One of the greatest challenges of saving for retirement is figuring out what your living expenses will look like. While you might struggle to come up with an exact number, you can do your best to estimate your major costs, like housing, healthcare, and transportation. Here, we’ll review the key items that need to go into your retirement budget and introduce you to a calculator that can help you add up your anticipated costs.
Healthcare is the one expense that almost universally goes up for seniors, and unfortunately, it tends to climb in a very big way. The latest estimates from HealthView Services tell us that the average healthy 65-year-old couple will spend $377,000 on medical expenses in retirement. And that’s the number healthy couples are looking at. If you have a known medical issue, that number might climb. Of course, if you’re lucky, you might get away with spending less, but use this number as a starting point when creating your retirement budget.
Paying off your mortgage in time for retirement can help keep your housing costs down. But not everyone is able to enter retirement mortgage-free. In fact, an estimated 30% of seniors still owe money on their home loans.
Even if you don’t carry mortgage debt into retirement, you’ll still have other housing costs to contend with. Property taxes and homeowners’ insurance, for example, are a necessary part of homeownership, and while maintenance costs can vary, the average property owner spends 1% to 4% of his or her home’s value per year on general upkeep.
Now if you’re planning to rent a modest home in retirement, you may come to find that doing so is cheaper than owning. Either way, you’ll need to put some thought into what your housing costs might look like down the line.
It’s estimated that the typical retiree spends $6,852 per year on transportation. But if you own a car, that number might climb. AAA reports that it costs $8,700 a year, on average, to own a vehicle, but if you’re dealing with an older automobile, you may wind up sinking in extra money just to keep it running. Along these lines, don’t be surprised if your car insurance rates climb as you age. According to Esurance, rates tend to increase for drivers 70 and older.
While healthcare, housing, and transportation represent some of the more significant costs you’ll face as a senior, your remaining expenses can also add up. After all, you’ll still need food, electricity, phone service,…