Having worked hard all your adult life to save money and create a nest egg for your retirement years, you cannot afford to fall into a trap that could wipe out your hard-earned savings.
Apart from watching your nest egg, pay careful attention these eight potential expense items, losses and mistakes that could erode your savings and make your retirement fund dwindle quickly.
Are you one of those people who let their passion for travel take a backseat during your working years? Have you waited for your retirement, intending to use your retirement fund, to travel in style? Be warned: travel can be very expensive unless you plan it well and stay within your budget.
After working hard for a lifetime to save for your retirement, no one can blame you if you do not wish to eat rice and beans every night. But splurging on entertainment and dining out with friends or enjoying expensive wines could burn a hole in your retirement fund faster than you can imagine.
Do you wish to leave your dreary life in suburbia and crave a condo in the city or a retirement home in a warm place? As per the AARP figures, housing costs have jumped by 194 percent over their 1988 prices. Steadily rising housing costs could leave you staring at a big hole in your retirement savings nest egg, along with inflation and higher gas prices.
You need to make yourself aware of the inherent limitations of Medicare. Healthcare expenses that Medicare does not cover include dentures and most dental care, eye examinations for prescription glasses, hearing exams and aids, cosmetic surgery, acupuncture, and long-term care.
Apart from this, original Medicare does not cover co-payments, prescriptions, coinsurance, or deductibles.
It is unfortunate but true, that Medicare does not cover long-term care. The U.S. Department of Health and Human Services figures show that 69 percent of retirees, at some point in time, will need some form of long-term care for an average of three years. If the monthly cost of a semi-private room at a nursing home is $6,844 on average, the cost for three years would be almost $250,000.
With more and more retirees opting for second careers, you might need to save for retirement, even while you are retired. This includes traditional and Roth IRAs, 401(k)s, and Health Savings Accounts (HSAs). While you will need to decide on when to draw your social security benefits, you may also need to include 50 to 85 percent of these benefits in your gross income, based on any additional taxable income that you generate.
On the face of it, this may sound harsh. But your children and other family members can be the reasons for the depletion of your retirement money. Your family members may have valid expenses like car repairs or medical expenses that you may be called upon to help with.
Retirees can often become unsuspecting targets of swindlers and cheats. Senior citizens having a sizable retirement fund and excellent credit can fall prey to tricksters who are out to rip them off. Some of the common scams involve con artists offering you a cheap vacation, low-cost health products, or free gifts.