Don’t Get Taken by Surprise in Retirement

Life is full of unexpected events. That’s as true in retirement as it is during any other time in your life. Some of these surprises can be pleasant, like connecting with an old friend or discovering a new passion. Some can be not so pleasant, like facing a costly home repair or a serious medical issue. And unpleasant surprises in retirement can sometimes put your savings at risk.
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No one has a crystal ball, and it’s simply not possible to plan for every outcome. If you take some time to think through potential threats, however, you may be able to lessen the impact of unfortunate life events. Below are a few questions to ask yourself so you’re not taken by surprise in retirement:

How will you pay for out-of-pocket medical costs?
 
Some of the most expensive costs you might face in retirement are those associated with medical expenses and long-term care. Medicare will provide you with some benefits, but it won’t cover everything. In fact, according to Fidelity, the average retired couple can expect to spend $260,000 out of pocket on health care.1 Couple that with the fact that the average 65-year-old has a 70 percent chance of needing long-term care, and you may want to think about how you’ll cover these costs.2
 
One option is to create an emergency fund, possibly in your health savings account (HSA). These tax-advantaged accounts can be effective vehicles for funding out-of-pocket medical costs in retirement. Another option would be to purchase long-term care insurance. Many policies will cover care provided either in a facility or in your own home.

Will your spending go up or down?
It’s natural for people to assume that once they retire, they’ll spend less money. But this may not be true. When you retire, you could find yourself with more money and time than you’ve ever had. Free time and money can often be a dangerous combination.
 
Some retirees fill their time with traveling, shopping, dining out or pursuing expensive hobbies. Those aren’t necessarily bad things, unless you let them get out of control. It might be a good idea to create a projected retirement budget. That might help you think through which expenses are important to you and which ones you could do without. You could also think of ways to spend your time that don’t involve spending a substantial amount of money. For example, you could volunteer or even take on a part-time job.

Will you get bored?
The retirement lifestyle suits some people. Other retirees are surprised to find that their newfound free time leads to boredom. After having worked for the majority of your life, you may find that you need a challenge or some purpose to strive for.
 
If that sounds like you, then you may want to think about easing into your post-work years. Maybe you could transition into retirement on a phased schedule or assume a part-time role. You could also use the talents and skills you’ve developed to consult or to help out a charitable cause that means a lot to you.
 
Need help developing a budget and retirement spending plan? Let’s talk about it. Contact us at Carstens Financial Group. We can help you evaluate your objectives and needs, and then develop a strategy. Let’s connect soon and start the conversation.
 

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1https://www.fidelity.com/about-fidelity/employer-services/health-care-costs-for-couples-in-retirement-rise
2http://longtermcare.gov/the-basics/who-needs-care/
 
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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