The reality that retirement awaits me in old age scares me, mainly because the demands on my savings are likely to shoot up. But for me to estimate how I’ll need to save for a fulfilling retirement, I must project my probable expenditure in retirement. Therefore I might better be able to plan for my IRA retirement investing and other retirement finance options to explore. Experts assert that as a retiree, I’ll need 80% or more of preretirement income to sustain my standard of living. According to the Bureau of Labor Statistics, I’m likely to spend 25% less in retirement than my current expenditure. The following are some of the things that I’m likely to spend more on during my retirement.
Moving and relocating
With the children all grown and in their homes, down-sizing from a multi-bedroom home to a condo becomes inevitable. Whereas this seems obvious, the relocation process can be hectic. There are huge unexpected costs that occur due to downsizing, especially if I decide to remain within an urban setup. It’s hard to estimate moving expenses and my thought of cutting costs by downsizing may not arise.
Health experts warn that I’m likely to incur higher medical expenses in my old age than it is currently. Statistics show that the proportion of household expenditure on health care increases from 8% in preretirement to about 11.2% beyond the age of 85. The increased spending on health care in old age could be attributed to unpredictable and costly new diagnoses and subsequent treatments. Services rendered include prescription medication, health insurance, medical supplies, and general health needs.
Traveling tops my to-do list when I retire. Whether it will entail pedalling down the getaways with my grandchildren, or setting off on luxury cruises, I’m likely to spend more than I had imagined. This is so because of the travel firms that will facilitate my tours be it on trains, buses, or boats. Although I expect my transportation to decline in retirement, I may take trips to places like Masai Mara in Kenya, Africa, which are costly.
With retirement comes more time on my hands, thus increasing my exercise frequencies. These will effectively increase my spending on fitness classes and gym sessions. Health experts say that retirement will motivate me to get fit. I will drop all unhealthy habits like smoking and drinking and adopt a flexible schedule devoid of frequent commuting.
About 53% of Americans engage in physical activity during retirement, with leisure and fitness activities accounting for approximately 13% of annual expenditure. This behavioral change during retirement is often spurred by the sheer fear of declining health.
Just like other retirees, I won’t be an exception to the vulnerability of accumulating debts with accompanying interests. One of the greatest risks to retirement is having a credit card that comes with high-interest rates. This is because a credit card comes in handy when settling rent, utilities, groceries, and medical expenses. Advisors suggest that should I find myself in such a situation, then I should start by paying off the cards that bear the highest interest rates, before transferring the balances to cards that attract a 9% interest rate.
Retirement doesn’t mean an instant alteration in my life. I will still be occupied with routines such as driving to meet friends here and there, grabbing coffee, or working on my laptop. Telephone bills, parking, and lunches are some of the small stuff that attracts daily expenses in retirement. Of course, this doesn’t equate for all the possible expenses in retirement that myself, or anyone else could have.
Like everyone else, I will endeavor to accumulate wealth as I work. Unfortunately, I know too well that the more wealth I accumulate, the more the efforts it will take for me to manage it. I may thus be required to hire a financial planner, which could be an expensive engagement.