How to Navigate Your Expenses in Retirement
It’s something every adult understands—saving for retirement is a necessity. But beyond the nebulous idea of “putting money away for later,” how much do we really know about the actual costs incurred by American seniors? Retirement expenses are rising, making it more imperative that people over 65 and their advocates understand the details of income options like life settlements. Following are some of the primary areas where expenses are rising for seniors:
This is the category that hits many senior adults the hardest, because of the obvious surge in medical needs as people age. An article from CNN Money estimates that the average 65-year-old man will spend $189,687 on healthcare in retirement, while an average 65-year-old woman will spend $214,565. Because medical situations and their attendant costs are unpredictable, those expenses are one of the key reasons seniors need to seek alternate sources of income.
Even if healthcare costs can mount fast, housing expenses are the most consistent hits on a senior’s budget. A 2015 study from the Social Security Administration indicates that households with people over 65 spend about 35 percent of their funds on housing, more than twice the amount spent monthly on out-of-pocket healthcare, which came to 13 percent. When all of the costs associated with housing are considered—mortgage or rent payments, utilities, maintenance and furnishings—seniors spend an average of $14,034 annually, according to a breakdown in U.S. News and World Report.
Transportation and Travel
Even though some seniors see a drop in gas costs when they stop working, transportation is still the second-largest expenditure, according to the Social Security Administration study, comprising 15 percent of the average senior’s budget. Transportation costs, as well as money spent on hotels, food and other entertainment, tend to rise in the retirement years because of the extra time for travel in retirement years. To mitigate this expense, seniors should seek travel discounts just for those 65 and older, and they should also take advantage of the freedom to travel during off-peak times when working people are unavailable.
Even though those three categories are typically the ones that cause the most headaches for seniors, other expenses can also be unexpectedly high during retirement—food, education costs for family members, insurance and entertainment, to name a few. Because retirement years can be expensive and seniors want to get the most they can out of that time in life, a life settlement can turn a burdensome unwanted life insurance policy into a valuable asset. To learn more, set up a call with a Magna representative today.