How accurately can we estimate and budget for our retirement future? While individual lifestyle will dictate your expenses, a report published by U.S. News & World Report lists the expenses that are shared by all retirees and must be budgeted for.
- Health care costs will be one of the biggest expenses you must deal with in retirement. A 65 year-old couple retiring in 2013 will need $220,000 to cover health care costs during retirement, according to calculations by Fidelity. This figure is based on average life expectancy. The cost of long-term care services depends on whether you receive it at home, in adult day care, at an assisted living facility or in a traditional nursing home. The average cost of a private nursing home is about $90,000 per year, assisted living facilities average $3477 per month and hourly home care rates average $46 for a Medicare-certified home health aid, according to MetLife.
- Basic living expenses like gas, electric, water, TV and Internet should remain relatively unchanged, with normal rate increases over time. Food bills should remain stable, unless you upgrade your lifestyle and restaurant expenditure. Your costs for various insurance programs, including health, automobile, liability and long-term care coverage must be included in your budget. Even if you own your house outright, you are likely to have to pay property taxes.
- Recreational expenses may be based on your choices, but it is important to have sufficient savings to fund your efforts to enjoy your retired life. With new freedom, many retirees hope to travel more and spend longer periods in these destinations. Dave Barnard, author of “I Want To Retire! Essential Considerations for the Retiree To Be”, suggests a little frugality when building quality travel memories by focusing on your destination rather than fancy lodging and extravagant meals.
- Unforeseen expenses translate into unexpected bills. A single emergency, or an unexpected illness that necessitates a hospital stay can have an impact on your retirement plans and finances. Setting aside a monetary cushion for will help give you peace of mind.
- Miscellaneous expenses that boost the quality of your retirement experience will also add to your expenses. Don’t forget to budget for the entertainment and hobbies that you will finally have time for in retirement.
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