Planning for retirement can sometimes feel like trying to hit a moving target. Just as you seem to get a handle on how much you’ll have to save and what you can reasonably expect moving forward, the goalposts move and you have to rethink your plans. Unfortunately, there are certain factors outside of your control that can raise the amount of capital you need to comfortably retire. Some are fairly easy to predict, but others can come out of the blue. To that point, today we’re going to focus on four unexpected costs that can eat away at a person’s retirement savings so that you can prepare yourself for them and react to them appropriately:
Many professionals dream of the day that they can finally pay off their mortgage once and for all and live in their dream home undisturbed. However, the frustrating reality is that many retirees face significant home improvement/repair costs. Natural disasters, wear-and-tear, foundational issues (etc.) all can work to significantly lower the value of your home. In such situations, retirees may find themselves forced to move to a new location, which in and of itself will generate further expenses. It’s unwise to always assume the value of a property will appreciate with time.
Crashes, Recessions, & Bear Markets
Even the “safest” investments on the stock and bond markets are susceptible to financial ruin. As such, individuals looking to retire should hedge their bets when playing the stock market. Putting all (or most) of your available capital into one or two ventures is akin to inviting disaster.
No one ever expects to fall victim to a scam. Yet, the reality is that many con artists specifically target senior citizens for fraudulent activities. Indeed, the FBI even has a page dedicated to fraud committed against senior citizens. Obviously it’s important to avoid these cons altogether, but it’s not a bad idea to set aside some extra money just in case.
Most people rightly plan for medical costs as they age. And setting up a health savings account is a great way to prepare for potential health issues. However, there are certain conditions that most retirees probably don’t anticipate. For instance, over the past three years, STD rates have risen 23% among people over 60. (Worse, male and female STD symptoms can sometimes be difficult to identify, and they’re often confused with other conditions.) The point here is that not all medical expenses are easy to predict.
It’s never too early to start saving for retirement. Even setting aside a few dollars here or there in a specific retirement account will add up over time. By keeping these potential costs in mind, individuals can avoid some of the financial frustrations many encounter when they retire.