3/29/2011 12:12 PM ET|
The hidden costs of retirement
Your plan looks good on paper, but did you think of everything? Be ready for these expenses, which are often unpredictable but always possible.
Cars, home appliances and the rising cost of college tuition are among the savings-depleting expenses that many people in retirement, or approaching retirement, may not be adequately preparing for.
Many people do not "do a very good job of estimating what they will spend in retirement," says Steve Johnson, a financial consultant in the Boston area for Charles Schwab.
Retirees or those about to retire may think they've covered the costs of future health care -- but have they budgeted for 30 years of exponential increases in prices? And what about in 11 other spending categories?
"People often vary on the extremes," he says. "We'll have clients who saved their entire life and have a very large nest egg but are always fearful about spending that. Then, conversely, you have those who really want to maintain the lifestyle they had in their 40s and 50s but don't have enough money. A lot of people don't have a target of how much they are really going to need in retirement, and they really don't have a plan."
Health care and long-term care are among many people's anticipated needs, but they are often underestimated given their exponentially rising costs.
- Cars: How to get car tech on the cheap
- Appliances: Find ways to save on Bing
- College: Pay tomorrow's tuition at today's prices
Housing, property taxes and maintenance
Housing is a major expected expense that may be under-assessed. Property taxes, and how they will increase over the years, need to be part of the equation. An aging house, coupled with the fury of Mother Nature, can mean unexpectedly large maintenance and repair bills.
"This has been a brutal winter. There have been a lot of storms, and people are now forced to add to their housing expenses in terms of costs for damage that has occurred because of the ice and the snow," Johnson says.
Utility costs are another rising expense that may not get enough consideration, as illustrated by the current, unforeseen spike in oil prices.
"If people do their budgeting, they might go look at how much they spend on utilities, food and various expenses," says actuary Steve Vernon, the author of "Recession-Proof Your Retirement Years: Simple Retirement Planning Strategies That Work Through Thick or Thin." "They forget they are going to be retired for 20 to 25 years or more. They are probably going to need one or two more cars during that time; they might need to replace the roof, or the washing machine might go out. All these unexpected but big things can happen. Look back over the past 20 years. How many cars did you buy? How many washing machines did you need to replace?"
VIDEO ON MSN MONEY
Yes, the future is uncertain, especially with the idjits we keep electing deciding our futures. But life is great, and retirement is a lot of fun, and I really hope you all do it as soon as you can. Cut back on your expenses, it isn't hard to do. So you can't live as you did when you are working, so what? I don't waste money as I did before, that's all.
Get out of that job, let someone younger have it so they can build their nest egg and live their dream.
So let me get this straight. The average american couple is expected to pay off their own school loans, save for a downpayment on a home, make mortgage payments, save for their children's college education, save for their retirement, put money aside to help with the eldercare expenses their parents may need-- and now plan to help put their grandchildren through college? Huh? Who's pushing this line of malarky? Who has all this money? How about writing articles that average people with average jobs and lifestyles can relate to.
I was reading Barrons, about the "middle class" and the author described it as families with "Discretionary Income" after paying for housing and living expenses. In other words, having money left over. In the article, the author acknowledged the American Middle Class is decreasing and the emerging Middle Class is Communist China.
Amazing, how US Corporations have shut down manufacturing and via "China Inc, aka Wal-Mart" America is losing its' middle class. Laws passed and Not Passed in Congress with the help of $4 Billion in Annual Bribes of Congress, all 535 of them, is what has made the demise of the Middle Class.
400 American people have more wealth, about $23 Trillion, than 150 million Americans and taxed at 15%.
The Congressman Ryan "Road to Prosperity" wants to lower the marginal tax rate to 25% from 35%.
Ryan also wants to lower the Corporate tax to 25% from 35% so more Corporations like GE, had $14 Billion Profit but paid No Federal Taxes.
The "Road to Prosperity" to turn Medicare to a voucher, think "Privatization" like student loans, where today, students graduate with $100,000 in school debt verses "before Privatization" $10,000. Giving Seniors $6000 or $8000 an Annual Voucher for health care when a heart Stent costs $12,000 is nothing more than helping Seniors into the Poor house, eventually becoming Medicaid and loss of all assets and dignity.
Thanks for nothing Congressman Ryan, we know who you represent and it is not the 99% of the American People.
. Is there anyone out there in the Republican Controlled House that is for me, the 99% who are struggling?
For the average American familiy it is not possible to (1) save for reirement, (2) pay for the childrens college education, (3) provide the children cars as teenagers and pay for insurance, (4) cover weddings and (5) house down payments for their children and (6) live any reasonable type of life style, (7) Support their parents, (8)pay off the mortgage
So, prioritize 1, 8,6 and 7 : save 10-15% for retirement, live a reasonable life, go on some reasonably priced vacations and if you have some left over save for those other things. Despite what the propaganda tells you your kids can put them selves through college for the most part: There is the GI bill, scholarships, loans. They actually DON''t NEED A CAR in college: they can ride a boke and work locally: there are almost always parttime jobs near campus.
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.