A retirement fund is expected to pay for a retiree’s living expenses throughout the entirety of retirement. Unfortunately, the cost of living rises all the time and inflation decreases the buying power of the dollar.
Sometimes being retired can be just as expensive as working for a living, if not more.
Here are four things that you will spend more money on after retiring.
Medical expenses
The typical person in the United States has a lifespan of just under 79 years. If you retire at age 65 you would expect to have 14 years of getting older and experiencing the inevitable ailments and medical issues that come with it.
Living long after you retire can be very expensive if you require medical treatment. And the longer that you live, the more likely you will need medical treatment for one issue or another.
Most retirement plans are calculated to pay for living expenses — not medical expenses. The average retired couple will need about $400,000 to pay for medical expenses throughout the entirety of their retirement.
A good way to mitigate such costs may be to open a tax-free health savings account.
Utilities
The typical retiree will spend more money on utility payments annually than a working-class family. Why?
Fixed-income retirees are spending more time at home. Retirees spend more on water, energy, and the Internet than others because home life essentially becomes life after retirement.
To save money on utilities, retirees should revise their time management skills and reassess priorities when using utilities at home.
Debt
Retirees and the elderly are burdened with more debt now than any other previous generation of Americans.
According to the National Council on Aging, the typical retiree owes more than $31,000.
People aged 50 and over owed $289 billion in student loan debt alone in 2018. Many retirees attempt to pay off student loan debt on behalf of their children or grandchildren.
Shockingly, more than 70% of Social Security benefits are garnished to pay the student loan debts of elderly people.
Develop a budget and stick to it. Make a plan to pay off debt. And cease paying the bills of adult children. Focus instead on your own finances.
Charitable donations
Americans over the age of 65 donate up to 11% of their annual income or retirement funds on charities or church-related activities. Americans over the age of 75 are liable to spend more than 11% of their income on charitable donations.
While it may be an uncomfortable topic, mental acuity and judgment skills diminish as we get older. It may be prudent to dedicate a trusted relative, friend, or financial advisor as a monitor for charitable donations.
