Estimating your future living costs when planning for retirement can be difficult. As your lifestyle changes some expenses will be reduced, for example mortgage repayments are hopefully cleared and you may be able to cut down on your insurances. It is worth doing a bit of a deep dive into possible expenses that may crop up for you as it’s wise to have some flexibility and wriggle room to cope with life’s unexpected events. If you are not sure where to start seeking financial planning advice may save you pain down the track.
Price rises that are above inflation
World events can impact the cost of living dramatically as we are currently seeing with the significant increase in fuel due to the impact of the war in Ukraine and current trading sanctions with Russia. The cost of food can also skyrocket because of natural disasters such as floods and droughts. Private Health insurance is also vulnerable to price hikes beyond general inflation.
The kids
Getting into the housing market is becoming increasingly difficult for the younger generation and the trend for young adults to stay at home longer is on the rise. According to The Australian Institute of Family Studies 43% of 20-24 year old’s are doing this. Other things such as weddings or unexpected life hiccups for your kids can crop up and if you are keen to be able to continue to support them it’s important to keep these in mind.
Elderly parents
If you are part of the sandwich generation and are caring for your ageing parents as well as your children, costs can add up. Be sure to account for these retirement costs.
Maintenance and home repairs
If you decide to stay in the family home you may find it needs more maintenance or even a renovation as it ages. Many retirees decide to install lifts in their homes to ensure they are accessible as mobility declines in old age, and you may have to make other alterations to bathrooms etc.
Medical expenses
In Australia we have one of the highest life expectancies in the world. Whilst we are living longer, many of us will require more medical care as we age. You will need to think about what sort of medical care you would like to be able to access and have a plan for aged care. There are big differences between public and private options, and you will need to budget for these.
When planning for retirement we all like to think about the fun stuff like travelling more or taking up a new hobby, however it is important to have some money aside to cover other life events as they crop up. We can look at your individual circumstances and help you come up with a plan that will work for you. Get in touch.
General Advice Warning: The information provided in this article is general in nature and does not consider your particular investment objectives, financial situation, or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions.
Dobbrick Financial Services (Gympie) Pty Ltd ABN 48 931 205 109 and Dobbrick Financial Services (Ipswich) ABN 86 100 184 521 & DFS Oakland ABN 64 340 527 395 and their advisers are authorised representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.
