Don’t Bust Your Budget
Creating a retirement budget can be a challenge. Most of us no longer have the income we once had and must be more aware of how we spend our money. We can calculate our recurring monthly expenses such as mortgage, electricity and food. We can also account for our annual recurring expenses such as car registration, property tax and insurance, but what about the expenses that don’t occur on a regular basis.
There are three main categories of unexpected expenses in retirement, and you can plan for them. Though they happen sporadically, you can bet these will arise at some point.
Home Expenses-While you can expect that your house will need to be painted every so often, you may not expect a broken pipe or leaky roof. Should you live in a condo, you are not immune. There may be repairs or updates needed on the property, and there could be a special assessment. You may find yourself in need of a new refrigerator, washer/dryer or stove. The garage door may stop opening. Your dog may need surgery. These can happen anytime and can destroy your budget if you are not prepared.
Auto Repairs-You know how many miles you drive and when you may need new tires and brake pads, but even a well-maintained car will have surprises. You may need a new battery, shock absorbers or a starter. If your car is older, you might even need a new transmission. These can be very costly.
Medical Expenses– This is the wild card of the retirement budget and the most common fear of retirees. Most bankruptcies in the U.S. are caused by medical bills, and many of those people had health insurance. This can often be caused by not understanding what amount you will be responsible for before treatment is administered.
We never know when an illness or disease might strike and what type of care will be required. After 65 Medicare will cover some of your expenses, but not all. There are recurring costs such as premiums and deductibles, but you will also be responsible for co-pays and any non-covered services. Medicare covers an average of 48% of your expenses. You are responsible for the other 52%. There are supplemental policies available to help with these costs. This coverage also comes with another premium.
What can you do about these 3 budget busters? Keep your home and your car well-maintained. Address small issues as they occur before they become big problems. Put aside some funds to cover the unexpected. This would be in addition to an emergency fund.
Stay healthy! The best thing you can do for your budget is to take care of your health. Eat well, exercise, stay active and social. 66% of our nation is overweight. Many are sedentary. It’s a recipe for physical and financial disaster. Diabetes, heart disease, cardiovascular disease, hypertension are expensive. There are doctor visits, hospital stays, therapy, and prescription medications. In many cases these conditions are preventable and possibly reversible. This is one area where you can play an active part in controlling your expenses, staying on budget and having a more pleasant retirement.