Retirement is a huge milestone, so make sure that you are ready to make the most of it, rather than worrying if you’ll be able to survive. The hardest thing about planning for retirement is that you have no idea how long you will live – you are always best to assume you will live long because you don’t want to be 90 years old and hungry, wishing you had died a few years before. Self-managed superannuation funds and other forms of DIY super funds can provide a useful part of your retirement finance solution, although knowing your expenses is vital. The following looks briefly at some of the costs associated with retirement, so you can make sure you are ready before you call time on your career.
If you don’t own the place where you live, accommodation costs will continue to be one of your biggest expenses after you retire. Without an income, you are going to need significant savings. Even if you own your own home, you should still try and have some money budgeted for repairs and maintenance. Many couples are now choosing to buy a recreational vehicle to live in instead, because they just can’t afford anything else.
If you are lucky and enjoy good health throughout your retirement years, you may not need very much money at all. However, most people experience increasing health difficulties as they get older and it is likely that you will too. Whether you join a private health fund, stuff a piggy bank, or invest in a gym membership and exercise classes, you had better have a decent stash of money as your body starts to get frailer.
Now that you finally have the time, hopefully you have the money. If there are any big purchases that you want to make, now is the perfect time to treat yourself, so make sure that you can. It is important that you have enough money to finally do some of those things that you’ve been waiting your entire life for, so even if you have to work an extra year or two before retiring, it is worth it for not being in survival mode from day one of your retirement.
The cost of food really does add up and you often hear heart-breaking stories of elderly people having to choose between food and medicine. Growing your own food and doing things like pickling and canning can help stretch out a budget, though don’t underestimate how much you’ll need. Plan to live long and not go hungry!
Though it isn’t something anyone likes thinking about, a funeral costs a lot of money. If you want to avoid leaving a financial mess when you pass on, it is always best if you are able to cover any funeral expenses yourself.
You should start planning for your retirement as early as you can. There is no such thing as having too much to retire with, but having too little can be devastating.