If there is one thing to be wary of, it is imagining that all will remain the same once you have retired. The amount of money you need to comfortably enjoy your retirement days will simply not be the same at 85 years old as it was at 65 years old. Even the most basic costs of living seems to be on a neverending increase and it would be foolish to imagine it will cease on the day you retire. Planning for this will involve some degree of overestimation and understanding of averages if you want to be as prepared as feasibly possible for future changes and fluctuations in the basic cost of living.
Health Isn’t Static
A recent study has revealed that the number one contributing cause of bankruptcy in America is medical issues, especially for people over 65. It is just far too common to believe that having good or even great private health insurance will leave you completely protected in the event of a catastrophe. Unfortunately, this is rarely the case and it only takes one major health event to deliver a harsh dose of reality. As such, it is paramount to prepare for the increase in healthcare costs that are natural as you age, and for potential major medical issues that may not be fully covered by insurance. Healthcare costs are a major threat to small safety nets that were expected to cover a variety of unexpected emergencies. With appropriate planning you will not need to be fearful of tragedy wiping out all of your progress and preparation.
Here Today, Gone Tomorrow
Another common mistake is expecting your current home or living arrangement to remain the same as it is now. Living in your own home and making modifications as needed is the true dream for most retirees, but it may not be a long-lived one. As you age or health conditions develop, you might find that senior or assisted living communities are a better option for you. Even for those who choose a retirement community early, often don’t prepare for eventually shifting to a higher and more expensive level of service or care as they age. As with all things you should hope for the best but plan for the worst, including the event that your perfect community no longer provides the service that you need or expect. It is naturally hard to imagine your situation as mobile, particularly after you retire, but this is one more outcome you won’t be surprised if you plan ahead.
Anyone planning to retire has to accept the significant unknown factor that goes hand in hand with planning for the future. It is time to stop thinking in terms of X amount per year is perfect for me, as this rarely applies when things go wrong or as you continue to age. In short, we must all plan for our longevity and the ups and downs that accompany it as opposed to the popular one-size-fits-all view. For professional guidance on planning for your financial future as a retiree, contact the BD Financial Concepts team today.