As you near retirement, it can be thrilling to anticipate all of the leisurely activities you will now have time for - like frequent travel, quality time with your family, and new hobbies. But as you plan for this exciting chapter in your life, don’t forget to budget for key financial expenses:
While many retirees benefit from an extensive Medicare system, that doesn’t mean that every healthcare expense will be covered by your insurance. For example, long-term care can often come with costly co-payments and high fees for additional services not included in your long-term plan. Alongside long-term care, Medicare may not cover the following medical expenses:
- Home Care
- Prescription Drugs
- Ambulance Services
- Occupational Therapy outside of a hospital
- Over-the-counter medications and treatments
- Transportation to and from treatment/medical facilities
While you begin planning your retirement, be sure to fully investigate your medical coverage so that you are prepared to handle these additional financial expenses.
Cost of Recreation and Hobbies
After you retire, you may discover that you enjoy spending more time at home and will likely want to invest in home upgrades. Although many retirees do plan for this, they are often surprised by significant and unexpected costs. For example, you could undergo a procedure that requires you to make your home more accessible. It is also possible that you will need to provide care for a loved one, an aging parent, or even your adult child as they undergo lifestyle changes or financial hardship. Although these situations may not be a part of your current plan, you may want to consider the possibility of these events.
Your retirement is a part of your life that you will want to celebrate! After decades of hard work and career achievements, it’s important to take the time to enjoy the simple things in life. With that in mind, many retirees are often surprised by the cost of new hobbies and a lifestyle that includes more free time on your hands. Because, as a retiree, you will find yourself on a fixed income, it is critical that you plan these costs in detail so that you are prepared to address them.
Planning Ahead to Ensure a Successful Retirement
While this is just a short summary of the several expenses that can come up during retirement, you can further protect your retirement by thinking about your unique retirement needs. Above all, it is important that you work with a financial advisor who can assist you in developing a long-term investment plan that matches your retirement goals. A well-prepared financial plan can help you to mitigate financial risks and ensure that your investment portfolio aligns with the amount of risk that you are willing to take. This is especially important during a season of retirement.
As you work through your plan with a financial advisor, consider the following:
- Outlining your goals for retirement
- Creating an emergency fund for unexpected expenses
- Increasing tax savings by maximizing RRSP and TFSA contributions during working years
- Timing withdrawals to reduce overall tax bill
- Ensuring that your retirement investments are fully aligned with your risk tolerance
Retirement planning is a life-changing process that requires considerable planning. Working through your plan with a qualified financial advisor can help you to improve your quality of life and feel confident about your retirement plans.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.