Retirement planning can be stressful enough when you’re just thinking about the amount you’ll need to live on. And, unfortunately, many Americans only focus on that, completely forgetting the money they may need for unexpected costs. Obviously, it is hard to plan for unexpected costs because, well, you do not expect them. However, there are a few you can assume may happen in your retirement lifetime.
Aging bodies bring a slew of new health issues. Some are minor; some can be major. You may find that one innocent fall puts you in the hospital for a few days. You may start requiring at home care or physical therapy. Whatever the medical need, those bills can rack up debt if you aren’t careful.
If you’ve been a homeowner for many years, you probably already know that owning a home can be expensive. There could be home improvements you’ve had on your “to do” list for a while, or a ball could fly through your window, shattering it to a hundred pieces tomorrow. Your furnace could be one day away from breaking, and you could be one thunderstorm away from that giant tree crashing down into your yard. You never know with a house. That’s why it is important to keep home improvements – and possible housing emergencies – in mind.
Another issue is if you plan to move out of your home. Whether you are downsizing or moving to warmer climates, you will have to factor in moving costs and other costs.
As you grow older, so does your family. That may mean that, during your retirement, there may be a few weddings, babies, graduations, and other life events you’ll be a part of. You may need some extra funds to travel, buy gifts, or get dressed up for the occasion.
It may also mean that certain family members may need help both emotionally and financially. Your child may need to move back in for a short period of time, or you may want to help pay for your grandchild’s college tuition. No one can make the decision to help a loved one except you. If you do choose to, though, that may be an extra expense for you.
This may sound a little macabre, but we all pass away some time. It’s something you must come to terms with when it comes to unexpected costs in retirement. If you or your spouse passes away, there is a loss of income. Not only that, but there may be funeral costs, which can get expensive. This isn’t a fun part of retirement planning, but it’s a must.
When it comes to retirement planning, a reverse mortgage may be an effective tool. You can open a line of credit and not use any money until you need it. That line will continue to grow in value over time. When one of the aforementioned events happen, you’ll be well prepared. If you plan to move, you may want to look into using a reverse mortgage to purchase a home. This will allow you to buy a new home and never have to make a monthly mortgage payment as long as you live there – though you are still responsible for paying homeowner’s insurance, property taxes, and home maintenance costs. Not having to pay a mortgage each month can give you more money each month for other expenses, both expected and unexpected.