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Retirement brings a sense of freedom and relaxation, but it can also come with unexpected financial shocks. Denial is a bad pill to take in retirement, and it’s important to have your savings ready when these issues arise. Here are the top 10 financial surprises that often catch retirees by surprise.
1. Medical expenses are higher than expected
Many retirees underestimate their medical expenses, including long-term care, which is not typically covered by Medicare. “The average 65-year-old couple retiring this year is expected to spend an average of $315,000,” reports Fidelity Investments’ 2022 Retirement Health Care Spending Estimates.
2. Impact of inflation
Rising costs of living can have a significant impact on your fixed retirement income, reducing your purchasing power over time. To really cushion the shock factor, look for a suitable place to save once you’ve settled into retirement.
3. Taxation of social security
Depending on your income level and location, a portion of your Social Security benefits may be taxable, but many retirees don’t anticipate this. As GOBankingRates previously reported, up to 50% of Social Security income is taxable for individuals and joint filers whose provisional income exceeds her $25,000 and her $32,000.
4. Housing maintenance and repair costs
As your home ages, unexpected repair and maintenance costs may arise, putting pressure on your retirement budget. If you live in an older home, you may want to research certain aspects of the place or even hire a contractor or home inspector to ensure that the shock you face doesn’t affect your wallet either. .
5. Support for adult children
Financial support for adult children, such as education, medical care, and living expenses, can be a major unplanned financial burden.
6. Early retirement due to health problems
Health problems can force you to retire early, reduce your savings and incur unexpected medical expenses.
7. Investment market volatility
Fluctuations in investment markets can affect your retirement savings, especially if a major economic downturn occurs early in your retirement.
8. Longevity risks
If you live longer than expected, your savings may be depleted sooner than expected. Don’t forget to save and budget for years to come.
9. Widow
The death of a spouse can cause unexpected financial problems, including a reduction in potential income and an increase in living expenses. This is always a shock, so you need to be prepared, but fortunately there are support groups and programs for advice and grief therapy.
10. Changing housing needs
Having to downsize, relocate, or move into assisted living can result in significant costs that many retirees don’t initially consider.
Understanding these potential shocks can help you better prepare for a financially secure retirement. For retirees or those planning to retire, it’s important to consider these factors when planning your finances to ensure a comfortable and stable post-work life.
Editor’s note: This article was created using automated technology, fine-tuned, and verified for accuracy by members of the GOBankingRates editorial team.
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