We are asked to make a list of all the expenses that we would incur during our retirement days, it is hard to figure out. Also, to keep up to our present lifestyle expenses we neglect planning for our retirement days. But to continue with the same lifestyle one would need to have a retirement plan in place and start investing much ahead in their life. Here are a few expenses that are a must during our retirement days.
Healthcare Expenses:
Health care is expensive whether it is now or in the future and people tend to spend more on healthcare as they age. Mediclaim can cover up to some extent but continuing a Mediclaim also has it’s own cost. One needs to pay for it’s premium, deductibles, copays as any other insurance. Also the Mediclaim doesn’t cover for expenses on dental, vision or hearing aids. These can be covered only when you buy add-ons with your existing health insurance plan.
These expenses are a must to be included if you are setting up a budget for your retirement. Also those who are already suffering from health ailments like high blood pressure, diabetes would have to give a higher premium for the health insurance plans.
Taxes:
Even though you have paid taxes during your work life, your retirement days aren’t tax free.You pay more taxes on your savings for the retirement plan in your working days so that your withdrawals are tax free. In case you opt for tax deferred retirement account contributions which reduces your taxable income but you need to pay taxes on your withdrawals.
You would require to keep a track of how much taxes you are ready to pay during your work life so that the burden of taxes during your retirement is lessened.
Emergency Expenses:
Another difficult expense that cannot be easily planned is emergency funds. No one is aware when they will arise and how much expenses you will have to incur. The only way out is to have a good retirement plan so that a major part can be kept to act as a cushion during any emergency.
Generally researchers suggest to keep 5-6 months living expenses as an emergency fund. But at the time of retirement when you do not have a constant flow of income it is always wise to keep aside an year’s living expense to meet any emergency fund.
Other than these expenses there may be expenses related to travelling or a luxury getaway. Also, there can be expenses in renovating your home if you already have one. These expenses may not be seen immediately but will occur eventually. And being prepared for such expenses in your retirement requires a robust and realistic retirement plan.
Though we understand that saving for our retirement is important but that cannot come at a cost of sacrificing your present life. To have a balanced, stress free present and future life is determined by a good corpus that is used only during times of emergency.