Planning for retirement is a big undertaking. You are working hard now so you can enjoy a comfortable, easy lifestyle in the future. But, even if you are proactive about budgeting and saving, there are certain expenses that you might be overlooking.
Does your retirement plan cover all essential costs for the future? Not only do you need to think through essential living expenses, such as housing and food, you also need to consider additional costs that might cut into your budget. Also, remember to plan for the fun side of retirement, such as travel!
Two additional costs that you should not overlook include the cost of healthcare and the potential of increased taxes:
Cost of Healthcare in Retirement
Even though Medicare is available for retirees, it is a mistake to assume that you will not have any out-of-pocket expenses. There are several gaps in coverage that need to be paid for through a supplemental plan.
In many cases, retirees find that they cover more out-of-pocket expenses than they originally anticipated. For example, Medicare Part B pays for about 80% of your preventative and routine care, but there is not coverage for hearing, vision, and dental.
One solution is to pay for a Medicare Advantage plan – supplemental insurance that covers the gaps in Medicare. This private insurance has added monthly premiums you will need to pay, but it may be a good investment because of the additional healthcare coverage you will receive.
Tax Burden in Retirement
Even though you no longer receive a paycheck in retirement, you still need to account for taxes. For example, during retirement income tax may need to be paid for withdrawals from retirement accounts if the money was put into the account pre-tax. Additionally, there may be taxes for investment activity.
Other possible tax expenses may include property tax, inheritance tax, and more. With tax rates changing all the time, it is better to be over-prepared so future taxes do not cut into your retirement budget. A financial planner can prepare your retirement plan accounts for these potential expenses.
Personalized Retirement Planning from a Team You Can Trust
At Bulman Wealth Group, we are here to help you design the ideal retirement plan for your lifestyle and personal situation. Our goal is to help you build retirement savings that will cover everything you need in the golden years of life. We invite you to schedule a consultation with one of our retirement planning professionals for more information.