Retirement is a time to kick back, relax and do all the things you wanted to do but couldn’t while you were working. But life doesn’t stop once you retire. Just like in your working years, you never quite know what emergencies can crop up.
When you’re retired, emergencies can be particularly devastating. Having to use funds to cope with unexpected events can significantly sap your retirement funds and make it harder to live out the rest of your life the way you want.
No one can see the future, but with a little planning you might be able to protect yourself. Below are a few common emergencies that you may want to consider as you plan for your retirement:
Big Home Repairs
Unexpected home repairs can eat into your retirement savings very quickly. Things like having to pay for a new roof, replacing a water heater or repairing storm damage can sneak up on you, and if you’re not prepared, you may find yourself dipping into your savings. What’s more, if you withdraw funds for repairs from your 401(k) or some other retirement account, you may even incur extra taxes.
There are a couple of ways you can prepare yourself for unexpected home expenses. For instance, you could set up an emergency fund outside of your retirement accounts. You could also consider downsizing, which would mean you’d have less to maintain.
Living Longer Than You’d Expected
People are living longer than ever, which is great, but this can become a problem if you outlive your savings. There are ways, however, that you can prepare for a longer life. One way is simply to plan.
It might be a good idea to calculate how much money you can withdraw each year according to your maximum life expectancy. Doing this can help you understand how much you can withdraw and help prevent overspending.
Another thing you can do is delay filing for Social Security. If you wait until you’re 70 years old, the maximum age at which you can file for benefits, you will receive the largest benefit possible. Annuities are another option you may want to consider. They can offer a means of income for life.
Large Medical Costs
According to Fidelity, a 65-year-old couple will pay $260,000 for out-of-pocket medical costs.1 And paying these costs can eat into your savings quickly. Fortunately, there are ways to account for these expenses. One way is to choose a Medicare Advantage plan. This bundles traditional Medicare with supplemental coverage to help fill in the gaps. You could also look into long-term care coverage. This can help cover the costs associated with ongoing care and assistance.
Are you prepared for these and other common retirement financial emergencies? Don’t wonder: Give us a call here at Carstens Financial Group and discuss it with a retirement planning professional today.
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