8 Things Seniors Should Budget For

Why a Budget Makes Sense

Retirement is a fun and much-anticipated time for most seniors. Yet while some expenses go away like commuting to work and daily lunches at restaurants, others may increase. Creating a budget before retirement is ideal, but sometimes it’s hard to forecast what additional expenses might be waiting for you. 

Housing

For most people, housing expenses tend to stand out as the most significant expense before and during retirement. If you can find a way to eliminate this budget-buster, you can significantly improve your overall financial situation.

With the mortgage paid off, your only housing concerns are taxes, insurance, and regular upkeep. I know how good that sounds, but it takes a diligent effort to make it happen. If paying off the mortgage is out of the question, possibly selling your house and moving to less expensive surroundings could improve your financial picture. 

Another home in a different neighborhood could cost less to heat and cool, and free up much-needed cash for other expenses such as taxes and home insurance.

Healthcare

While most retirees receive Medicare Part A for free, other Medicare plans aren’t, and they can put a dent in your budget. Plan to budget these expenses and get hard numbers by contacting insurance companies to compare competing plans. 

Most plans will not cover expenses in full, so prepare to have money to cover them. Out-of-pocket costs can add up quickly. If you’re planning on selecting coverage to help with the extra expenses, shop around and get the least expensive and most comprehensive coverage possible.

Remember that as we get older, our health changes. (This even applies to expats!). We may require devices like hearing aids and glasses, and dental services, all of which Medicare usually doesn’t cover. Dental expenses can reach thousands of dollars and present a difficult financial challenge if you don’t prepare ahead of time. 

Dental Insurance

Fortunately, several insurance companies offer dental insurance for seniors. Coverages indeed differ, but most cover preventative services such as cleanings, fillings, and x-rays. Moreover, they offer generous discounts for expensive procedures from root canals to dentures. 

Another feature of these plans is that most have no waiting period for coverage of preventative services, and graduated waiting periods based on the typical cost of a procedure or device. Root canals may carry a six-month waiting period, and crowns may force you to wait a full 12 months before coverage begins. 

It’s vital to budget for out-of-pocket dental expenses as well as monthly premiums for insurance. Costs include not only the copays but deductibles, too. 

Vision Insurance

Many companies offer proper vision insurance for seniors and compare favorably with the major, well-known ones. Frame and lens allowances make them affordable and budget-friendly. Use the protection in conjunction with a Medicare Advantage plan to ease the cost of eye care.

Review your choices carefully. What can seem like great coverage, may haunt you with extra fees and less-than-favorable coverages on needed care. 

Income Taxes

You invested many years of your life working and planning the day when the work is over, and retirement begins. When done right, it’s a fantastic time of life. If most of those working years saw you invest in your 401k or IRA, plan for the taxes you’ll pay for each withdrawal. 

Some of your Social Security benefits, together with your retirement income, might reach the threshold where the government will tax them like ordinary income.

Food

With extra free time on your hands, why not become somewhat of a connoisseur of fantastic homemade meals? You will save money versus going out to eat, and the benefit of healthy meals at home speaks for itself. 

Those times when socializing at your favorite restaurant is more appealing, remember to take advantage of senior discounts typical in most places. 

Emergency Funds

You should have an emergency fund, and the need for it doesn’t end when you retire. It’s more important than ever. Most financial experts and planners suggest having enough cash on hand to pay for at least six months of expenses. Make it a long-term goal and work on it until you reach the minimum or more. 

Consider the comfort in knowing you have emergencies covered when, not if, they happen. Car repairs and home fixes top the list as the most expensive emergency repairs that could occur. 

Fun Money

No, that’s not a typo. Have some fun while you’re spending your golden years together. If that means traveling the world or sightseeing at the local parks in your area, you can enjoy it together without worrying about the cost or how much time it takes. You deserve to have fun, so don’t forget to add some fun money to your budget. 

If traveling or sightseeing isn’t on your list, keep the grandkids in mind for a splurge or two. Don’t go overboard because you’re still on a limited income, and too much of a good thing could throw your budget out of sync. 

 

 

 

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