Some commonly overlooked expenses when setting retirement goals include healthcare costs, long-term care expenses, inflation, and travel and leisure activities. It is important to consider these factors in order to accurately plan for a financially secure retirement.
Healthcare Costs
Healthcare costs can be a significant expense in retirement, especially as we age and require more medical care. Many retirees underestimate how much they will need to budget for healthcare expenses. Here are some healthcare costs to consider when setting retirement goals:
- Medicare premiums and out-of-pocket costs
- Prescription drug expenses
- Dental and vision care
- Long-term care insurance or expenses
Long-Term Care Expenses
Long-term care expenses are often overlooked when setting retirement goals, but they can be a major financial burden if not planned for in advance. Long-term care includes services such as nursing home care, assisted living facilities, and in-home care. Here are some factors to consider when planning for long-term care expenses:
- Cost of long-term care services in your area
- Long-term care insurance premiums
- Potential need for caregiving services for yourself or a spouse
Inflation
Inflation is another commonly overlooked expense when setting retirement goals. Over time, the cost of goods and services tends to increase, reducing the purchasing power of your retirement savings. It is important to factor in inflation when planning for retirement in order to maintain your standard of living. Here are some ways to account for inflation in your retirement goals:
- Use inflation-adjusted return rates when calculating retirement savings
- Consider investing in assets that provide protection against inflation, such as inflation-linked bonds or real estate
- Periodically review and adjust your retirement budget to account for rising prices
Travel and Leisure Activities
While healthcare costs and long-term care expenses are essential to consider, it’s also important to budget for travel and leisure activities in retirement. Many retirees have aspirations of traveling and enjoying their free time, but they may not realize the costs associated with these activities. Here are some travel and leisure expenses to include in your retirement goals:
- Travel expenses, including flights, accommodation, and dining out
- Hobbies and recreational activities
- Entertainment and cultural events