The most common misconception about retirement is that our spending will decrease as we won’t have daily commuting costs or expensive lunches or a work wardrobe to spend our money on. While many retirees do find that their expenses go down, some are surprised when retirment means their expenses seem to be going up! We tell you why your expenses may be going up with all that extra free time to spend.
TRAVEL
Particularly in the early days of retirement you may want to travel so travel expenses will tend to shoot up as you most probably want to travel to places that you may not have had the time to go to when you were working a 9 to 6 job and had job commitments. Now that your commitments and job-related expenses have lessened, the extra cash will go toward your travel budget.
Ways to save: Many hotels and airlines offer good deals but check before you buy:They aren’t always the best deal you can get.
Consider hotels: Some hotels offer senior discounts that could be up to 15% off their regular room rates.Also be sure to ask if they have other promotions running at the same time and the best available prices on the type of room you want.The senior discount can be applied on top of that.There are also great travel agents available that can find you the best deal when you travel especially tailored to suit senior citizen needs.
When searching for plane and other transport tickets also be sure to inquire after senior discounts. In many cities, those over 55 get to travel on public transport for free or at vastly discounted prices. Be sure to research the best modes of transport in the cities you arrive in.
Travel insurance, which you’re almost certain to be offered, is another consideration. Before you automatically buy a policy for peace of mind, make sure you know exactly what it covers and which restrictions lurk in its fine print as certain regulations might not be of benefit to you. Make sure what your credit card covers in terms of risks such as lost luggage too.
Probably the biggest advantage retirees have in getting great travel deals is the flexibility to travel when others aren’t competing to travel. This means the best prices are usually during low season which applies to both flight tickets and hotel rates. During key holiday seasons such as school holidays or public holidays, prices could increase by as much as 40% and as a retiree without the constraints of time, you could spend so much less for the same holiday others are taking.
HEALTHCARE
Most of us would have employer-paid health insurance when we are working such as dental care and regular check ups. When you’ve retired, and what with old-age, you probably would need to have some extra money set aside for healthcare services into your retirement budget.
Ways to save: If your non-covered medical expenses are substantial, one way to ease the burden a bit is by bunching them into a single calendar year and claiming a tax deduction. Don’t put off emergency procedures, of course, but if you can safely wait a bit for non-urgent dental work or a new hearing aid, you might accumulate a large enough bill to reach the threshold for claiming a
deduction.
TAXES
Your income may decline during retirement, resulting in a lower marginal tax bracket and a smaller income tax bill. But if you have a lot of money in retirement plans, you could actually find your income and income taxes going up. That’s a nice problem to have, but it can be a shocker nonetheless.
Ways to save: Try to get a close estimate of how much money you’re likely to need to cover the taxes on, figure out where the money is going to come from. This would mean figuring out how best to save or invest your money so the taxable income works for you. If this is unfamiliar territory for you, it is best to seek the professional services of a financial planner or accountant.
DAILY EXPENDITURE
When you retire, it means you spend more time at home in the day time and this is the time you might want to start sprucing up your home with purchasing some new furniture or to renovate certain areas so that your home becomes more conducive for
your spending more time there. You might want to build a new kitchen annexe or convert your child’s room into a gym or study.
If you can afford the added comforts there’s no reason to deny yourself these luxuries. However now with added healthy-living, retirement could last a longer time and we could live well into our 90s. Ideally your savings should hold out as long as you do so
try not to live on credit.
Ways to save: Fortunately, one of the great things about being retired is that you don’t just have more time to shop. You also have more time to shop around for the very best deals. So take advantage of it and enjoy.
THE BOTTOM LINE
While you take advantage of the freedom retirement brings, keep an eye on your expenses. Set a budget and cut back if needed.
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