Retirement can bring a variety of financial and lifestyle surprises to recent retirees. Understanding the unexpected retirement costs that could arise during this time can go a long way toward helping you deal with them productively. Here are five of the biggest surprises recent retirees face and what you can do about them.
1. Caring for Elderly Parents
Retirement from your career doesn’t necessarily mean a retirement from all responsibilities. At this time in your life, you may be called upon to care for an elderly parent. If you don’t plan for this possibility ahead of time, it can add up to a significant amount of your retirement costs.
For example, you could be asked to pay some or all of your parents’ elderly care costs. This could mean anything from becoming their primary caregiver, providing in-home nursing care, or paying for permanent placement in an assisted living facility.
The latter can be prohibitively expensive; costs vary from state to state, but one insurer found that the median cost of keeping an elderly person in a private room in an assisted living facility is $90,000 per year. Even options that keep elderly parents in-home can get expensive quickly.
It’s crucial to run through the different possibilities and see what type of elderly care makes the most sense for your family’s finances and stress levels. Knowing who you may need to support during your retirement will go a long way to preventing unexpected expenses.
2. Helping the Kids through Financial Struggles
Another scenario that can catch you off guard is that of your children running into financial difficulties of their own—for instance, a lost job or unexpected illness—and looking to you for help. It’s only natural that you’ll want to help them, but you should go into these situations with a clear view of what will be expected of you and for how long. Having an adult son or daughter move back in with you for a few months is one thing. Having to pay off his or her significant debt is another.
This is much harder to predict than caring for your elderly parents, but it’s something to keep in mind as an event that could dramatically impact your retirement plans. Again, it helps to set clear expectations upfront to avoid paying your child’s expenses indefinitely.
3. The Lack of Structure
You might be counting down the days until you don’t have to worry about the regimented lifestyle that having a full-time job demands, but the sudden lack of structure in life is often a big shock for recent retirees.
Work plays a central role in our lives, providing us with social connections, a regular schedule, and an outlet for the skills we’ve accumulated over the course of our careers. Without those, it’s common for retirees to feel somewhat aimless in the weeks after their final days at work.
Before you retire, come up with some ideas of what you’d like to accomplish during this stage of your life, whether it’s a new hobby, volunteering, or even taking a part-time job as part of a partial retirement. Taking some time for relaxation and spontaneity can be fun, but you’ll likely want a more concrete plan before long.
4. Changing Housing Needs
When you bought your current home, you probably thought you’d be there for the long haul. One of the biggest surprises for recent retirees, however, is realizing that their current living situation doesn’t make sense for them during retirement.
Whether you need to be in a more convenient location to access public services or family, or just need a smaller and more manageable home, the possibility of moving must factor into your financial planning ahead of time.
5. Having to Pace Yourself
In the first few months and years of retirement, you may have a list of goals you want to accomplish. Retirement is definitely a great opportunity to do some of the things you’ve been putting off during your working years, but it’s important to pace yourself.
Medical advances have made the post-retirement portion of life longer than ever, which means your money has to last longer too. It’s easy to get swept up in the rush of finally doing everything on your to-do list and forget to pace yourself. This can lead to total exhaustion, both physically and financially. Spacing your trips and big purchases out will help you keep closer tabs on your finances and better monitor your own health.
On a fixed income, predictability is key. Keep these potential surprises in mind as you plan for your retirement so you don’t find yourself scrambling to cover unexpected costs.
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