Like everything else, when some things go down, some others go up. The same applies to expenses incurred during retirement as well. While it is true that some expenses will drop after retirement, unfortunately,some other increase. These are:
1. Medical bills
Medical bills tend to go up as some people are not as healthy as they were before. While they were bright and springy in their youth, a different story emerges in the latter years. The blood pressure goes up, weight goes up but theur hair falls off!.
Next, they now have to pay for their own medical bills, and cannot charge them to their employers anymore. Added expense.
But perhaps, the surest reason for this increase is due to the rising cost of medical care. Worse, the increase are not uniform or even related to the inflation rate. For example, the cost of hospotal roomms prescription has astounding 719%, while the cost of prescription drugs rose by 169% in the last 20 years. Medical cost can go one way in the future- UP!!!!
Put all these together and you can see why the medical bills go up after retirement.
2. Travel and other changes in lifestye
When i ask employees, ” Do you spend more money during weekdays or weekends”, the answer is always ” weekends”. And then i tell them, ” When you retire, everyday is a weekend!!”
The abundance of leisure time gives tremendous oppurtunity for retirees to do one fabulous thing - spend money!! Some retirees take the oppurtunity to do the things they did not manage to do when they were working, travel for instance. However, the words “travel” and “cheap” have never gone side by side. This equals a greater outflow of cash.
Furthermore, changes in lifestyle often translate into an outflow of cash as welll. They may decide to pick up a new activity, golf for instance. Buying the clubs, paying the green fees and certainly for the lessons will cost money.
3. Dependents
While i’ve stated earlier that the children’s expenses normally drop in your retirement years most of them would have been working and become self sufficient, that does not apply to some retirees. They may have dependents such as children with physical or mental problems who require long term custodial care and therefore financial care. These often last throughout their retirement.
Some others may have their own parents still living and requiring care as well. This again requires cash.
And if i have not made myself clear before, i’ll spell out for you - all this money , each single dollar, must generate income for you.
That means that the house that you are going to staying does not count.”And why not”
Its simple.Your beautifull house doesnt count because it does not generate income. While it may be valuable, costing in the hundreds of thousands, or even million, it is useless as far as generating income is concerned. It fact, it will cost you money to maintain the house.(It will only count once you sell the house and invest the proceeds to generate income)
On the same token, any other assets that do not generate income also do not count. These wil include cars,idle land, gold, silver and empty rental properties.
So there you go folks, the reasons why the money needed is so much. But despite the monstrous figure, perhaps you;re still neutral about it. Ah-Hah thats because you have not come to the part where you are the lead actor in the show. However, thats all going to change because we are now going to find out exactly how much money you are going to need in your retirement.
Think you can handle it?
Allright , thats all for this Topic. I will continue on the next topic which is ” 10 Steps to save for your retirement “.
