medicare Part D or private Medigap insurance, but it might be a good idea. If you get sick and need medical care that Medicare doesn’t cover, having extra coverage could save you a lot of money.
Care for a Long Time
As you get older, the chance that you will need some kind of long-term care goes up. This kind of care can be anything from having a home health helper come to your house a few times a week to living in a nursing home full-time. The cost of long-term care often has to be paid for out of cash or with long-term care insurance.
For people with more money, paying out of pocket might be the best option. Long-term care insurance is probably a good idea for people in the middle class or less. You might pay a lot of money for insurance that you never need, but if you ever need long-term care, it could save you a lot of money.
Loss of a Spouse
It can be very hard on both your emotions and your finances to lose a mate. This is often especially true if the spouse who died was the family’s main source of income. Getting long-term life insurance ahead of time, making sure you’ll be able to access your partner’s pension after they die, and delaying Social Security for as long as possible for the spouses who make the most money are all ways to lessen the financial impact of losing a spouse.
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Survivors of a deceased spouse can get their Social Security benefits after the death of the partner. If you wait to take the higher-earning spouse’s Social Security benefit until they are 70 years old, or longer, you’ll make sure that both of you get the highest monthly benefit for life.
Conclusion
When planning for retirement, it’s important to think about costs you didn’t expect that could affect your ability to pay your bills. Charles Schwab talks about five big costs that people don’t expect: taking care of adult children, fixing up the house, unplanned medical bills, long-term care, and losing a spouse. By planning ahead for these problems and having backup plans ready, you can protect your retirement savings and have a safe and happy retirement.