When I retire, my expenses will go down . . . so
Shouldn’t my Social Security check be enough?
Me: All this talk about saving for retirement seems silly to me. By the time I retire, the mortgage and my auto loan will be paid. My other expenses are likely to be minimal, too. I’ll drive so much less that my car will last for years, and I won’t have to burn as much gas or oil. I’ll be too old to care about wearing the latest fashions. I can putter in my garden instead of going to the gym, and I’ll be happy to stay close to home.
Financial Advisor: Keep in mind, though, that your purchasing power will diminish as costs of goods and services go up. A Social Security check of $1,500 a month won’t stretch nearly as far in 10 or 20 years. No matter how happy at home you may picture yourself, most retirees aren’t ready to sit in their rocking chairs all day, or give up many of the pleasures they’ve enjoyed throughout their working days.
Once you have more free time, you’ll be surprised at how nice it sounds to spend a night at the theatre, dine out in the newest restaurant in town or travel a little. You’ll enjoy visiting grandkids and old friends. You probably won’t want to miss your high school, college or family reunions, annual vacations or anniversary getaways.
Aren’t most retirees satisfied to live quiet lives at home? After spending your first leisurely days in your house, you’ll look forward to an occasional get-out-of-dodge break. New adventures might sound tempting to you, too. Now and then, you might want to try a day trip to the city or a group night on the town. Unfortunately, if you don’t have a nest egg to dig into, you may find that you have more time than money. Occasional excitement like bus tours to interesting places will be out of reach for you.
Won’t my monthly bills be about the same? Prices rise with time, so seniors without savings may need to alter their shopping habits from carefree spending on food, clothing and household items to penny pinching. For some retires, switching from their favorite stores to second-hand shops or garage sales can be traumatic. One unexpected illness can add hundreds in medical bills, putting even more big dents into monthly budgets.
But, I’ll be OK if I have a good health care plan. No matter how well-covered you may be, you will probably find yourself seeing a few more health professionals as you age. You could be in a real bind without any savings to cover out-of-pocket costs. From 2006 to 2017, according to Kaiser, the average cost of healthcare deductibles increased from $303 to more than $1,200 annually. Medical expenses are likely to keep rising every year.
What about us retirees who own paid-off property? Your mortgage may be history, but when was the last time your house had a new roof, the washer and dryer replaced or refrigerator repaired? When do you remember your taxes going up or your condo fees raised to cover unexpected projects? Until they’re living on fixed incomes, many retirees fail to calculate how much their homes will actually cost them in utility bills, taxes and maintenance. If you haven’t saved much for a worry-free retirement, it may be time to start a retirement emergency fund!
No matter when you plan to retire, make an appointment at Advanced Asset Management to discuss your options.
Manage Your Money . . . financial facts for a brighter future provided by Advancd Asset Management LLC
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Ronald Van Surksum, CFP
4555 Wilson Ave SW – Suite 2 Grandville, MI 49418
Phone: (616) 531-5220 Cell: (616) 450-8439
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