As a smart, responsible working adult, you realize you can’t just start saving like mad prior to giving your two-week’s notice at age 65. But there are other, not-so-obvious pitfalls that can get in the way of a comfortable retirement. Check out these four expenses that can strain your retirement budget if you’re not careful.
- Expensive Hobbies
Looking forward to retirement, you may dream one day of living on a Caribbean island and taking up yachting, or maybe you’ve always want to open up a bed and breakfast and live out your years in the countryside. While these are all worthwhile pursuits, make sure you have a way to pay for it all. During your early retirement years, excessive spending can really dent your budget — or worse, drain it completely — because you suddenly have time to do what you’ve always wanted. The world seems like your oyster, and rightfully so, but just make sure those oysters don’t put you in the poor house.
Bankrate advises having a spending plan that will fit your lifestyle and allow your retirement income to last through ALL of retirement, not just the first few years.
- Excessive Home Renovations. Don’t forget to budget for those necessary home improvements, whether you want to do some redecorating and rearranging rooms, or you want to leave some money in an emergency home improvement fund in case necessary repairs are needed. It’s easy to underestimate what you will be spending on renovations in retirement. You may think you love the house the way it is right now, but you may not feel that way in five years.
Plan for home improvements in your retirement budget, but don’t take out a second mortgage or anything drastic to finance a home improvement. The last thing you want to take on right now is more debt.
- Financially Bailing out Adult Children. Perhaps putting the biggest strain on retirement budgets is the bail-out of adult children, whether that involves helping them pay for a home or getting them out of a bad financial bind. You have two choices: plan for enough to accommodate your generous nature or learn to say no. Remember, this is YOUR retirement. You don’t have another shot at this. Your kids do.
- Caring for an Aging Parent. This is another big factor that many people don’t think to factor into their retirement costs. Perhaps your mom is facing a debilitating illness, or maybe your father who has Alzheimer’s lives with you. If your parent still insists on living in their own home, you’ll be buying groceries and preparing meals, taking care of household tasks and improvements, and much more. If they are to go into a nursing home and have limited funds, guess who will have to take care of paying for that?
Whether you’re funding your retirement with savings, stocks and bonds, mutual funds or a combination of all, make sure your investments are in line with your plans. Stay on top of who is managing your money and know the name of a trusted stockbroker fraud attorney you can call if you need to.