Is your retirement plan ready to work?
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For most, retirement is a time when we can finally do all those things we've dreamed of but never had the time for. That might mean anything from taking a trip around the world to installing a dream kitchen or buying a sailboat.
But along with the joys of retirement come significant expenses you might not have considered. Social Security, pensions, 401(k) plans and other investments are all important sources of retirement income, but consumer experts agree that saving for those post-work years is an important component of financial security after retirement.
In fact, having a retirement savings plan is a key factor in Americans' increasingly optimistic outlook about enjoying an affordable retirement, according to the 2015 Retirement Confidence Survey conducted by the Employee Benefits Research Institute/Greenwald & Associates. Yet the same survey found optimism about retirement doesn't mean that Americans have done more to prepare for it. Instead, the percentage of workers who reported they and/or their spouse had begun to save for retirement has actually declined in the last six years.
Ask yourself: Have I saved enough money to cover my expenses and enjoy the retirement lifestyle I hope for? Remember, Americans are living longer. According to AARP, a healthy upper-middle-class couple who are 65 today have a 43 percent chance that one or both partners will live to 95, meaning you could be spending 30 or more years as a retiree. Having a cushy nest egg is one way of ensuring you'll be able to cover expenses and enjoy the time you've looked forward to.
So, what are some of the expenses worth thinking about as retirement beckons? Whether your retirement is down the road or around the corner, here are some of the expenses you should consider:
Because you'll likely be spending more time at home than you did while you were working, you can expect to see increases in some home-based expenses, such as utility bills. Chances are since you'll be enjoying more leisure time around the house, you may want to upgrade furnishings or keep up with the latest technology and electronics, which can add expenses. You'll also need to factor in general upkeep and maintenance, along with property taxes and insurance, which usually go up over time. Retirement is when many of us buy that second home we've always dreamed of owning, and the average price paid for a vacation home in 2013 was $168,700, according to the National Association of Realtors.
Yes, at age 65 you likely will qualify for Medicare, but many don't realize that the program is not free. Medicare.gov provides information about associated premiums, copays and deductibles, along with prescription drug costs. If you want expanded coverage through a Medicare Advantage or Medigap plan, you can familiarize yourself with the costs connected to those options at that site as well. According to the United States Department of Labor, for those choosing to stay with an employer-provided plan, there may be significant future costs, and coverage may not be guaranteed. If you retire before age 65 and don't have an employer plan, you can use the Health Insurance Marketplace at healthcare.gov/retirees to buy an Affordable Care Act plan. According to a recent HealthView Services report, an average healthy couple retiring at age 65 would need about $266,000 to cover Medicare Parts B and D and supplemental insurance for their lifetime, no small chunk of change.
Though your pride-and-joys may no longer be youngsters, you're likely not done putting away the wallet to help them out just yet. It's around the time parents are edging closer to retirement that many children decide to say, "I do." The average cost of a wedding in the United States is $25,200, according to the website costofwedding.com. If you have a child (or two or three) that might be getting married in the coming years, it's important to factor wedding expenses into your savings. If you have a child in college, you already know how expensive tuition can be. Is there a chance your soon-to-be graduate might be thinking of pursuing an advanced degree? Again, remember to keep these costs in mind as you plan for retirement.
Dinners out, concerts, shows – you'll have more time for leisure activities once you retire, meaning you'll be spending more dollars on the pursuit of happiness. Maybe your hobbies lean to the recreational side, like golf or boating. As retirement calls, many choose to take their hobbies to the next level or take up new ones. Make sure your savings will be able to get you there.
Let Flagstar Bank help you plan now for those post-work years. Find a branch near you.
Flagstar Bank has been in business since 1987 and is the largest bank headquartered in Michigan with branches from lake to lake. Along with full-service banking for consumers and businesses, Flagstar has earned its reputation as a top 10 national mortgage originator. Member FDIC. Equal housing lender.
This story is provided and presented by our sponsor Flagstar Bank.
Members of the editorial and news staff of The Detroit News were not involved in the creation of this content.