Showing posts with label retirement expenses. Show all posts
Showing posts with label retirement expenses. Show all posts

Wednesday, July 19, 2017

Surprises in Retirement

If you are not yet retired, what do you think it will be like when you finally walk away from your job for the last time?  If you have already retired, did it turn out to be what you expected?  What surprised you the most?  Were the surprises pleasant or disappointing?

Most people find that at least some aspects of retirement were not quite what they expected.  Some people were disappointed and lonely.  Other people were delighted by how quickly their lives become filled with new activities.

The varying reactions to retirement may be a result of different personalities.  In other cases, it could be because of inadequate financial resources, which make it tough to "live the dream."  Whatever the reason, below are some of the surprises many people have expressed about retirement.  If you are not retired yet, knowing what has surprised other people may help you better prepare for retirement; if you have retired, it may help you realize you are not alone in what you are experiencing and it may not be too late to make changes which will help you enjoy your retirement more.

What Surprises People Most about Retirement

Loss of Self-Worth - We had a neighbor whose father came to stay with her after retirement.  He was very quiet and kept to himself.  My neighbor told me her father was depressed and out-of-sorts because he had retired from a job as the Superintendent of Schools for a large school district.  He had literally supervised thousands of employees until the day he retired.  Afterwards, he felt "worthless" and didn't know what to do with himself.  While he could have turned his energies towards volunteering, local politics, or finding other ways to help people, he just hung around her house and remained depressed.  People need to have a reason to get up each morning if they want to have a satisfying retirement.

It Can be Easier than Expected to Leave Your Job Behind - On the other had, after working decades for a company, many people are surprised at how quickly they can put the past behind them and find new activities, interests and friends.  The people who are able to leave the past behind seem to flow more smoothly into retirement.  Surprisingly few people talk much about their former career once they retire.

It is Expensive to Retire - If you have been telling yourself you will be comfortable living on half, or even 80 percent, of your current income, you may be shocked to learn that the amount of income you need will be just as high as it was while you were working.  It is true you will not spend as much on the cost of commuting to a job, buying lunches from restaurants, or maintaining a work wardrobe.  However, these cost savings could be replaced by expenses related to engaging in new hobbies, eating more meals at home, traveling, and spending more for medical expenses.  In particular, Medicare premiums could be higher than expected and will shoot up dramatically if you get a financial windfall (taking a retirement buyout or selling stocks), because you will be required to pay a Medicare surcharge.  Those who opt to purchase a Medicare supplement may be surprised by the cost, as well.

Financial Planning Really Does Pay Off - Those retirees who had the self-discipline to put aside a nest egg for retirement are often pleased to discover their plan worked out well for them after retirement.  In the same way, those who managed to pay off all or most of their debt prior to retirement are also happy to see the difference it makes in the quality of their retirement, and how much easier it is for them to ride out the ups and downs in the economy.  For example, if your home temporarily loses value during a recession, it is not as stressful if you do not have a large mortgage against it. For those who have not been able to save as much as they hoped prior to retiring from their career, many retirees are surprised to discover how easy and rewarding it is to find a part-time job after retirement.

Your Health Can Improve - Many people find that having the time to play golf, take exercise classes, focus on their diet and visit their doctor has made it possible for them to lose weight and improve their health, especially during the first few years after retirement.  It is not unusual in the retirement community where I live to hear people say they never thought it could be so easy to walk 8,000 to 10,000 steps a day or participate in swimming and tennis competitions.

It Can Be Painful to Face Mortality - People who never thought about how much longer they might live while they were still working, can become overwhelmed and depressed when they develop a serious illness or lose a spouse or close friend.  Visiting friends in skilled nursing facilities or attending their funerals forces many retirees to face their own mortality.  While some people are at peace with their own mortality, others become depressed.

It is Easier than Expected to Make New Friends - Many retirees are hesitant to move to new locations when they first retire because they believe it will be hard for them to make new friends.  However, since retirement also means having more free time, most retirees have discovered it is easier than ever for them to take classes, join clubs, volunteer, and spend time with other people. In addition, having more free time also leaves you free to attend weddings, birthday parties, the baptisms of grandchildren and other special events with friends and family. Most new retirees find they have more time than ever to spend with old friends and they are able to make new friends, as well.  For those who have lost a spouse, it is not unusual for them to begin dating again and even remarry.

If you are interested in learning more about retirement planning, where to retire, common medical issues, Social Security, Medicare and more, use the tabs or pull down menu at the top of the page to find links to hundreds of additional articles.

Watch for my book, Retirement Awareness: 10 Steps to a Comfortable Retirement, which will be published by Griffin Publishing in 2018.

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Photo credit:  Photo of Laguna Woods Village golf course taken by author

Some info based on Wall Street Journal report "The Biggest Surprises in Retirement," Feb. 13, 2017.

Wednesday, May 13, 2015

What To Expect After You Retire

Recently, the checker at my local grocery store told me that she was old enough to retire now and that she had moved into a condo in the same retirement community where I live.  However, she confided that she was very nervous about giving up her job.  She said she didn't know what to expect.

This seems to be a common concern for many people who retire.  Although most of the people I know are happy that they gave up their jobs, I have also known several who returned to their old occupations or found a new one, within a year or two of retiring.

As a result, I thought it was time to write a post to let people know what they can expect after retirement.  The fewer surprises you have, the happier you are likely to be.

You Still Have to Pay Attention to Money After Retirement

Just because you have stopped working and stopped contributing to a retirement plan, it does not mean that you can stop thinking about your finances.  You will need to continue to pay attention to how you spend money and how your retirement funds are invested.  You also need to make sure that you have realistic expectations of your potential return on your investments and how much you can withdraw each year in order to make sure your money lasts the rest of your life.

Statistics show that widows, in particular, often (but not always) go through their assets faster than they should.  Everyone should consult with a financial adviser periodically to make sure they are still spending their money in a realistic manner and they remain on track for their assets to last the rest of their lives.

On the other hand, spending down your retirement savings can be emotionally and psychologically painful for some people.  After spending years, or possibly decades, putting together a nice nest egg, it can be hard to see it shrink as the years go by.  If you are on a reasonable disbursement plan, such as using 4% of your assets each year, you may still have to give yourself permission to spend your money down!

No matter how critical you were of the Social Security program prior to retirement, it is likely to be a significant source of income for you after you retire.   Approximately 86% of retirees will receive Social Security.  Social Security makes up about 90% of retirement income for roughly one-third of retirees.  It makes up at least 50% of the income of 65% of retires.   The average benefit at the end of 2014 was $1,282.

Another financial concern you will have is making sure you know how you will cover your medical expenses.  Basic Medicare does not cover routine eye exams, eyeglasses, contact lenses, dental care or hearing aids.  In addition, it only covers 100 days in a nursing home.  Retirees really need to investigate the best Medicare supplemental plans, Medicare Advantage plans and long-term insurance plans to make sure the money they have set aside to cover medical expenses will go as far as possible.  In addition, they may need to keep some liquid assets on hand to cover deductibles and co-pays each year.

Loneliness Is An Issue for Many Retirees

Retirement is not always the way it is depicted on television and in movies.  Many retirees will not spend their Golden Years surrounded by children and grandchildren, enjoying leisurely Sunday dinners with their extended family, as depicted on shows like "Blue Bloods."

About 44% of people over the age of 65 are living alone because they are widowed, divorced, separated or never married.   As they get older, the percentage of people living alone goes up.  As a result, the average senior over the age of 75 watches more than four hours of television a day.  Many seniors watch significantly more television than that or spend additional hours playing computer games or engaged in other solitary activities.

To counteract the loneliness, it is important that you find group activities you enjoy and get involved with them as soon as possible after you retire.  This could mean signing up for classes, joining clubs, attending church, scheduling regular lunch or dinner dates with friends, volunteering or getting a "fun" job.   You need to reach out to your friends and neighbors on a regular basis, especially if you live alone.

You Might Start Dating Again

Much to their surprise, single retirees often discover that they want to date.  It can be fun and exciting to be involved in a romantic relationship again, and it can do a lot to minimize any loneliness you may be experiencing.  Our community television station has even begun to broadcast our own local version of "The Dating Game."  One of the former writers for the original "Dating Game" lives in our community and, when he offered to organize a show for our community, his idea was enthusiastically embraced.  Over 250 people showed up the first time they held auditions to appear on the show ... and it is only open to the people who live in this community!

It is possible you will meet people you want to date through some of the classes or clubs you enjoy.  It has also become more common for seniors to meet someone through an online dating site, like (see the ad in the sidebar) which is specifically designed for people over the age of 50.  On these sites, you should be honest about your age and use photos that show the "real" you.  You are more likely to end up in an healthy relationship.   

One warning:  Immediately drop any online relationships the minute the other person begins to mention that they need money ... no matter how worthy the cause.  Tens of thousands of elderly people have lost thousands of dollars to scammers who form relationships and then ask for money.  Other than that, just use your common sense ... go slow, meet in public places and take someone else with you until you feel comfortable. In addition, if you are computer savvy enough to engage in online dating, you should be computer savvy enough to do an online background check of any person you consider dating.

Many seniors have found a new chance at love when they open themselves up to dating again and it can be a lot of fun!

You Probably Will Not Move Very Far

While many seniors think they would like to move to a new, exotic location, the truth is that only 5.7% of Americans over the age of 65 moved between 2009 and 2013.  Most of those who did relocate, usually moved only a short distance.  Only about 1% of retirees moved to a new state.  Approximately 0.3% moved overseas.

Most senior citizens want to maintain their current support system ... continuing to belong to the same church and clubs, seeing the same doctors, shopping in the same stores, etc.  It is comforting to feel that you will not need to rebuild these relationships somewhere else.

Downsizing, finding a one-story home, moving into a retirement community or senior apartments can be a smart decision for many retirees.  As a result, it can be a good idea to start your search for a retirement home near the community where you currently live.  

Accept That Someday You Will Need Help

One of the most difficult realities that most people have to accept is that someday they will probably need help of some kind.  They may reach a point when they can no longer drive, grocery shop, cook, maintain their home, shovel snow, climb stairs or perform similar everyday activities.  They may even live long enough that they will need help performing basic personal tasks like dressing or bathing.

While paying for people to help you can be a financial concern, living long enough to reach this stage in your life can also cause depression and other emotional difficulties.  Many people postpone moving into an assisted living facility long past the time when it would have made their life much more comfortable.  It will make life easier for both you and your family when you accept that this is a natural stage of aging and it is OK to get help when you need it.

Despite Everything, Retirement Can Be FUN

Does it sound like retirement could be lonely and depressing?  The point of this post is that it does NOT have to be.  If you know what to expect and prepare yourself financially, emotionally and psychologically, you can have a lot of fun after you retire.

The key here is YOU.

It is up to you to make sure you have prepared financially, you have made appropriate adjustments to your lifestyle, you have chosen the right Medicare plan to meet your needs, and you have investigated ways to pay for long-term care when you need it.

In addition, you want to be sure that you have built up a network of doctors, friends, family members, and financial consultants whom you trust.

Join clubs, sign up for classes, build friendships, schedule social events and participate in activities that you enjoy.  Enjoy your free time.  Read a book, take a walk, eat leisurely meals, play with your grandkids. 

Take occasional trips, even if it is no more than a short commuter train ride to visit a relative for a few days.  The change of scenery will do you good.

When I look around at the people I know in my current retirement community, many of whom are well into their 90's, the ones who knew what to expect in retirement and took steps to make sure they were prepared, are still having a wonderful time, years after they stopped working.  It is up to you to make sure this is true for your retirement years, too!

If you are interested in getting more information to help you prepare for retirement, use the tabs or pull down menu at the top of this article.  Those index articles will connect you to hundreds of other articles about retirement.

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Photo credit:  Photo taken by author, Deborah-Dian; all rights reserved.

Thursday, December 18, 2014

Budgeting for Your Golden Years

At the end of each year, many people take time to evaluate their retirement plans, work on their budgets and evaluate how they are doing financially.  In fact, this is something everyone should do once a year, whether they are young adults, middle aged or already retired. 

One of the keys to a happy, successful retirement is to have a realistic budget.  This involves knowing which expenses will be reduced or eliminated entirely, which expenses are expected to remain about the same, and which expenses are likely to increase.  It is important to be honest when you evaluate how much money you can reasonably expect to need in order to have a satisfying retirement.  Here is some basic information to get you started:

Retirement Expenses that Could be Reduced or Eliminated

Mortgage -- Will you pay off your mortgage or move someplace less expensive where your payments will be lower?  If you go into retirement with your current mortgage, of course, you can expect this expense to remain unchanged.

Rent -- If you do not own your own home, will you remain in your current lease or move to less expensive housing?  Renting does make it easier for people to be flexible in making adjustments to their cost-of-living.

Debt -- Even if you still have a mortgage, many people try to pay off all or most of their other debts before they retire.  If this is true for you, it could make a substantial reduction in your monthly budget, depending on how much debt you have been carrying.

Commuting and Transportation -- Most people drive fewer miles after they retire, which also means that they spend less on related expenses, such as car repairs and parking.  However, if you plan to do a lot of traveling by car, this may not be true for you.

Lunches, work clothing, dry cleaning and other job related expenses -- Once you stop working, you are much less likely to be eating lunch out every day, buying suits or taking them to be cleaned.  The amount of savings can add up.

Retirement savings -- After you begin living off your retirement savings, you will stop adding money to your IRA or 401(k).  This is one expense that will drop off completely.

Medical Expenses - Maybe -- If you are old enough to go on Medicare when you retire, and if you decide to use a high-quality Medicare Advantage plan, you may save money, especially if you paid your own health insurance premiums in the past.  However, if you have received free or inexpensive healthcare through your employer, then this could be an expense that will be higher when you retire.

Retirement Expenses That Will Remain About the Same

Groceries -- While we like to think we will save money in every area of our life, the truth is that certain expenses, such as our grocery bill, are going to stay the same or may even increase slightly as we eat more meals at home.

Utilities -- This is another bill that will probably remain about the same or might increase slightly, especially if you have been accustomed to turning the thermostat down when you're at work.  Once you are home all day, running the furnace or air conditioner, watching television or using the computer, your utility bills will be at least as much as you spent in the past and could go up slightly.

Insurance -- The amount that you spend on homeowner's or renter's insurance, life insurance, and auto insurance are all going to remain about the same as what you have paid in the past.

Property Taxes -- If you own a home, even if you have paid it off, you still need to include your property taxes in your retirement budget.  They will initially continue to be about what you have paid in the past.  Over the years, you can expect taxes, and everything else, to go up.

Retirement Expenses that Could Increase ... Possibly a Lot!

Health Insurance -- Whether or not your health insurance costs go up or down depends a lot on what you have been paying in the past and the type of Medicare supplement you decide to purchase after you retire.  For example, if your employer paid for your insurance prior to retirement, then anything you pay for Medicare and the supplemental policies you choose will be an increase.  If you had an expensive individual health insurance policy in the past and you had to pay the premiums yourself, then Medicare, even with a Medigap supplemental policy, will seem like a bargain.  You need to do your research and have a realistic budget for your health insurance.  For most people, the least expensive way to handle Medicare is by using a Medicare Advantage plan.

Other health expenses -- Depending on the insurance you choose, you will still have co-pays and deductibles with most Medicare plans.  Drug costs are sometimes high for senior citizens, as well.  Basic Medicare does not cover dental or vision expenses, which can be significant as you age, so you may need to purchase extra insurance to help with these costs.  Even if you do have insurance, certain dental expenses, such as implants, can still be quite high.  It is wise to estimate what your deductibles and other costs could be and set aside some money to cover these possible future expenses.

Long-term care -- If you decide to purchase long-term care insurance after you are already in your 60's or 70's, the insurance premiums could be quite high.  If you have not yet reached your 60's, you are better off getting the insurance while you are younger and before you have developed any serious health problems. It is smart for most people to get the insurance, because the cost of long-term care can be significant when paid out of pocket.  According to the the U.S. Department of Health and Human Services, you have a 70% chance of needing some type of long-term care after the age of 65.  A nursing home can cost as much as $90,000 a year and assisted living facilities run approximately $42,000 a year.  One way or another, it is wise to either buy the insurance or set aside some money for this possible expense.

Entertainment --  Particularly during the first decade after you retire, you may want to kick up your heels a little and spend more time traveling, eating out, going to plays, or indulging in your favorite hobbies ... whether that means enjoying more time on the golf course, purchasing a sailboat or spending money on your favorite collection.  It's important to budget for these activities before you retire.  It won't be any fun to retire if you are unable to afford to do any of the things you looking forward to.

Emergencies -- An unexpected event can have an even greater effect on you when you are not working, since it could be difficult to make up for the lost money.  For example, a sudden drop in the value of your investments, a period of high inflation, losing your home and possessions in a flood, earthquake or other catastrophe, significant medical expenses, or major car repairs can be difficult losses to overcome, particularly if you are living on a tight budget.  When you first retire, it is wise to set aside as much money as possible in an emergency fund so you are prepared for the worst.

The bottom line is that you need to prepare for everything.  As they say, hope for the best and prepare for the worst.  That's the secret to a comfortable retirement.


Yahoo! Finance, Dave Bernard, "5 Costs to Include in Your Retirement Budget," U.S. News & World Report, September 5, 2014.

For additional information about retirement planning, use the tabs at the top of this page to find links to hundreds of articles about great places to retire in the U.S. or abroad, financial planning, medical issues, family concerns and more.

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Photo credit:  Photo of Laguna Beach taken by author, Deborah-Diane; all rights reserved.