by Emily Hechler 
Retirement is a milestone many people look forward to after years of hard work and planning. No more commutes, work schedules, or daily deadlines. Saving for your retirement now is only one piece of managing your money well. As you approach retirement, you need to understand what expenses you’ll balance in between your free time and not-so-free time. Here’s an overview of typical retirement expenses.
Debt Payments
As you retire, your money can go farther if you are debt-free. Entering retirement with little or no debt can help your savings last longer and provide greater financial flexibility. Because many retirees rely heavily on retirement savings and fixed income sources, reducing debt can free up more money for everyday expenses.
Besides a mortgage, eliminate any credit card debt, Personal Loans, Auto Loans, and other types of debt before you retire. The less debt you carry into retirement, the more of your income can go toward supporting your lifestyle.
Housing
Even when you’re mortgage-free, you’ll still have housing expenses to pay for. Property taxes, homeowners’ insurance, utilities, and HOA fees can continue even after your mortgage is paid off.
You may decide to downsize during your retirement. If you do, you can ideally cover the cost of a different house from the money you received selling your old home. Because of health or lifestyle preferences, you may decide to live in a retirement community or nursing home. These facilities can be expensive, but selling your house can help cover the cost.
Medical Expenses
Many people experience increased healthcare needs as they age. More healthcare needs often lead to additional prescriptions, treatments, and medical expenses. You may also need to budget for Part D drug coverage and Medigap or Medicare Advantage costs. Depending on your situation, you may have additional dental, vision, and hearing expenses, including copays and deductibles. Some also opt for long-term care or in-home support.
Insurance
In addition to healthcare costs, retirees often continue paying for several types of insurance. You may pay for home insurance, car insurance, health insurance, and more. Keep in mind that your health insurance premiums will likely increase with your age or if you have existing medical concerns. You may be eligible for Medicare once you reach age 65, which can offset some of your medical insurance costs.
Daily Living Expenses
So far, this hasn’t created a glamorous view of retirement. Fortunately, there are many parts of your retirement expenses that are similar to your expenses today. Common daily living expenses include groceries, dining out, lawn care, transportation costs, clothing, and other household items.
Recreation and Entertainment
This is the fun part of retirement! No job to report to opens the door to do something different with your time and money. According to Statista, the most popular hobbies among American retirees are cooking or baking, reading, caring for pets, gardening, traveling, spending time outdoors, and arts and crafts. More time in your day gives you the capacity to try new activities. Plus, you can bring in friends and family for the fun.
Buffer
When you retire, you shouldn’t plan to spend everything in your budget. It’s wise to leave a savings buffer for unexpected costs or emergencies. This can help keep your retirement plan on track when unexpected expenses arise.
Pass It Along
According to LegalZoom, 77% of older Americans plan to leave some type of inheritance to the next generation. While leaving an inheritance isn’t required in any way, many plan to save more than they spend so their kids can benefit too.
Reducing debt before retirement may allow more of your assets to be passed to your beneficiaries. Plus, when you eliminate your debt, you can enjoy the perks of no mortgage, car loan, or credit card bill too.
Start Saving for Your Retirement
Saving for your retirement takes time, money, and intentionality. No matter if you choose to invest with your employer, the stock market, IRAs, portfolios, or other methods, every dollar you save while you work has the potential to grow for you to spend later. Talk to a certified financial counselor at Alltru for help budgeting for your retirement, whether you’re just saving now or want to create a sustainable budget for retirement. If you need help creating a retirement savings plan, talk to a financial planner for guidance.
