Plan for the Unexpected in Retirement
BY: Jeff Supple
The undisputed champion of concerns retirees have is outliving their money. The anxiety created by those nasty unexpected expenses can really hinder the enjoyment of your golden years. Anticipating the unexpected as much as you can and budgeting for them is the best cure. Think not only of bills, but also things you want to spend money to enjoy your retirement.
Here’s a list of some of those expenditures that come up in retirement that people often overlook:
Children/Grandchildren
Allowances should have gone by the wayside after you’ve left the workforce but it’s amazing how things can add up. A wealthy client with a large family once asked me, “Do you have any idea what I spend on family dinners because Dad/Grandpa is always expected to pick up the check?” I didn’t know, neither did he, but it was enough to raise the concern of someone with considerable means.
Unreimbursed Medical Costs
Most people are aware that Medicare is not going to cover everything but they are not sure how much they are going to end up spending. AARP has a great calculator that can help you anticipate some of these costs:
https://www.aarp.org/retirement/the-aarp-healthcare-costs-calculator/
Vehicles
If you are people that buy cars outright that’s great, but because there is not a current monthly expense for it people often forget to budget for this “recurring non-monthly expense”.
Home Maintenance
Unfortunately the water heater doesn’t know you’re retired. Some years are going to be more expensive than others but setting aside around 3% of your home value each year should help cover your costs.
Charitable Giving
If you were a giver in your working years it stands to reason that you would like to continue as a retiree. Setting aside an annual giving budget ensures that your generosity and fulfillment received by it will live on.
A key note on charitable giving:
Tax reform starting in 2018 doubles the standard deduction which means that many people that itemized deductions in previous years might not going forward. If you are not itemizing deductions and are giving this generally means a loss of the tax deduction. For those in Required Minimum Distribution phase consider looking into making a Qualified Charitable Distribution from your IRA which can work as a de facto deduction.
Contact a member of our Wealth Management Team to discuss more about your retirement plan.